EX-7 4 exhibit7-2proforma.txt PRO FORMA FINANCIAL STATEMENTS EXHIBIT 7.2 PRO FORMA FINANCIAL INFORMATION UNAUDITED PRO FORMA FINANCIAL INFORMATION. INTRODUCTION The following Unaudited Pro Forma Condensed Combined Balance Sheet as of September 29, 2001 and Unaudited Pro Forma Condensed Combined Statements of Income for the nine months ended September 29, 2001 and for the fiscal year ended December 30, 2000 give effect to the purchase by Salant Corporation and its wholly-owned subsidiaries (the "Company" or "Salant") of the assets of Axis Clothing Corporation ("Axis"). The Unaudited Pro Forma Condensed Combined Financial Information should be read in conjunction with: (1) the audited financial statements of Axis as of and for the nine months ended September 30, 2001, included as Exhibit 7.1 to this Current Report on Form 8-K; and (2) the Company's Annual Report on Form 10-K as of and for the year ended December 30, 2000 and the Company's Quarterly Report on Form 10-Q as of and for the nine months ended September 29, 2001. The purchase consideration, including estimated fees and expenses, for acquiring Axis will be allocated to the tangible and intangible assets acquired, with the excess cost being allocated to goodwill and presented as an intangible asset. A preliminary allocation of the purchase price of Axis has been reflected in the Unaudited Pro Forma Condensed Combined Financial Information. A final allocation of the purchase price of Axis is ongoing and is dependent on the completion of certain valuations and other studies, which are expected to be completed prior to the end of fiscal 2002. Accordingly, the results of the final allocation could be different from the amounts reflected in these pro forma financial statements. The excess cost over the fair value of the tangible and definite lived intangible assets acquired will not be amortized, but will be assessed for impairment in accordance with Statement of Financial Accounting Standards No. 142. The Unaudited Pro Forma Condensed Combined Financial Statements are provided for illustrative purposes only and do not purport to represent what actual results of operations or financial position would have been had the acquisition of Axis occurred on the respective dates assumed, and are not necessarily indicative of the Company's future operating results. In addition, the unaudited pro forma information gives effect only to adjustments set forth in the accompanying notes thereto and does not reflect management's estimate of any anticipated cost savings or other benefits as a result of the acquisition.
Salant Corporation and Subsidiaries Pro Forma CONDENSED Combined Statement of Income (Unaudited) (Amounts in thousands, except per share data) Year Ended Pro ---------- SALANT AXIS Forma Pro Dec 30, Dec 31, Adjust- Forma 2000 2000 ments Combined ------- -------- ------------ --------- Net sales $ 208,303 $ 29,434 $ 237,737 Cost of goods sold 152,708 18,620 $ 790 (a) 172,118 --------- -------- --------- --------- Gross profit 55,595 10,814 (790) 65,619 Selling, general and administrative expenses (45,188) (7,684) 190 (b) (51,892) 790 (a) Royalty income 750 99 849 Goodwill amortization (519) (519) Other income 213 213 Restructuring reversal 629 629 -------- -------- --------- --------- Income before interest and income taxes 11,480 3,229 190 14,899 Interest income/(expense), net 1,244 (287) (589)(c) 368 -------- --------- --------- --------- Income/(loss) before income taxes 12,724 2,942 (399) 15,267 Income taxes expense 13 67 80 -------- -------- -------- -------- Income/(loss) from continuing operations $ 12,711 $ 2,875 $ (399) $ 15,187 ======== ======== ========= ======== Basic and diluted income per share from continuing operations $ 1.28 $ 1.53 ======== ======== Weighted average common stock Outstanding 9,901 9,901 ======== ========
Salant Corporation and Subsidiaries Pro Forma CONDENSED Combined Statement of Income (Unaudited) (Amounts in thousands, except per share data) Nine Months Ended Pro ----------------- SALANT AXIS Forma Pro Sept 29, Sept 30, Adjust- Forma 2001 2001 ments Combined ------- -------- ------------ --------- Net sales $ 148,574 $ 25,832 $ 174,406 Cost of goods sold 113,559 15,888 $ 613 (a) 130,060 --------- -------- -------- --------- Gross profit 35,015 9,944 (613) (a) 44,346 --------- -------- -------- --------- Selling, general and administrative expenses (35,695) (6,845) 114 (b) (41,813) 613 (a) Royalty income 148 78 226 Goodwill amortization (470) (470) Other expense (26) (26) --------- ------- -------- --------- (Loss)/income before interest and income taxes (1,028) 3,177 114 2,263 Interest income/(expense), net 309 (166) (391)(c) (248) --------- -------- --------- --------- (Loss)/income before income taxes (719) 3,011 (277) 2,015 Income taxes (benefit)/expense (37) 67 30 --------- -------- -------- --------- Net (loss)/income $ (682) $ 2,944 $ (277) $ 1,985 ========= ======== ======== ========= Basic diluted (loss)/income per share $ (0.07) $ 0.20 ========= ========= Weighted average common stock Outstanding 9,901 9,901 ========= =========
Salant Corporation and Subsidiaries PRO FORMA CONDENSED COMBINED BALANCE SHEETS (Unaudited) (Amounts in thousands) Pro SALANT AXIS Forma Pro Sept 29, Sept 30, adjust- Forma 2001 2001 ments ---- ---- ------ Combined ASSETS Current assets: Cash and cash equivalents $ 2,409 $ 49 $ (49)(d) $ 0 (2,409)(e) Accounts receivable, net 34,549 4,550 (4,550)(d) 34,549 Inventories 51,890 2,669 (2,669)(d) 52,424 534 (e) Prepaid expenses and other current assets 6,397 335 (335)(d) 6,649 414 (e) (162)(f) -------- -------- -------- ------------ Total current assets 95,245 7,603 (9,226) 93,622 Property, plant and equipment, net 12,666 304 (304)(d) 12,766 100 (e) Goodwill & Trademarks (Axis) 11,000 (e) 11,631 162 (f) 469 (e) Other assets 15,720 24 (24)(d) 16,120 400 (e) -------- --------- -------- ------------ Total assets $123,631 $ 7,931 $ 2,577 $134,139 ======== ========= ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Loans payable $ 0 $ 0 $ 12,917 (e) $ 10,508 (2,409)(e) Accounts payable 13,048 1,058 (1,058)(d) 13,048 Notes payable - shareholders 471 (471)(d) 0 Liabilities subject to compromise 1,143 1,143 Accrued liabilities 5,499 729 (729)(d) 5,499 Net liabilities of discontinued Operations 749 749 Reserve for business restructuring 830 830 ------- --------- ------------------ -------- Total current liabilities 21,269 2,258 8,250 31,777 Deferred liabilities 5,668 5,668 Shareholders' equity: Common stock 10,000 56 (56)(d) 10,000 Additional paid-in capital 206,040 206,040 Earnings/(deficit) (114,699) 5,617 (5,617)(d) (114,699) Accumulated other comprehensive loss (4,449) (4,449) Less - treasury stock, at cost (198) (198) --------- -------- -------- --------- Total shareholders' equity 96,694 5,673 (5,673) 96,694 --------- -------- -------- --------- Total liabilities and shareholders' equity $ 123,631 $ 7,931 $ 2,577 $ 134,139 ========= ======== ======== =========
NOTES TO THE UNAUDITED PRO FORMA Condensed COMBINED STATEMENTS OF INCOME AND BALANCE SHEET (Unaudited) The unaudited pro forma condensed combined statements of income for the year ended December 30, 2000 and nine months ended September 29, 2001 have been prepared assuming that the acquisition has been consummated as of January 2, 2000 and the unaudited condensed combined balance sheet as of September 29, 2001 was prepared assuming the acquisition was consummated on September 29, 2001. (a) Reclassification of Axis distribution expenses from selling, general and administrative expenses to Cost of Goods Sold to conform with the Salant financial statements presentation. (b) Reversal of depreciation expense for Axis of $215 and $133 for the year ended December 31, 2000 and the nine months ended September 30, 2001, respectively. Depreciation was then recorded based on the fair value of the assets purchased of $25 and $19 for the year ended December 30, 2000 and the nine months ended September 29, 2001, respectively. Amortization of other identified intangibles of $400 is not reflected for the year ended December 30, 2000 and the nine months ended September 29, 2001, respectively as these costs will be fully amortized within one year of the acquisition and do not reflect an ongoing expense. (c) Reversal of interest income that was earned on the cash payout of approximately $12,917 during fiscal year 2000 and on the monthly cash balances for the nine months ended September 29, 2001. The calculation for the loss of interest income was based upon an average interest rate of 4.5% for 2000 and 2.5% for 2001. In addition to the loss of interest income, during several months of 2001, the cash payout exceeded the cash on hand and interest expense was computed at average rate of 5.5% for the projected borrowings. (d) Elimination of the assets, liabilities and equity of Axis in order to allocate the purchase price as discussed in note (e). (e) Recording the assets that were purchased from Axis at their estimated fair market value, including the recording approximately $11,631 of goodwill and other indefinite-lived intangible assets, primarily trademarks. Approximately $400 has been preliminarily allocated to contractual rights and will be amortized during fiscal year 2002. As the acquisition was consummated using cash available as of the closing date, excess cash of the Company has been eliminated and a payable has been reflected as of September 29, 2001 for the balance of the purchase price. (f) Reclassification of direct acquisition costs incurred by the Company in connection with the acquisition from prepaid expenses to purchase price allocated in note (e) above.