FRZ » Topics » 2. Acquisitions

This excerpt taken from the FRZ 10-Q filed May 1, 2009.

11. Acquisitions

        No acquisitions were completed in the three months ended March 31, 2009. During 2008, the Company purchased seven ice companies. Including direct acquisition costs, the total acquisition consideration was $4.0 million. The results of operations of the 2008 acquisitions are included in the Company's consolidated results of operations from their respective acquisition dates, which range from February 29, 2008 to September 30, 2008.

        The following unaudited pro forma information presents the Company's consolidated results of operations (i) for the three months ended March 31, 2008 as if the 2008 acquisitions had all occurred on January 1, 2008 (in thousands):

Pro forma revenues

  $ 43,338  

Pro forma net loss

    (3,240 )

Pro forma basic and diluted net loss per share

    (0.15 )
These excerpts taken from the FRZ 10-K filed Mar 11, 2009.

Acquisitions

        From 1997 through 1999, we pursued a consolidation strategy within the highly fragmented packaged ice industry. During that period, we completed approximately 80 acquisitions. Significant

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acquisitions included the purchase of Reddy Ice Corporation from Suiza Foods Corporation in April 1998 and the purchase of Cassco Ice & Cold Storage, Inc., in July 1998. Reddy Ice Corporation, prior to our acquisition of it, had been active in the consolidation of the packaged ice industry, having made 28 acquisitions from January 1997 to April 1998. Cassco was a leading regional producer and distributor of packaged ice products and was an owner/operator of refrigerated warehouses in the mid-Atlantic region. We did not complete any significant acquisitions from 2000 through the third quarter of 2003.

        Beginning in the fourth quarter of 2003, we have completed a total of fifty two acquisitions. Information regarding our acquisitions during this period is set forth in the table below.

Year
  Acquisitions
Completed
  Aggregate Purchase
Price (including direct
acquisition costs)
 

2003

    2   $ 67.4 million  

2004

    11     16.9 million  

2005

    2     0.9 million  

2006

    10     12.9 million  

2007

    20     26.8 million  

2008

    7     4.0 million  

        We will continue to consider strategic acquisitions, principally in existing or adjacent geographic markets, that enhance the density of our distribution routes, provide capacity rationalization opportunities, increase our market penetration in existing markets or expand our presence in contiguous or new markets.

Acquisitions

        From 1997 through 1999, we pursued a consolidation strategy within the highly fragmented packaged ice industry. During that period, we completed approximately 80 acquisitions. Significant

8


Table of Contents


acquisitions included the purchase of Reddy Ice Corporation from Suiza Foods Corporation in April 1998 and the purchase of Cassco Ice & Cold Storage, Inc., in July 1998. Reddy Ice Corporation, prior to our acquisition of it, had been active in the consolidation of the packaged ice industry, having made 28 acquisitions from January 1997 to April 1998. Cassco was a leading regional producer and distributor of packaged ice products and was an owner/operator of refrigerated warehouses in the mid-Atlantic region. We did not complete any significant acquisitions from 2000 through the third quarter of 2003.

        Beginning in the fourth quarter of 2003, we have completed a total of fifty two acquisitions. Information regarding our acquisitions during this period is set forth in the table below.

Year
  Acquisitions
Completed
  Aggregate Purchase
Price (including direct
acquisition costs)
 

2003

    2   $ 67.4 million  

2004

    11     16.9 million  

2005

    2     0.9 million  

2006

    10     12.9 million  

2007

    20     26.8 million  

2008

    7     4.0 million  

        We will continue to consider strategic acquisitions, principally in existing or adjacent geographic markets, that enhance the density of our distribution routes, provide capacity rationalization opportunities, increase our market penetration in existing markets or expand our presence in contiguous or new markets.

Acquisitions



        From 1997 through 1999, we pursued a consolidation strategy within the highly fragmented packaged ice industry. During that period, we
completed approximately 80 acquisitions. Significant



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HREF="#bg18601a_main_toc">Table of Contents






acquisitions
included the purchase of Reddy Ice Corporation from Suiza Foods Corporation in April 1998 and the purchase of Cassco Ice & Cold Storage, Inc., in July 1998. Reddy Ice
Corporation, prior to our acquisition of it, had been active in the consolidation of the packaged ice industry, having made 28 acquisitions from January 1997 to April 1998. Cassco was a leading
regional producer and distributor of packaged ice products and was an owner/operator of refrigerated warehouses in the mid-Atlantic region. We did not complete any significant acquisitions
from 2000 through the third quarter of 2003.




        Beginning
in the fourth quarter of 2003, we have completed a total of fifty two acquisitions. Information regarding our acquisitions during this period is set forth in the table below.




















































































Year



 Acquisitions

Completed
 Aggregate Purchase

Price (including direct

acquisition costs)
 

2003

  2 $67.4 million 

2004

  11  16.9 million 

2005

  2  0.9 million 

2006

  10  12.9 million 

2007

  20  26.8 million 

2008

  7  4.0 million 




        We
will continue to consider strategic acquisitions, principally in existing or adjacent geographic markets, that enhance the density of our distribution routes, provide capacity
rationalization opportunities, increase our market penetration in existing markets or expand our presence in contiguous or new markets.



This excerpt taken from the FRZ 10-Q filed Nov 7, 2008.

5. Acquisitions

        During the nine months ended September 30, 2008, the Company purchased seven ice companies. Including direct acquisition costs, the total acquisition consideration was $4.0 million. The total purchase price was allocated to the acquired assets and assumed liabilities based upon estimates of their respective fair values as of the respective closing dates using valuations and other studies. The

9



REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007

5. Acquisitions (Continued)


following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition (dollars in millions):

Total assets acquired

  $ 1.2  

Total liabilities assumed

    (0.5 )
       

Net assets acquired

  $ 0.7  
       

        The excess of $3.3 million of the aggregate purchase price over the net assets acquired was allocated to goodwill ($1.9 million) and other intangible assets ($1.4 million). Other intangible assets are comprised of customer lists, which are being amortized on a straight line basis over useful lives of 10 to 30 years.

        During 2007, the Company purchased twenty ice companies for total acquisition consideration of $26.8 million. The results of operations of the 2007 and 2008 acquisitions are included in the Company's consolidated results of operations from the date of each acquisition, which ranged from January 2, 2007 to December 28, 2007 and from February 29, 2008 to September 30, 2008.

        The following unaudited pro forma information presents the Company's consolidated results of operations (i) for the three and nine months ended September 30, 2008 as if the 2008 acquisitions had all occurred on January 1, 2008 and (ii) for the three and nine months ended September 30, 2007 as if the 2008 and 2007 acquisitions had all occurred on January 1, 2007:

 
  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
 
  2008   2007   2008   2007  
 
  (in thousands, except per share amounts)
 

Pro forma revenues

  $ 125,734   $ 128,130   $ 271,858   $ 282,234  

Pro forma net income (loss)

    (112,976 )   16,925     (110,637 )   17,562  

Pro forma basic net income (loss) per share

  $ (5.13 ) $ 0.77   $ (5.03 ) $ 0.81  

Pro forma diluted net income (loss) per share

  $ (5.13 ) $ 0.77   $ (5.03 ) $ 0.80  
This excerpt taken from the FRZ 10-Q filed Aug 8, 2008.

4.    Acquisitions

        During the six months ended June 30, 2008, the Company purchased six ice companies. Including direct acquisition costs, the total acquisition consideration was $3.8 million. The total purchase price was allocated to the acquired assets and assumed liabilities based upon estimates of their respective fair values as of the respective closing dates using valuations and other studies. The following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition (dollars in millions):

Total assets acquired

  $ 1.2  

Total liabilities assumed

    (0.5 )
       

Net assets acquired

  $ 0.7  
       

        The excess of $3.1 million of the aggregate purchase price over the net assets acquired was allocated to goodwill ($1.9 million) and other intangible assets ($1.2 million). Other intangible assets are comprised of customer lists, which are being amortized on a straight line basis over useful lives of 11 to 30 years.

        During 2007, the Company purchased twenty ice companies for total acquisition consideration of $26.8 million. The results of operations of the 2007 and 2008 acquisitions are included in the Company's consolidated results of operations from the date of each acquisition, which ranged from January 2, 2007 to December 28, 2007 and from February 29, 2008 to April 19, 2008.

        The following unaudited pro forma information presents the Company's consolidated results of operations (i) for the three and six months ended June 30, 2008 as if the 2008 acquisitions had all

9


REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 and 2007

4.    Acquisitions (Continued)


occurred on January 1, 2008 and (ii) for the three and six months ended June 30, 2007 as if the 2008 and 2007 acquisitions had all occurred on January 1, 2007:

 
  Three Months Ended
June 30,
  Six Months Ended
June 30,
 
 
  2008   2007   2008   2007  
 
  (in thousands, except per share amounts)
 

Pro forma revenues

  $ 102,717   $ 106,933   $ 146,025   $ 154,025  

Pro forma net income

    5,656     10,520     2,314     367  

Pro forma basic net income per share

    0.26     0.48     0.11     0.02  

Pro forma diluted net income per share

    0.26     0.48     0.11     0.02  
This excerpt taken from the FRZ 10-Q filed May 5, 2008.

4. Acquisitions

        During the three months ended March 31, 2008, the Company purchased five ice companies. Including direct acquisition costs, the total acquisition consideration was $3.1 million. The total purchase price was allocated to the acquired assets and assumed liabilities based upon estimates of their respective fair values as of the respective closing dates using valuations and other studies. The

8


REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Continued)

FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007

4. Acquisitions (Continued)


following table summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition (dollars in millions):

Total assets acquired   $ 1.1  
Total liabilities assumed     (0.5 )
   
 
Net assets acquired   $ 0.6  
   
 

        The excess of $2.5 million of the aggregate purchase price over the net assets acquired was allocated to goodwill ($1.6 million) and other intangible assets ($0.9 million). Other intangible assets are comprised of customer lists, which are being amortized on a straight line basis over useful lives of 11 to 30 years.

        During 2007, the Company purchased twenty ice companies for total acquisition consideration of $26.8 million. The results of operations of the 2007 and 2008 acquisitions are included in the Company's consolidated results of operations from the date of each acquisition, which ranged from January 2, 2007 to December 28, 2007 and from February 29, 2008 to March 31, 2008.

        The following unaudited pro forma information presents the Company's consolidated results of operations (i) for the three months ended March 31, 2008 as if the 2008 acquisitions had all occurred on January 1, 2008 and (ii) for the three months ended March 31, 2007 as if the 2008 and 2007 acquisitions had all occurred on January 1, 2007:

 
  Three Months Ended March 31,
 
 
  2008
  2007
 
 
  (in thousands)

 
Pro forma revenues   $ 43,199   $ 47,013  
Pro forma net loss     (3,388 )   (10,902 )
Pro forma basic and diluted net loss per share     (0.15 )   (0.50 )
These excerpts taken from the FRZ 10-K filed Mar 14, 2008.

4. ACQUISITIONS

        During 2007, 2006 and 2005, the Company purchased twenty, ten and two ice companies, respectively. The total purchase price was allocated to the acquired assets and assumed liabilities based upon estimates of their respective fair values as of the closing dates using valuations and other studies. The following table summarizes the aggregate purchase prices and estimated aggregate fair values of the assets acquired and the liabilities assumed at the date of acquisition:

 
  Year Ended
December 31,

 
  2007
  2006
  2005
 
  (in millions)
Total acquisition costs, including direct acquisition costs   $ 26.8   $ 12.9   $ 0.9

Total assets acquired

 

 

9.1

 

 

5.0

 

 

0.3
Total liabilities assumed     0.7     0.3    
   
 
 
Net assets acquired assumed   $ 8.4   $ 4.7   $ 0.3
   
 
 

F-16


REDDY ICE HOLDINGS, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)

4. ACQUISITIONS (Continued)

        The excess of the aggregate purchase price over the net assets acquired or net liabilities assumed was allocated to goodwill and other intangible assets as follows:

 
  Year Ended
December 31,

 
  2007
  2006
  2005
 
  (in millions)
Goodwill   $ 10.2   $ 4.8   $ 0.4
Other intangible assets     8.2     3.4     0.2
   
 
 
Total excess purchase price   $ 18.4   $ 8.2   $ 0.6
   
 
 

        Other intangible assets were comprised of customer lists and a patent, which are being amortized over useful lives of eight to 30 years. The acquisitions were funded out of the Company's operating cash flows.

        The results of operations of the 2007 acquisitions are included in the Company's consolidated results of operations from their respective acquisition dates, which range from January 2, 2007 to December 28, 2007. The results of operations of the 2006 acquisitions are included in the Company's consolidated results of operations from their respective acquisition dates, which range from January 6, 2006 to December 22, 2006. The following unaudited pro forma information presents the Company's consolidated results of operations (i) for the year ended December 31, 2007 as if the twenty acquisitions in 2007 had all occurred on January 1, 2007 and (ii) for the year ended December 31, 2006 as if the twenty acquisitions in 2007 and the ten acquisitions in 2006 had all occurred on January 1, 2006:

 
  Year Ended
December 31,

 
  2007
  2006
 
  (in thousands)
(unaudited)

Pro forma revenues   $ 344,516   $ 355,230
Pro forma net income   $ 11,362   $ 16,155
Pro forma basic net income per share   $ 0.52   $ 0.76
Pro forma diluted net income per share   $ 0.52   $ 0.75

4. ACQUISITIONS



        During 2007, 2006 and 2005, the Company purchased twenty, ten and two ice companies, respectively. The total purchase price was allocated to the acquired assets
and assumed liabilities based upon estimates of their respective fair values as of the closing dates using valuations and other studies. The following table summarizes the aggregate purchase prices
and estimated aggregate fair values of the assets acquired and the liabilities assumed at the date of acquisition:


























































































 
 Year Ended

December 31,

 
 2007
 2006
 2005
 
 (in millions)
Total acquisition costs, including direct acquisition costs $26.8 $12.9 $0.9


Total assets acquired

 

 


9.1

 

 


5.0

 

 


0.3
Total liabilities assumed  0.7  0.3  
  
 
 
Net assets acquired assumed $8.4 $4.7 $0.3
  
 
 



F-16








REDDY ICE HOLDINGS, INC. AND SUBSIDIARY



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)




4. ACQUISITIONS (Continued)



        The
excess of the aggregate purchase price over the net assets acquired or net liabilities assumed was allocated to goodwill and other intangible assets as follows:














































































 
 Year Ended

December 31,

 
 2007
 2006
 2005
 
 (in millions)
Goodwill $10.2 $4.8 $0.4
Other intangible assets  8.2  3.4  0.2
  
 
 
Total excess purchase price $18.4 $8.2 $0.6
  
 
 




        Other
intangible assets were comprised of customer lists and a patent, which are being amortized over useful lives of eight to 30 years. The acquisitions were funded out of the
Company's operating cash flows.



        The
results of operations of the 2007 acquisitions are included in the Company's consolidated results of operations from their respective acquisition dates, which range from
January 2, 2007 to December 28, 2007. The results of operations of the 2006 acquisitions are included in the Company's consolidated results of operations from their respective
acquisition dates, which range from January 6, 2006 to December 22, 2006. The following unaudited pro forma information presents the Company's consolidated results of operations
(i) for the year ended December 31, 2007 as if the twenty acquisitions in 2007 had all occurred on January 1, 2007 and (ii) for the year ended December 31, 2006 as
if the twenty acquisitions in 2007 and the ten acquisitions in 2006 had all occurred on January 1, 2006:


























































 
 Year Ended

December 31,

 
 2007
 2006
 
 (in thousands)

(unaudited)

Pro forma revenues $344,516 $355,230
Pro forma net income $11,362 $16,155
Pro forma basic net income per share $0.52 $0.76
Pro forma diluted net income per share $0.52 $0.75




This excerpt taken from the FRZ 10-Q filed Oct 26, 2007.

3.    Acquisitions

        During the nine months ended September 30, 2007, the Company purchased 17 ice companies, with four of these purchases occurring during the three months ended September 30, 2007. Including direct acquisition costs, the total acquisition consideration was $21.8 million. The total purchase price was allocated to the acquired assets and assumed liabilities based upon estimates of their respective fair values as of the respective closing dates using valuations and other studies. The following table

7



summarizes the estimated fair values of the assets acquired and the liabilities assumed at the date of acquisition (dollars in millions):

Total assets acquired   $ 7.2
Total liabilities assumed     0.5
   
Net assets acquired   $ 6.7
   

        The excess of the aggregate purchase price over the net assets acquired of $15.1 million was allocated to goodwill ($8.6 million) and other intangible assets ($6.5 million). Other intangible assets are comprised of customer lists and patents, which are being amortized on a straight line basis over useful lives of 8 to 30 years.

        During 2006, the Company purchased ten ice companies for total acquisition consideration of $12.9 million. The results of operations of the 2006 and 2007 acquisitions are included in the Company's consolidated results of operations from the date of each acquisition, ranging from January 6, 2006 to December 22, 2006 and from January 2, 2007 to September 27, 2007.

        The following unaudited pro forma information presents the Company's consolidated results of operations (i) for the three months and nine months ended September 30, 2007 as if the 2007 acquisitions had all occurred on January 1, 2007 and (ii) for the three months and nine months ended September 30, 2006 as if the 2007 and 2006 acquisitions had all occurred on January 1, 2006:

 
  Three Months Ended
September 30,

  Nine Months Ended
September 30,

 
  2007
  2006
  2007
  2006
 
  (in thousands)

Pro forma revenues   $ 126,051   $ 129,718   $ 277,818   $ 290,906
Pro forma net income     16,660     16,238     17,206     21,088
Pro forma basic net income per share   $ 0.76   $ 0.76   $ 0.79   $ 0.99
Pro forma diluted net income per share   $ 0.75   $ 0.75   $ 0.78   $ 0.97
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