0001810546FALSE00018105462022-12-062022-12-06
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
(Amendment No. 1)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported): October 31, 2023
EASTERN BANKSHARES, INC.
(Exact Name of Registrant as Specified in Charter)
| | | | | | | | | | | | | | |
Massachusetts | | 001-39610 | | 84-4199750 |
(State or Other Jurisdiction of Incorporation or Organization) | | (Commission File Number) | | (I.R.S. Employer Identification No.) |
| | | | | | | | | | | | | | |
265 Franklin Street | | 02110 |
Boston | , | MA | |
(Address of Principal Executive Offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (800) 327-8376
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions:
| | | | | |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | | | | | | | |
Title of each class | | Trading Symbol(s) | | Name of each exchange on which registered |
Common Stock | | EBC | | Nasdaq Global Select Market |
Indicate by check mark whether the Registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Explanatory Note
This Amendment No. 1 to Current Report on Form 8-K/A (the “Form 8-K/A”) amends and supplements the Current Report on Form 8-K filed by Eastern Bankshares, Inc. (the “Company”) with the Securities and Exchange Commission on October 31, 2023 (the “Initial Filing”) to include the pro forma financial information required by Item 9.01(b) and to include the additional exhibits related thereto under Item 9.01(d) of this Form 8-K/A.
Item 9.01 Financial Statements and Exhibits.
(a) Pro Forma Financial Information.
As disclosed in the Initial Filing, the Company completed on October 31, 2023, the sale (the “Asset Sale”) of Eastern Bank’s insurance operations, which conducted business under the name Eastern Insurance Group LLC (“EIG”) to Arthur J. Gallagher Risk Management Services, LLC. The Asset Sale is described in more detail in the Initial Filing and in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on September 19, 2023.
Item 9.01 of the Initial Filing stated that the Company anticipated filing, on or before November 6, 2023, an amendment to the Initial Filing that would include an unaudited pro forma condensed balance sheet, unaudited pro forma condensed statements of comprehensive income, and accompanying explanatory notes, each giving effect to the Asset Sale.
By this Form 8-K/A, the Company is amending the Initial Filing to file as Exhibit 99.1 and incorporate herein by reference an unaudited pro forma condensed balance sheet that gives effect to the Asset Sale as if it had occurred on September 30, 2023, and unaudited pro forma condensed income statements for the nine months ended September 30, 2023 and each of the years ended December 31, 2022, 2021, and 2020, in each case giving effect to the Asset Sale as if it had occurred on January 1, 2020.
(b) Exhibits.
| | | | | | | | |
Exhibit No. | | Description |
| | |
99.1 | | |
104 | | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.
| | | | | | | | | | | |
| EASTERN BANKSHARES, INC. |
| | |
DATE: November 6, 2023 | By: | | /s/ James B. Fitzgerald |
| | | James B. Fitzgerald |
| | | Chief Financial Officer |
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma condensed financial information reflects the statements of income for the nine months ended September 30, 2023, and for the years ended December 31, 2022, December 31, 2021, and December 31, 2020, as if the Asset Sale had occurred on January 1, 2020. The unaudited pro forma condensed balance sheet as of September 30, 2023, assumes that the Asset Sale occurred as of September 30, 2023. The unaudited pro forma condensed financial information should be read together with the Company’s historical consolidated financial statements and accompanying notes and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its annual report on Form 10-K for the fiscal year ended December 31, 2022, and in its quarterly report on Form 10-Q for the nine months ended September 30, 2023.
The unaudited pro forma condensed financial information is presented based on information currently available, is intended for informational purposes, is not intended to represent what the Company’s consolidated statements of income and balance sheet actually would have been had the Asset Sale occurred on the dates indicated above and do not reflect all actions that may be undertaken by the Company after the Asset Sale. In addition, the unaudited pro forma condensed financial information is not necessarily indicative of the Company’s results of operations and financial position for any future period.
The “Historical Eastern Bankshares, Inc.” column in the unaudited pro forma condensed financial information reflects the Company’s historical consolidated financial information for the periods presented and does not reflect any adjustments related to the Asset Sale and related transactions.
The information in the “Pro Forma Adjustments” column in the unaudited pro forma condensed statements of income was derived from the Company’s consolidated financial information and related accounting records for the nine months ended September 30, 2023 and fiscal years ended December 31, 2022, 2021, and 2020, and reflects the removal of substantially all of the historical operating results of Eastern Insurance Group LLC (“EIG”). Pro forma adjustments do not include any allocation of general corporate overhead expense or interest expense of the Company to EIG. Pro forma adjustments do not reflect what EIG’s results of operations would have been on a stand-alone basis, and are not necessarily indicative of future results of operations. Beginning in the third quarter of fiscal year 2023, EIG’s historical financial results for periods prior to the Asset Sale will be reflected in the Company’s consolidated financial statements as discontinued operations.
The information in the “Pro Forma Adjustments” column in the unaudited pro forma condensed financial information was based on available information and assumptions that the Company’s management believes are reasonable, that reflect the impacts of events directly attributable to the Asset Sale and related transactions that are factually supportable, and for purposes of the consolidated statements of operations, are expected to have a continuing impact on the Company. The pro forma adjustments do not reflect future events that may occur after the Asset Sale, including potential selling, general and administrative dis-synergies and the expected charges, the expected realization of any cost savings and other synergies, or the usage of the expected cash distribution received from Arthur J. Gallagher Risk Management Services, LLC (“Gallagher”) in connection with the Asset Sale.
The unaudited pro forma condensed financial information is provided for illustrative information purposes only. The unaudited pro forma condensed financial information is not necessarily, and should not be assumed to be, an indication of the actual results that would have been achieved had the Asset Sale been completed as of the dates indicated or that may be achieved in the future. The pro forma financial information has been prepared by the Company in accordance with Regulation S-X Article 11, Pro Forma Financial Information, as amended by the final rule, Amendments to Financial Disclosures About Acquired and Disposed Businesses, as adopted by the SEC on May 21, 2020.
The unaudited pro forma condensed financial information also does not consider any potential effects of changes in market conditions on revenues, expense efficiencies, asset dispositions, and share repurchases, among other factors. The pro forma adjustments have been made solely for the purpose of providing the unaudited pro forma condensed financial information.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
As of September 30, 2023
| | | | | | | | | | | | | | | | | | | | | | | |
| | | Transaction Accounting Adjustments | | |
| Historical Eastern Bankshares, Inc. | | Pro forma Adjustments | | Note 2 | | Pro forma Condensed |
| (In thousands) |
ASSETS | | | | | | | |
Cash and due from banks | $ | 72,689 | | | $ | 490,663 | | | B | | $ | 563,352 | |
Short-term investments | 536,119 | | | — | | | | | 536,119 | |
Cash and cash equivalents | 608,808 | | | 490,663 | | | | | 1,099,471 | |
Securities | 4,717,418 | | | — | | | | | 4,717,418 | |
Loans held for sale | 23,892 | | | — | | | | | 23,892 | |
Loans | 13,899,968 | | | — | | | | | 13,899,968 | |
Allowance for loan losses | (155,146) | | | — | | | | | (155,146) | |
Net loans | 13,744,822 | | | — | | | | | 13,744,822 | |
FHLB stock | 37,125 | | | — | | | | | 37,125 | |
Premises and equipment | 59,033 | | | — | | | | | 59,033 | |
Bank-owned life insurance | 163,700 | | | — | | | | | 163,700 | |
Goodwill and other intangibles, net | 566,709 | | | — | | | | | 566,709 | |
Deferred income taxes, net | 416,081 | | | — | | | | | 416,081 | |
Prepaid expenses | 156,113 | | | — | | | | | 156,113 | |
Other assets | 527,873 | | | (113,136) | | | C | | 414,737 | |
Assets of discontinued operations | 124,718 | | | (124,718) | | | A | | — | |
Total assets | $ | 21,146,292 | | | $ | 252,809 | | | | | $ | 21,399,101 | |
LIABILITIES AND EQUITY | | | | | | | |
Deposits | $ | 17,424,169 | | | $ | — | | | | | $ | 17,424,169 | |
Borrowed funds | 715,372 | | | — | | | | | 715,372 | |
Other liabilities | 525,378 | | | — | | | | | 525,378 | |
Liabilities of discontinued operations | 34,820 | | | (34,820) | | | A | | — | |
Total liabilities | 18,699,739 | | | (34,820) | | | | | 18,664,919 | |
Shareholders’ equity | | | | | | | |
Common stock | 1,766 | | | — | | | | | 1,766 | |
Additional paid in capital | 1,661,136 | | | — | | | | | 1,661,136 | |
Unallocated common shares held by the Employee Stock Ownership Plan | (133,992) | | | — | | | | | (133,992) | |
Retained earnings | 1,747,225 | | | 287,629 | | | C | | 2,034,854 | |
Accumulated other comprehensive income, net of tax | (829,582) | | | — | | | | | (829,582) | |
Total shareholders’ equity | 2,446,553 | | | 287,629 | | | | | 2,734,182 | |
Total liabilities and shareholders’ equity | $ | 21,146,292 | | | $ | 252,809 | | | | | $ | 21,399,101 | |
See the accompanying Notes to the Unaudited Pro Forma Condensed Financial Information.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
For the Nine Months Ended September 30, 2023
| | | | | | | | | | | | | | | | | |
| | | Transaction Accounting Adjustments | |
Nine Months Ended September 30, 2023 | Historical Eastern Bankshares, Inc. | | Pro forma Adjustments (Note 2A) | | Pro forma Condensed |
| (Dollars in thousands, except per share data) |
Interest and dividend income: | | | | | |
Interest and fees on loans | $ | 483,676 | | | $ | — | | | $ | 483,676 | |
Taxable interest and dividends on available-for-sale securities | 77,451 | | | — | | | 77,451 | |
Non-taxable interest and dividends on available-for-sale securities | 4,302 | | | — | | | 4,302 | |
Interest on federal funds sold and other short-term investments | 27,384 | | | — | | | 27,384 | |
Total interest and dividend income | 592,813 | | | — | | | 592,813 | |
Interest expense: | | | | | |
Interest on deposits | 158,686 | | | — | | | 158,686 | |
Interest on borrowings | 17,025 | | | — | | | 17,025 | |
Total interest expense | 175,711 | | | — | | | 175,711 | |
Net interest income | 417,102 | | | — | | | 417,102 | |
Provision for allowance for loan losses | 14,854 | | | — | | | 14,854 | |
Net interest income after provision for loan losses | 402,248 | | | — | | | 402,248 | |
Noninterest income: | | | | | |
Service charges on deposit accounts | 21,117 | | | — | | | 21,117 | |
Trust and investment advisory fees | 18,136 | | | — | | | 18,136 | |
Debit card processing fees | 10,071 | | | — | | | 10,071 | |
Losses on sales of securities available for sale, net | (333,170) | | | — | | | (333,170) | |
Other | 19,354 | | | — | | | 19,354 | |
Total noninterest income | (264,492) | | | — | | | (264,492) | |
Noninterest expense: | | | | | |
Salaries and employee benefits | 185,264 | | | — | | | 185,264 | |
Office occupancy and equipment | 26,797 | | | — | | | 26,797 | |
Data processing | 38,555 | | | — | | | 38,555 | |
Professional services | 13,277 | | | — | | | 13,277 | |
FDIC insurance | 8,388 | | | — | | | 8,388 | |
Other | 25,292 | | | — | | | 25,292 | |
Total noninterest expense | 297,573 | | | — | | | 297,573 | |
Loss from continuing operations before income tax benefit | (159,817) | | | — | | | (159,817) | |
Income tax benefit | (65,619) | | | — | | | (65,619) | |
Net loss from continuing operations | (94,198) | | | — | | | (94,198) | |
Net income from discontinued operations | 7,872 | | | (7,872) | | | — | |
Net loss | $ | (86,326) | | | $ | (7,872) | | | $ | (94,198) | |
Basic (loss) earnings per share: | | | | | |
Basic loss per share from continuing operations | $ | (0.58) | | | | | $ | (0.58) | |
Basic earnings per share from discontinued operations | 0.05 | | | | | N/A |
Basic loss per share | $ | (0.53) | | | | | $ | (0.58) | |
Diluted earnings per share: | | | | | |
Diluted earnings per share from continuing operations | $ | 0.58 | | | | | $ | (0.58) | |
Diluted earnings per share from discontinued operations | 0.05 | | | | | N/A |
Diluted (loss) earnings per share | $ | 0.63 | | | | | $ | (0.58) | |
Basic weighted average shares | 162,199,158 | | | | |
Diluted weighted average shares | 162,260,503 | | | | | |
See the accompanying Notes to the Unaudited Pro Forma Condensed Financial Information.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
For the Year Ended December 31, 2022
| | | | | | | | | | | | | | | | | |
| | | Transaction Accounting Adjustments | | |
Year Ended December 31, 2022 | Historical Eastern Bankshares, Inc. | | Pro forma Adjustments (Note 2A) | | Pro forma Condensed |
| (Dollars in thousands, except per share data) |
Interest and dividend income: | | | | | |
Interest and fees on loans | $ | 476,041 | | | $ | — | | | $ | 476,041 | |
Taxable interest and dividends on available-for-sale securities | 118,690 | | | — | | | 118,690 | |
Non-taxable interest and dividends on available-for-sale securities | 7,179 | | | — | | | 7,179 | |
Interest on federal funds sold and other short-term investments | 3,271 | | | — | | | 3,271 | |
Total interest and dividend income | 605,181 | | | — | | | 605,181 | |
Interest expense: | | | | | |
Interest on deposits | 28,621 | | | — | | | 28,621 | |
Interest on borrowings | 8,506 | | | — | | | 8,506 | |
Total interest expense | 37,127 | | | — | | | 37,127 | |
Net interest income | 568,054 | | | — | | | 568,054 | |
Provision for allowance for loan losses | 17,925 | | | — | | | 17,925 | |
Net interest income after provision for loan losses | 550,129 | | | — | | | 550,129 | |
Noninterest income: | | | | | |
Insurance commissions | 99,232 | | | (99,232) | | | — | |
Service charges on deposit accounts | 30,392 | | | — | | | 30,392 | |
Trust and investment advisory fees | 23,593 | | | — | | | 23,593 | |
Debit card processing fees | 12,644 | | | — | | | 12,644 | |
Losses on sales of securities available-for-sale, net | (3,157) | | | — | | | (3,157) | |
Other | 13,457 | | | (179) | | | 13,278 | |
Total noninterest income | 176,161 | | | (99,411) | | | 76,750 | |
Noninterest expense: | | | | | |
Salaries and employee benefits | 298,186 | | | (65,089) | | | 233,097 | |
Office occupancy and equipment | 40,764 | | | (3,319) | | | 37,445 | |
Data processing | 57,273 | | | (4,335) | | | 52,938 | |
Professional services | 16,814 | | | (1,009) | | | 15,805 | |
FDIC insurance | 6,250 | | — | | | 6,250 | |
Other | 50,315 | | (7,201) | | | 43,114 | |
Total noninterest expense | 469,602 | | | (80,953) | | | 388,649 | |
Income before income tax expense | 256,688 | | | (18,458) | | | 238,230 | |
Income tax expense | 56,929 | | (5,210) | | | 51,719 | |
Net income | $ | 199,759 | | | $ | (13,248) | | | $ | 186,511 | |
Basic earnings per share | $ | 1.21 | | | | | $ | 1.13 | |
Diluted earnings per share | $ | 1.21 | | | | | $ | 1.13 | |
Basic weighted average shares | 165,510,357 | | | | | |
Diluted weighted average shares | 165,648,571 | | | | | |
See the accompanying Notes to the Unaudited Pro Forma Condensed Financial Information.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
For the Year Ended December 31, 2021
| | | | | | | | | | | | | | | | | |
| | | Transaction Accounting Adjustments | | |
Year Ended December 31, 2021 | Historical Eastern Bankshares, Inc. | | Pro forma Adjustments (Note 2A) | | Pro forma Condensed |
| (Dollars in thousands, except per share data) |
Interest and dividend income: | | | | | |
Interest and fees on loans | $ | 367,585 | | | $ | — | | | $ | 367,585 | |
Taxable interest and dividends on available-for-sale securities | 58,312 | | | — | | | 58,312 | |
Non-taxable interest and dividends on available-for-sale securities | 7,376 | | | — | | | 7,376 | |
Interest on federal funds sold and other short-term investments | 1,886 | | | — | | | 1,886 | |
Total interest and dividend income | 435,159 | | | — | | | 435,159 | |
Interest expense: | | | | | |
Interest on deposits | 5,167 | | | — | | | 5,167 | |
Interest on borrowings | 165 | | | — | | | 165 | |
Total interest expense | 5,332 | | | — | | | 5,332 | |
Net interest income | 429,827 | | | — | | | 429,827 | |
Release of allowance for loan losses | (9,686) | | | — | | | (9,686) | |
Net interest income after release of loan losses | 439,513 | | | — | | | 439,513 | |
Noninterest income: | | | | | |
Insurance commissions | 94,704 | | | (94,704) | | | — | |
Service charges on deposit accounts | 24,271 | | | — | | | 24,271 | |
Trust and investment advisory fees | 24,588 | | | — | | | 24,588 | |
Debit card processing fees | 12,118 | | | — | | | 12,118 | |
Gains on sales of securities available-for-sale, net | 1,166 | | | — | | | 1,166 | |
Other | 36,308 | | | (1,014) | | | 35,294 | |
Total noninterest income | 193,155 | | | (95,718) | | | 97,437 | |
Noninterest expense: | | | | | |
Salaries and employee benefits | 295,916 | | | (68,292) | | | 227,624 | |
Office occupancy and equipment | 40,465 | | | (3,204) | | | 37,261 | |
Data processing | 50,839 | | | (4,424) | | | 46,415 | |
Professional services | 21,879 | | | (596) | | | 21,283 | |
FDIC insurance | 4,226 | | — | | | 4,226 | |
Other | 30,631 | | (6,485) | | | 24,146 | |
Total noninterest expense | 443,956 | | | (83,001) | | | 360,955 | |
Income before income tax expense | 188,712 | | | (12,717) | | | 175,995 | |
Income tax expense | 34,047 | | (3,583) | | | 30,464 | |
Net income | $ | 154,665 | | | $ | (9,134) | | | $ | 145,531 | |
Basic earnings per share | $ | 0.90 | | | | | $ | 0.85 | |
Diluted earnings per share | $ | 0.90 | | | | | $ | 0.85 | |
Basic weighted average shares | 172,192,336 | | | | | |
Diluted weighted average shares | 172,252,057 | | | | | |
See the accompanying Notes to the Unaudited Pro Forma Condensed Financial Information.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF INCOME
For the Year Ended December 31, 2020
| | | | | | | | | | | | | | | | | |
| | | Transaction Accounting Adjustments | | |
Year Ended December 31, 2020 | Historical Eastern Bankshares, Inc. | | Pro forma Adjustments (Note 2A) | | Pro forma Condensed |
| (Dollars in thousands, except per share data) |
Interest and dividend income: | | | | | |
Interest and fees on loans | $ | 372,152 | | | $ | — | | | $ | 372,152 | |
Taxable interest and dividends on available-for-sale securities | 31,825 | | | — | | | 31,825 | |
Non-taxable interest and dividends on available-for-sale securities | 7,588 | | | — | | | 7,588 | |
Interest on federal funds sold and other short-term investments | 1,757 | | | — | | | 1,757 | |
Interest and dividends on trading securities | 6 | | | — | | | 6 | |
Total interest and dividend income | 413,328 | | | — | | | 413,328 | |
Interest expense: | | | | | |
Interest on deposits | 11,315 | | | — | | | 11,315 | |
Interest on borrowings | 762 | | | — | | | 762 | |
Total interest expense | 12,077 | | | — | | | 12,077 | |
Net interest income | 401,251 | | | — | | | 401,251 | |
Provision for allowance for loan losses | 38,800 | | | — | | | 38,800 | |
Net interest income after provision for loan losses | 362,451 | | | — | | | 362,451 | |
Noninterest income: | | | | | |
Insurance commissions | 94,495 | | | (94,495) | | | — | |
Service charges on deposit accounts | 21,560 | | | — | | | 21,560 | |
Trust and investment advisory fees | 21,102 | | | — | | | 21,102 | |
Debit card processing fees | 10,277 | | | — | | | 10,277 | |
Loss on trading securities, net | (4) | | | — | | | (4) | |
Gains on sales of securities available-for-sale, net | 288 | | | — | | | 288 | |
Other | 30,655 | | | (199) | | | 30,456 | |
Total noninterest income | 178,373 | | | (94,694) | | | 83,679 | |
Noninterest expense: | | | | | |
Salaries and employee benefits | 261,827 | | | (60,593) | | | 201,234 | |
Office occupancy and equipment | 33,796 | | | (3,176) | | | 30,620 | |
Data processing | 45,259 | | | (4,049) | | | 41,210 | |
Professional services | 16,445 | | | (770) | | | 15,675 | |
Charitable contributions | 95,272 | | | — | | | 95,272 | |
FDIC insurance | 3,734 | | — | | | 3,734 | |
Other | 48,590 | | (6,844) | | | 41,746 | |
Total noninterest expense | 504,923 | | | (75,432) | | | 429,491 | |
Income before income tax expense | 35,901 | | | (19,262) | | | 16,639 | |
Income tax expense | 13,163 | | (5,385) | | | 7,778 | |
Net income | $ | 22,738 | | | $ | (13,877) | | | $ | 8,861 | |
Basic earnings per share | $ | 0.13 | | | | | $ | 0.05 | |
Diluted earnings per share | $ | 0.13 | | | | | $ | 0.05 | |
Basic weighted average shares | 171,812,535 | | | | | |
Diluted weighted average shares | 171,812,535 | | | | | |
See the accompanying Notes to the Unaudited Pro Forma Condensed Financial Information.
EASTERN BANKSHARES, INC.
NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited pro forma condensed financial information and related notes were prepared in accordance with Article 11 of Regulation S-X. The unaudited pro forma condensed statements of income for the nine months ended September 30, 2023 and the years ended December 31, 2022, 2021 and 2020 separates substantially all of the operating results of EIG from the historical consolidated income statement of the Company, giving effect to the Asset Sale as if it had been completed on January 1, 2020. The unaudited pro forma condensed balance sheet as of September 30, 2023 separates substantially all of the assets and certain liabilities of EIG from the historical consolidated balance sheet of the Company, giving effect to the Asset Sale as if it had been completed on September 30, 2023.
The unaudited pro forma condensed financial information and explanatory notes have been prepared to illustrate the effects of the Asset Sale. The unaudited pro forma condensed financial information is presented for illustrative purposes only and does not necessarily indicate the financial results of the company had the sale been completed on January 1, 2020, nor does it necessarily indicate the results of operations in future periods or the future financial position of the Company.
2. Pro Forma Adjustments to the Unaudited Condensed Balance Sheet and Income Statements
The unaudited condensed pro forma statements of operations for the nine months ended September 30, 2023, and the years ended December 31, 2022, 2021, and 2020, and the unaudited pro forma condensed balance sheet as of September 30, 2023, include the following adjustments:
A.Reflects the sale of substantially all of the assets and transfer of certain liabilities of EIG, including the associated results of operations.
B.Reflects the receipt of net cash consideration which includes the following:
| | | | | |
Gross purchase price pursuant to Asset Purchase Agreement | $ | 515,000 | |
Transaction costs settled at closing | (17,041) | |
Settlement of certain obligations of the seller primarily related to employee post-retirement liabilities originating prior to closing | (4,066) | |
Working capital adjustment settled at closing | 4,189 | |
Net cash proceeds at closing | 498,082 | |
Fiduciary cash transferred to Gallagher | (7,419) | |
Adjusted net proceeds | $ | 490,663 | |
C.Reflects the impact to the Company’s total shareholders’ equity from the estimated gain on sale, net of tax, of substantially all of the assets and transfer of certain liabilities of EIG to Gallagher. The tax effect was computed using the Company’s statutory tax rate of 28.23%.
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