EX-99.3 5 j8745901ex99-3.htm UNAUDITED PRO FORMA FINANCIAL STATEMENTS UNAUDITED PRO FORMA FINANCIAL STATEMENTS

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

  (1)   Unaudited Pro Forma Condensed Consolidated Balance Sheet as of November 30, 2000.
 
  (2)   Notes to Unaudited Pro Forma Condensed Consolidated Balance Sheet.
 
  (3)   Unaudited Pro Forma Condensed Consolidated Statement of Operations for the year ended August 31, 2000.
 
  (4)   Unaudited Pro Forma Condensed Consolidated Statement of Operations for the Three-Month Period Ended November 30, 2000.
 
  (5)   Notes to Unaudited Pro Forma Condensed Consolidated Statements of Operations.

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PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

      The following unaudited pro forma condensed consolidated financial statements have been prepared to give the effect to the acquisition of substantially all of the assets and the assumption of certain liabilities of Consumer Cap Corporation (“Consumer”) by a wholly-owned subsidiary of Portola Packaging, Inc. (“Portola”). These pro forma financial statements do not purport to be indicative of the consolidated financial position or results of operations for future periods or the results that actually would have been realized had Portola and Consumer been a consolidated company during the specified periods.

      The acquisition of Consumer was accounted for using the purchase method of accounting pursuant to which the purchase price at closing was allocated to the tangible and intangible assets and liabilities assumed based on their estimated fair values. The purchase allocations were made based upon valuations and other studies that have been completed.

      The unaudited pro forma condensed consolidated financial statements, including the notes thereto, are qualified in their entirety by reference to, and should be read in conjunction with the historical consolidated financial statements and the notes thereto of Portola which were previously reported in Portola’s Annual Report on Form 10-K for the year ended August 31, 2000 and the Quarterly Report on Form 10-Q for the quarter ended November 30, 2000, and the financial statements of Consumer for the eleven-month period ended November 30, 2000 included elsewhere in this Form 8-K/A.

      The unaudited pro forma condensed consolidated balance sheet was prepared as if the acquisition had occurred on November 30, 2000, combining both Portola’s and Consumer’s financial position as of November 30, 2000, and the Consumer financial information as of November 30, 2000. The unaudited pro forma condensed consolidated statements of operations for the year ended August 31, 2000 and the three-month period ended November 30, 2000 were prepared as if the acquisition had occurred on September 1, 1999. To prepare the unaudited pro forma condensed consolidated statements of operations for the year ended August 31, 2000, Portola’s statement of operations for the year ended August 31, 2000 has been combined with Consumer’s statement of operations for the eleven-month period ended November 30, 2000. To prepare the unaudited pro forma condensed consolidated statement of operations for the three-month period ended November 30, 2000, Portola’s statement of operations for the three-month period ended November 30, 2000 was combined with Consumer’s statement of operations for the three-month period ended November 30, 2000.

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PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

November 30, 2000
(in thousands)

                                                 
Pro Forma Portola
Portola Consumer Adjustments Pro Forma
Current assets:
Cash and cash equivalents $ 3,298 $ 75 $ — $ 3,373
Accounts receivable, net 24,030 1,158 — 25,188
Inventories 13,944 1,070 — 15,014
Other current assets 1,361 21 — 1,382
Deferred income taxes 2,862 — — 2,862
Total current assets 45,495 2,324 47,819
 
Property, plant and equipment, net 80,408 4,472 (71 ) (3 ) 84,809
Goodwill, net 12,492 — — 12,492
Debt financing costs, net 2,215 — — 2,215
Patents, net 2,957 — 1,800 (3 ) 4,757
Investment in/advances to unconsolidated affiliates, net 586 — — 586
Other assets, net 1,201 24 1,812 (3 ) 3,037
Total assets $ 145,354 $ 6,820 $ 3,541 $ 155,715
 
Current liabilities:
Current portion of long-term debt $ 241 $ 2,931 $ (2,749 ) (4 ) $ 423
Revolving line of credit — 1,460 (1,460 ) (4 ) —
Accounts payable 11,485 2,063 475 (7 ) 14,023
Book overdraft — 35 — 35
Due to related parties — 1,020 (1,020 ) (4 ) —
Accrued liabilities 9,438 665 (637 ) (4 ) 9,466
Accrued compensation 3,986 142 — 4,128
Accrued interest 1,966 212 (212 ) (4 ) 1,966
Accrued royalties — 198 — 198
Total current liabilities 27,116 8,726 (5,603 ) 30,239
 
452 (5 )
Long-term debt, less current portion 135,919 826 4,474 (4 ) 141,671
Other long term obligations 1,006 — 636 (6 ) 1,642
Deferred income taxes 2,127
 —
 —
 2,127
Total liabilities 166,168 9,552 (41 ) 175,679
 
Minority interest 88 — — 88
Redeemable warrants to purchase Class A
Common Stock		 12,767 — — 12,767
Redeemable preferred stock — 5,881 (5,881 ) (1 ) —
300 (4 )
550 (2 )
Total common stock and other shareholders’ equity (deficit) (33,669 ) (8,613 ) 8,613 (1 ) (32,819 )
Total liabilities, minority interest, redeemable warrants, redeemable preferred stock, common stock and other shareholders’ equity (deficit) $ 145,354 $ 6,820 $ 3,541 $ 155,715

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED BALANCE SHEET

November 30, 2000
(in thousands)

      The unaudited pro forma condensed consolidated balance sheet gives effect to the following unaudited pro forma adjustments:

  1.   Adjustment to eliminate Consumer’s redeemable preferred stock, convertible preferred stock and shareholders’ deficit not acquired in connection with purchase accounting.
 
  2.   Adjustment to record the fair value of common stock of Portola issued for the purchase of Consumer.
 
  3.   Adjustments to reflect the allocation of the purchase price for Consumer of $9,300 and $475 in acquisition costs, in accordance with the purchase method of accounting as follows:

              Purchase Price:

         
Issuance of common stock of Portola for purchase of Consumer $ 550
Adjustment to record issuance of non-compete agreements (see Note 5) 452
Estimated acquisition costs (see Note 7) 475
1,477
 
Plus: Assumption of Consumer’s liabilities 9,552
Less: Fair market value adjustment of liabilities assumed (see Note 4) (1,304 )
$ 9,725

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              Allocation of Purchase Price:

         
Purchase Price $ 9,725
Less: Fair market value of liabilities assumed and extinguished by Portola (see Note 4) (6,078 )
Less: Fair market value of remaining liabilities assumed by Portola (2,170 )
$ 1,477
 
Existing net book value of asset acquired $ (2,732 )
Plus: Fair market value adjustment of liabilities assumed (see Note 4) 1,304
Plus: Increase in patents 1,800
Plus: Increase in other identifiable intangible assets 1,812
Less: Accrued liabilities for exit costs (see Note 6) (636 )
Less: Decrease in book value of property, plant and equipment to estimated fair market value (71 )
$ 1,477

  4.   Adjustments to reflect certain of Consumer’s long-term debt ($2,749), revolving line of credit borrowing ($1,460), accrued interest ($212), accrued expenses ($637) and due to related parties ($1,020) to be paid-off by Portola and incurrence of new debt in the amount of $4,474 and issuance of common stock of Portola of $300 to extinguish these debt obligations of Consumer.
 
      The difference between the total debt obligations of Consumer assumed by Portola of $6,078 and the amount extinguished through the pay-off of the debt or issuance of common stock of Portola in exchange for the debt obligation of $4,774 totaled $1,304.
 
  5.   Adjustment to record the liability in the amount of $452 associated with the issuance of non-compete agreements in connection with the purchase of Consumer.
 
  6.   Adjustment to record estimated exit costs of $636 for closing of facilities purchased from Consumer.
 
  7.   Adjustment to record estimated acquisition costs of $475 incurred in connection with the purchase of Consumer.

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PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS

For the Year Ended August 31, 2000
(in thousands)

                                           
Pro Forma Portola
Portola Consumer Adjustments Pro Forma
Sales $ 203,031 $ 9,110 $ — $ 212,141
Cost of sales 156,406
 8,827
 (152
 ) (4 ) 165,081
    Gross profit 46,625 283 152 47,060
 
Selling, general and administrative 30,379 2,580 — 32,959
Research and development 2,922 — — 2,922
113 (1 )
Amortization of intangibles 3,457 — 377 (1 ) 3,947
Restructuring costs 493
 —
 —
 493
37,251
 2,580
 490
 40,321
    Income (loss) from operations 9,374 (2,297 ) (338 ) 6,739
 
Other (income) expense:
    Interest income (75 ) (6 ) — (81 )
(370 ) (2 )
    Interest expense 14,486 508 218 (3 ) 14,842
    Amortization of debt financing costs 428 — — 428
    Minority interest (118 ) — — (118 )
    Equity losses of unconsolidated affiliates, net 469 — — 469
    Loss (gain) from sale of property, plant and equipment and securities 106 — — 106
    Other (income) expense, net (14 ) — — (14 )
15,282 502 (152 ) 15,632
    Loss before income taxes (5,908 ) (2,799 ) (186 ) (8,893 )
Income tax benefit (2,165 ) — — (5 ) (2,165 )
Net loss $ (3,743 ) $ (2,799 ) $ (186 ) $ (6,728 )
 
Redeemable preferred stock dividends — (563 ) — (563 )
Net loss applicable to common stock $ (3,743 ) $ (3,362 ) $ (186 ) $ (7,291 )
 
Number of shares used in computing per share amounts 12,145
 12,266
Basic and diluted loss per common share $ (0.31 ) $ (0.60 )

      The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PORTOLA PACKAGING, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS

For the Three-Month Period Ended November 30, 2000
(in thousands)

                                           
Pro Forma Portola
Portola Consumer Adjustments Pro Forma
Sales $ 49,462 $ 2,691 $ — $ 52,153
Cost of sales 39,089
 2,623
 (42
 ) (4 ) 41,670
    Gross profit 10,373 68 42 10,483
Selling, general and administrative 7,042 391 — 7,433
Research and development 694 — — 694
28 (1 )
Amortization of intangibles 860 — 94 (1 ) 982
Restructuring costs 1,856
 —
 —
 1,856
10,452
 391
 122
 10,965
    Loss from operations (79 ) (323 ) (80 ) (482 )
 
Other (income) expense:
    Interest income (25 ) — — (25 )
(94 ) (2 )
    Interest expense 3,703 149 59 (3 ) 3,817
    Amortization of debt financing costs 131 — — 131
    Minority interest (73 ) — — (73 )
    Loss (gain) from sale of property, plant and equipment and securities (1,249 ) — — (1,249 )
    Other (income) expense, net 133
 —
 —
 133
2,620 149 (35 ) 2,734
    Loss before income taxes (2,699 ) (472 ) (45 ) (3,216 )
Income tax benefit (755 ) — — (5 ) (755 )
Net loss $ (1,944 ) $ (472 ) $ (45 ) $ (2,461 )
 
Redeemable preferred stock dividends — (140 ) — (140 )
Net loss applicable to common stock $ (1,944 ) $ (612 ) $ (45 ) $ (2,601 )
 
Number of shares used in computing per share amounts 12,180
 12,301
Basic and diluted loss per common share $ (0.16 ) $ (0.22 )

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

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PORTOLA PACKAGING, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED PRO FORMA
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

For the Year Ended August 31, 2000 and
Three-Month Period Ended November 30, 2000
(in thousands)

      The unaudited pro forma condensed consolidated statements of operations give effect to the following unaudited pro forma adjustments:

  1.   Adjustment to reflect amortization of identifiable intangible assets as follows:
 

                         
Amortization Annual
Period Amount Amortization
Customer list 6 $ 1,000 $ 167
Trade name 3 360 120
Non-compete agreements 5 452 90
$ 1,812 $ 377
 
Patents 16 $ 1,800 $ 113

  2.   Adjustment to eliminate interest expense on revolving line of credit and long-term debt paid-off by Portola at time of closing.
 
  3.   Adjustment to reflect interest expense on borrowings under Portola’s credit facility to finance pay-off of certain of Consumer’s debt obligations at the time of closing as follows:

         
Amount borrowed $ 4,474
Interest rate 9 %

  4.   Adjustment to reflect depreciation expense on property, plant and equipment on new basis.

         
Depreciation expense on old basis $ 1,037
Depreciation expense on new basis 885
Depreciation adjustment 152

  5.   No income tax benefit has been recognized for the net loss of Consumer due to the limitations under Section 382 of the Internal Revenue Code of 1986 as amended and due to Portola's current tax position.

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