Contract
On December 1, 2017, Daseke TSH LLC (“TSH”), an indirect wholly owned subsidiary of Daseke, Inc. (“Daseke”), and Xxxxxx X. Xxxxxxx 2007 Family Irrevocable Gift Trust, Xxxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxx Xxxxxxx, Xxxxx X. Xxxxxxx 2012 GST-Exempt Family Trust, Xxxxx X. Xxxxxxx 2012 GST-Exempt Family Trust, and Xxxx Xxxx Xxxxxxx 2012 GST-Exempt Family Trust entered into a Purchase and Sale Agreement pursuant to which TSH purchased 100% of the outstanding equity interests of (1) Tennessee Steel Haulers, Inc., a Tennessee corporation, (2) Alabama Carriers, Inc., a Tennessee corporation, (3) Fleet Movers Inc., a Tennessee corporation (collectively “TSH & Co.”), for total consideration of $74.9 million in cash and 972,680 shares of Daseke common stock with a value of approximately $12.0 million at the time (the “Transaction”).
TSH & Co. has a 1,100 flatbed-focused fleet with a 100% asset-light operating model and operations throughout the East Coast and Southeast as well as Mexico. TSH & Co. generated $213.4 million and $171.8 million in revenues for the year ended December 31, 2016 and for the nine months ended September 30, 2017, respectively.
The unaudited pro forma combined financial statements have been presented for illustrative purposes only and are not intended to represent or be indicative of what the combined company’s financial position or results of operations actually would have been had the Transaction been completed as of the dates indicated. In addition, the unaudited pro forma combined financial information does not purport to project the future financial position or operating results of the combined company. The unaudited pro forma combined financial information does not include the impact of any revenue, cost or other operating synergies that may result from the Transaction.
The pro forma adjustments are based upon information and assumptions available at the time of the filing of the Current Report on Form 8-K/A to which these unaudited pro forma combined financial statements are filed as Exhibit 99.3 (the “Current Report”). The pro forma combined financial information is derived from and should be read in conjunction with (i) the consolidated financial statements and related footnotes for the year ended December 31, 2016 as set forth in Daseke’s Current Report on Form 8-K/A filed March 16, 2017, (ii) the unaudited consolidated financial statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations, which appear in Daseke’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, (iii) the combined financial statements of TSH & Co., which are filed as Exhibits 99.1 and 99.2 to the Current Report.
DASEKE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
As of September 30, 2017
(in thousands)
|
|
|
|
TSH & Co |
|
Pro Forma |
|
Footnote |
|
Pro Forma |
| |||||
|
ASSETS |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Current assets: |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Cash and cash equivalents |
|
$ |
112,510 |
|
$ |
415 |
|
$ |
63,700 |
|
(3)(8)(9)(10) |
|
$ |
176,625 |
|
|
Accounts receivable, net |
|
106,081 |
|
21,674 |
|
— |
|
|
|
127,755 |
| ||||
|
Total other current assets |
|
33,628 |
|
5,234 |
|
— |
|
|
|
38,862 |
| ||||
|
Total current assets |
|
252,219 |
|
27,323 |
|
63,700 |
|
|
|
343,242 |
| ||||
|
Property and equipment, net |
|
369,199 |
|
27,143 |
|
4,432 |
|
(1)(7) |
|
400,774 |
| ||||
|
Intangible assets, net |
|
77,541 |
|
— |
|
— |
|
|
|
77,541 |
| ||||
|
Goodwill |
|
139,889 |
|
— |
|
56,901 |
|
(4) |
|
196,790 |
| ||||
|
Other long-term assets |
|
18,573 |
|
3,375 |
|
— |
|
|
|
21,948 |
| ||||
|
Total assets |
|
$ |
857,421 |
|
$ |
57,841 |
|
$ |
125,033 |
|
|
|
$ |
1,040,295 |
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Current liabilities: |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Checks outstanding in excess of bank balances |
|
$ |
1,479 |
|
$ |
— |
|
$ |
— |
|
|
|
$ |
1,479 |
|
|
Accounts payable |
|
12,493 |
|
1,364 |
|
— |
|
|
|
13,857 |
| ||||
|
Accrued expenses and other liabilities |
|
24,660 |
|
5,544 |
|
5,455 |
|
(11) |
|
35,659 |
| ||||
|
Accrued payroll, benefits and related taxes |
|
12,027 |
|
— |
|
— |
|
|
|
12,027 |
| ||||
|
Accrued insurance and claims |
|
10,248 |
|
— |
|
— |
|
|
|
10,248 |
| ||||
|
Current portion of long-term debt |
|
26,514 |
|
4,840 |
|
1,491 |
|
(10) |
|
32,845 |
| ||||
|
Total current liabilities |
|
87,421 |
|
11,748 |
|
6,946 |
|
|
|
106,115 |
| ||||
|
Line of credit |
|
— |
|
600 |
|
(600 |
) |
(3) |
|
— |
| ||||
|
Long-term debt, net of current portion |
|
395,841 |
|
4,721 |
|
144,621 |
|
(10)(12) |
|
545,183 |
| ||||
|
Deferred tax liabilities |
|
114,900 |
|
75 |
|
9,127 |
|
(2)(13) |
|
124,102 |
| ||||
|
Other long-term liabilities |
|
1,342 |
|
— |
|
— |
|
|
|
1,342 |
| ||||
|
Total liabilities |
|
599,504 |
|
17,144 |
|
160,094 |
|
|
|
776,742 |
| ||||
|
Stockholders’ equity: |
|
|
|
|
|
|
|
|
|
|
| ||||
|
Series A convertible preferred stock |
|
65,000 |
|
— |
|
— |
|
|
|
65,000 |
| ||||
|
Common Stock |
|
4 |
|
2 |
|
(2 |
) |
(5)(6) |
|
4 |
| ||||
|
Additional paid-in-capital |
|
222,102 |
|
5,580 |
|
6,420 |
|
(5)(6) |
|
234,102 |
| ||||
|
Retained earnings (accumulated deficit) |
|
(30,221 |
) |
35,115 |
|
(41,479 |
) |
(5) |
|
(36,585 |
) | ||||
|
Accumulated other comprehensive income (loss) |
|
1,032 |
|
— |
|
— |
|
|
|
1,032 |
| ||||
|
Total stockholders’ equity |
|
257,917 |
|
40,697 |
|
(35,061 |
) |
|
|
263,553 |
| ||||
|
Total liabilities and stockholders’ equity |
|
$ |
857,421 |
|
$ |
57,841 |
|
$ |
125,033 |
|
|
|
$ |
1,040,295 |
|
See accompanying notes to the Unaudited Pro Forma Combined Financial Statements.
DASEKE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Nine Months Ended September 30, 2017
(in thousands, except share and per share amounts)
|
|
|
|
TSH & Co |
|
Pro Forma |
|
Footnote |
|
Pro Forma |
| ||||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Freight |
|
$ |
446,454 |
|
$ |
142,090 |
|
(27,335 |
) |
|
|
$ |
561,209 |
|
|
Brokerage |
|
83,723 |
|
4,575 |
|
30,773 |
|
|
|
119,071 |
| |||
|
Logistics |
|
10,571 |
|
6,996 |
|
(5,318 |
) |
|
|
12,249 |
| |||
|
Fuel surcharge |
|
48,331 |
|
18,159 |
|
(2,377 |
) |
|
|
64,113 |
| |||
|
Total revenue |
|
589,079 |
|
171,820 |
|
(4,257 |
) |
|
|
756,642 |
| |||
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Salaries, wages and employee benefits |
|
174,253 |
|
9,063 |
|
— |
|
|
|
183,316 |
| |||
|
Fuel |
|
64,423 |
|
— |
|
63 |
|
|
|
64,486 |
| |||
|
Operations and maintenance |
|
86,332 |
|
2,884 |
|
1,185 |
|
|
|
90,401 |
| |||
|
Communications |
|
1,491 |
|
— |
|
— |
|
|
|
1,491 |
| |||
|
Purchased freight |
|
148,945 |
|
138,680 |
|
(3,747 |
) |
|
|
283,878 |
| |||
|
Administrative expenses |
|
24,019 |
|
2,903 |
|
(1,211 |
) |
|
|
25,711 |
| |||
|
Sales and marketing |
|
1,425 |
|
— |
|
— |
|
|
|
1,425 |
| |||
|
Taxes and licenses |
|
7,855 |
|
1,073 |
|
— |
|
|
|
8,928 |
| |||
|
Insurance and claims |
|
15,516 |
|
5,714 |
|
(547 |
) |
|
|
20,683 |
| |||
|
Acquisition-related transaction expenses |
|
2,255 |
|
— |
|
— |
|
|
|
2,255 |
| |||
|
Depreciation and amortization |
|
53,758 |
|
5,608 |
|
(287 |
) |
(1) |
|
59,079 |
| |||
|
(Gain) loss on disposition of revenue property and equipment |
|
(513 |
) |
703 |
|
— |
|
|
|
190 |
| |||
|
Total operating expenses |
|
579,759 |
|
166,628 |
|
(4,544 |
) |
|
|
741,843 |
| |||
|
Income from operations |
|
9,320 |
|
5,192 |
|
287 |
|
|
|
14,799 |
| |||
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Interest income |
|
(130 |
) |
(244 |
) |
— |
|
|
|
(374 |
) | |||
|
Interest expense |
|
21,064 |
|
341 |
|
7,805 |
|
(2)(3) |
|
29,210 |
| |||
|
Write-off of unamortized deferred financing fees |
|
3,883 |
|
— |
|
— |
|
|
|
3,883 |
| |||
|
Other |
|
(247 |
) |
(37 |
) |
— |
|
|
|
(284 |
) | |||
|
Total other expense |
|
24,570 |
|
60 |
|
7,805 |
|
|
|
32,435 |
| |||
|
Loss before provision (benefit) for income taxes |
|
(15,250 |
) |
5,132 |
|
(7,518 |
) |
|
|
(17,636 |
) | |||
|
Provision (benefit) for income taxes |
|
(3,448 |
) |
— |
|
(539 |
) |
(5) |
|
(3,987 |
) | |||
|
Net income (loss) |
|
(11,802 |
) |
5,132 |
|
(6,979 |
) |
|
|
(13,649 |
) | |||
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
| |||
|
Unrealized income (loss) on interest rate swaps |
|
52 |
|
— |
|
— |
|
|
|
52 |
| |||
|
Foreign currency translation adjustments |
|
1,032 |
|
— |
|
— |
|
|
|
1,032 |
| |||
|
Comprehensive income (loss) |
|
$ |
(10,718 |
) |
$ |
5,132 |
|
(6,979 |
) |
|
|
$ |
(12,565 |
) |
|
Net income (loss) |
|
(11,802 |
) |
5,132 |
|
(6,979 |
) |
|
|
(13,649 |
) | |||
|
Less dividends to preferred stockholders |
|
(3,725 |
) |
— |
|
— |
|
|
|
(3,725 |
) | |||
|
Net loss attributable to common stockholders |
|
$ |
(15,527 |
) |
$ |
5,132 |
|
(6,979 |
) |
|
|
$ |
(17,374 |
) |
|
Net loss per common share: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Basic and Diluted |
|
$ |
(0.45 |
) |
|
|
|
|
|
|
$ |
(0.49 |
) | |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Basic and Diluted |
|
34,790,861 |
|
|
|
972,680 |
|
(4) |
|
35,763,541 |
| |||
See accompanying notes to the Unaudited Pro Forma Combined Financial Statements.
DASEKE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
For the Year Ended December 31, 2016
(in thousands, except share and per share amounts)
|
|
|
Daseke, Inc 12/31/16 |
|
TSH & Co 12/31/2016 |
|
Pro Forma |
|
Footnote |
|
Pro Forma |
| |||
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Freight |
|
$ |
517,861 |
|
$ |
177,834 |
|
(37,512 |
) |
|
|
$ |
658,183 |
|
|
Brokerage |
|
87,410 |
|
6,200 |
|
38,926 |
|
|
|
132,536 |
| |||
|
Logistics |
|
— |
|
9,167 |
|
(7,190 |
) |
|
|
1,977 |
| |||
|
Fuel surcharge |
|
46,531 |
|
20,178 |
|
(2,633 |
) |
|
|
64,076 |
| |||
|
Total revenue |
|
651,802 |
|
213,379 |
|
(8,409 |
) |
|
|
856,772 |
| |||
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Salaries, wages and employee benefits |
|
197,789 |
|
13,631 |
|
— |
|
|
|
211,420 |
| |||
|
Fuel |
|
66,865 |
|
— |
|
160 |
|
|
|
67,025 |
| |||
|
Operations and maintenance |
|
96,100 |
|
4,861 |
|
1,337 |
|
|
|
102,298 |
| |||
|
Communications |
|
1,618 |
|
— |
|
— |
|
|
|
1,618 |
| |||
|
Purchased freight |
|
154,054 |
|
171,788 |
|
(7,696 |
) |
|
|
318,146 |
| |||
|
Administrative expenses |
|
25,250 |
|
3,827 |
|
(1,759 |
) |
|
|
27,318 |
| |||
|
Sales and marketing |
|
1,743 |
|
— |
|
— |
|
|
|
1,743 |
| |||
|
Taxes and licenses |
|
9,222 |
|
1,476 |
|
— |
|
|
|
10,698 |
| |||
|
Insurance and claims |
|
19,114 |
|
7,584 |
|
(451 |
) |
|
|
26,247 |
| |||
|
Acquisition-related transaction expenses |
|
25 |
|
— |
|
— |
|
|
|
25 |
| |||
|
Depreciation and amortization |
|
67,500 |
|
7,141 |
|
(369 |
) |
(1) |
|
74,272 |
| |||
|
(Gain) loss on disposition of revenue property and equipment |
|
(116 |
) |
633 |
|
— |
|
|
|
517 |
| |||
|
Impairment |
|
2,005 |
|
— |
|
— |
|
|
|
2,005 |
| |||
|
Total operating expenses |
|
641,169 |
|
210,941 |
|
(8,778 |
) |
|
|
843,332 |
| |||
|
Income from operations |
|
10,633 |
|
2,438 |
|
369 |
|
|
|
13,440 |
| |||
|
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Interest income |
|
(44 |
) |
(315 |
) |
— |
|
|
|
(359 |
) | |||
|
Interest expense |
|
23,124 |
|
514 |
|
10,386 |
|
(2)(3) |
|
34,024 |
| |||
|
Other |
|
(331 |
) |
(166 |
) |
— |
|
|
|
(497 |
) | |||
|
Total other expense |
|
22,749 |
|
33 |
|
10,386 |
|
|
|
33,168 |
| |||
|
Loss before provision (benefit) for income taxes |
|
(12,116 |
) |
2,405 |
|
(10,017 |
) |
|
|
(19,728 |
) | |||
|
Provision (benefit) for income taxes |
|
163 |
|
(199 |
) |
99 |
|
(5) |
|
63 |
| |||
|
Net income (loss) |
|
(12,279 |
) |
2,604 |
|
(10,116 |
) |
|
|
(19,791 |
) | |||
|
Other comprehensive income (loss): |
|
|
|
|
|
|
|
|
|
|
| |||
|
Unrealized income (loss) on interest rate swaps |
|
62 |
|
— |
|
— |
|
|
|
62 |
| |||
|
Comprehensive income (loss) |
|
$ |
(12,217 |
) |
$ |
2,604 |
|
(10,116 |
) |
|
|
$ |
(19,729 |
) |
|
Net income (loss) |
|
(12,279 |
) |
2,604 |
|
(10,116 |
) |
|
|
(19,791 |
) | |||
|
Less dividends to preferred stockholders |
|
(4,770 |
) |
— |
|
4,770 |
|
(6) |
|
— |
| |||
|
Net loss attributable to common stockholders |
|
$ |
(17,049 |
) |
$ |
2,604 |
|
(5,346 |
) |
|
|
$ |
(19,791 |
) |
|
Net loss per common share: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Basic and Diluted |
|
$ |
(117.18 |
) |
|
|
|
|
|
|
$ |
(0.63 |
) | |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
|
|
|
| |||
|
Basic and Diluted |
|
145,495 |
|
|
|
31,109,296 |
|
(4)(6) |
|
31,254,791 |
| |||
See accompanying notes to the Unaudited Pro Forma Combined Financial Statements.
DASEKE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
NOTE 1 — Purchase Price
The estimated purchase price and the allocation of the estimated purchase price discussed below are preliminary, and subject to certain post-closing adjustments. A final determination of required adjustments will be made based upon final evaluation of the fair value of tangible and identifiable intangible assets acquired and liabilities assumed.
The following table summarizes the purchase price allocation adjustments of the assets acquired and liabilities assumed. The final allocation of the purchase price will be determined at a later date and is dependent on a number of factors, including the final evaluation of the fair value of tangible and identifiable intangible assets acquired and liabilities assumed. Final adjustments, including increases and decreases to depreciation and amortization resulting from the allocation of the purchase price to amortizable tangible and intangible assets, may be material. Adjustments to the fair value of tangible and intangible assets acquired and liabilities assumed will impact the value of goodwill recognized in the Transaction, and the adjustment to goodwill may be material. For illustrative purposes, the preliminary allocation of the purchase price to the fair value of assets acquired and liabilities assumed was as follows:
|
Cash |
|
$ |
284 |
|
|
Accounts receivable |
|
20,207 |
| |
|
Prepaid & Other |
|
10,421 |
| |
|
Other assets |
|
19,049 |
| |
|
Property and equipment |
|
8,705 |
| |
|
Goodwill |
|
56,901 |
| |
|
Deferred tax liability |
|
(9,742 |
) | |
|
Total liabilities |
|
(13,894 |
) | |
|
|
|
$ |
91,931 |
|
NOTE 2 — PRO FORMA ADJUSTMENTS, AS PRESENTED ON THE SEPTEMBER 30, 2017 BALANCE SHEET
The pro forma adjustments are based upon information and assumptions available at the time of the filing of the Current Report. The unaudited pro forma combined balance sheet includes adjustments that are factually supportable and directly attributable to the transaction regardless of whether they will have a continuing impact or were non-recurring.
Represents adjustments for the Transaction as follows:
1. Represents an increase of $4.1 million in property and equipment to appraised values.
2. Represents increase in deferred tax liabilities due to the increase in property and equipment values and deferred taxes on non-deductible goodwill of $9.7 million.
3. Represents the payoff of line of credit of $0.6 million.
4. Recognition of the preliminary goodwill resulting from the pro forma allocation of the purchase price as if the Transaction had occurred using a preliminary goodwill estimate. Goodwill resulting from the Transaction is not amortized, and will be assessed for impairment at least annually in accordance with ASC 350. The goodwill as a result of the Transaction is not deductible for income tax purposes.
5. Represents adjustment to eliminate TSH & Co. common stock, additional paid-in capital, and retained earnings of $2 thousand, $5.6 million, and $35.1 million, respectively.
6. Represents 972,680 shares of common stock issued to the sellers of TSH & Co. resulting in adjustments to common stock, and additional paid-in capital of $97 dollars and $12.0 million, respectively.
7. Adjustment to reflect a decrease in accumulated depreciation of $287 thousand after the adjustment for the increase in fair value of property and equipment, reduced by the impact of adjustments to the remaining useful lives of the assets.
8. Represents cash consideration paid in the transaction of $80.0 million.
DASEKE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
9. Represents elimination of historical cash balances not received by Xxxxxx in the transaction of $131 thousand.
Other adjustments are as follows:
10. Represents increase in term loan of $150.0 million, net of deferred finance fees of $4.4 million and interest expense of $1.8 million, resulting in net cash of $143.8 million.
11. Represents additional interest on the term loan advance at 6.5% of $5.5 million, net of $30 thousand interest expense on debt paid off in the Transaction.
12. Adjustment to reflect amortization of deferred loan fees associated with the term loan advance of $.5 million.
13. Adjustment to reflect $1.7 million tax benefit on the impact of pro forma adjustments, offset by $1.2 million of tax expense to reflect the conversion from Subchapter S to C corporations in the Transaction.
NOTE 3 — PRO FORMA ADJUSTMENTS, AS PRESENTED IN THE STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2017
The unaudited pro forma combined statements of operations include adjustments which give effect to the events that are factually supportable, directly attributable to the Transaction, and are expected to have a continuing impact on Daseke and the Transaction on a consolidated basis.
(a) Certain reclassifications have been made to the TSH & Co. historical combined statement of operations to conform to Xxxxxx’s presentation.
Represents adjustments for the Transaction as follows:
1. Represents adjustment to record a decrease in depreciation expense of $287 thousand on the purchase price allocation for the fair value of assets of TSH & Co. as adjusted for the remaining useful lives of the assets.
2. Represents incremental interest expense of $7.3 million from the advance on Xxxxxx’s term loan as if the advance occurred on January 1, 2016 partially offset by $30 thousand reversal of interest on existing TSH & Co. debt upon assumed refinance of debt on January 1, 2016 utilizing funds from the advance on the Daseke term loan.
3. Represents amortization of $0.5 million of deferred finance fees incurred in term loan increase.
4. Represents 972,680 shares of common stock issued to the sellers of TSH & Co.
5. Represents $1.7 million tax benefit on the impact of pro forma adjustments, offset by $1.2 million of tax expense to reflect the conversion from Subchapter S to C corporations in the Transaction, calculated using Xxxxxx’s effective tax rate of 22.6% for the nine months ended September 30, 2017.
DASEKE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(in thousands, except share and per share data)
NOTE 4 — PRO FORMA ADJUSTMENTS, AS PRESENTED IN THE STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2016
The unaudited pro forma combined statements of operations include adjustments which give effect to the events that are factually supportable, directly attributable to the Transaction, and are expected to have a continuing impact on Daseke and the Transaction on a consolidated basis.
(a) Certain reclassifications have been made to the TSH & Co. historical combined statement of operations to conform to Xxxxxx’s presentation.
Represents adjustments for the Transaction as follows:
1. Represents adjustment to record a pro forma decrease to depreciation expense of $369 thousand on the purchase price allocation for the fair value of assets of TSH & Co. as adjusted for the remaining useful lives of the assets.
2. Represents incremental interest expense of $9.7 million from the advance on Xxxxxx’s term loan as if the advance occurred on January 1, 2016 partially offset by $60 thousand reversal of interest on existing TSH & Co. debt upon assumed refinance of debt on January 1, 2016 utilizing funds from the advance on the Daseke term loan.
3. Represents amortization of $0.7 million of deferred finance fees incurred on the term loan increase.
4. Represents 972,680 shares of common stock issued to the sellers of TSH & Co.
5. Represents $131 thousand tax expense on impact of pro forma adjustments, offset by $31 thousand tax benefit to reflect the conversion from Subchapter S to C corporations in the Transaction, calculated using Xxxxxx’s effective tax rate of (1.3%) for the year ended December 31, 2016.
6. Represents conversion of 145,495 shares of common stock and 64,500 shares of Series B Convertible Preferred Stock of pre-merger Daseke at a conversion of 144.2 shares for each share outstanding, resulting in 30,282,111 shares of common stock. Dividends to preferred stockholders of $4.8 million were removed from the calculation of basic and diluted earnings per share due to the conversion of the Series B preferred stock to common.
