EX-99.2 3 file003.txt PRO-FORMA FINANCIALS UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma financial information for the year ended December 31, 2003 and as of and for the three months ended March 31, 2004 has been derived from our audited and unaudited consolidated financial statements as of such date and for such period and gives pro forma effect to (collectively, the "Transactions"): i. the February 2003 acquisition (the "Diamond Acquisition") of substantially all of the assets of Diamond Brands International, Inc. and its subsidiaries ("Diamond") including the related financing; ii. the August 2003 acquisition (the "Lehigh Acquisition") of Lehigh Consumer Products Corporation and its subsidiary ("Lehigh") including the related amendment and restatement of our senior credit facility and issuance of an additional $150 million of term debt thereunder; iii. the September 2003 equity issuance, a portion of the proceeds of which were used to fund a portion of the cash purchase price of USPC (see below); and, iv. the June 2004 acquisition of Bicycle Holding, Inc. and its subsidiaries including The United States Playing Card Company (the "USPC acquisition) and the related second amendment and restatement of our senior credit facility which included the issuance of an additional $116 million of term debt thereunder. The unaudited pro forma financial information is not necessarily indicative of our results of operations or financial position had the events reflected herein actually been consummated at the assumed dates, nor is it necessarily indicative of our results of operations or financial position for any future period. The unaudited pro forma financial information should be read in conjunction with the Jarden consolidated financial statements with the related notes incorporated by reference herein and the Lehigh, Diamond and USPC consolidated financial statements with the related notes incorporated by reference or included herein. The pro forma adjustments related to the purchase price allocations for the USPC Acquisition are preliminary and are subject to revision as additional information becomes available. Revisions to the preliminary purchase price allocations may have a significant impact on the unaudited pro forma information. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 2004 (In thousands)
USPC ACQUISITION JARDEN PRO FORMA PRO FORMA AS REPORTED USPC ADJUSTMENTS COMBINED ----------- ---- ----------- -------- ASSETS Current assets: Cash and cash equivalents............... $ 82,351 $ 1,704 $ (69,700) a $ 14,355 Accounts receivable, net................ 88,579 20,313 108,892 Inventories, net........................ 133,189 18,179 151,368 Other current assets.................... 24,219 2,459 26,6789 ---------- ---------- ---------- ------------ Total current assets................ 328,338 42,655 (69,700) 301,293 Property, plant and equipment, net.......... 72,769 20,376 9,000 b 102,145 Intangibles, net.............................. 82,927 17,596 33,828 c 134,351 Goodwill...................................... 273,665 72,961 95,171 d 441,797 Other assets.................................. 18,429 4,464 (2,535) e 22,358 2,000 f ---------- ---------- ---------- ------------ Total assets.................................. $ 776,128 $ 158,052 $ 67,764 $ 1,001,944 ========== ========== ========== ============ LIABILITIES AND EQUITY Current Liabilities: Short-term debt and current portion long-term debt....................... $ 18,249 $ 12,577 $ (10,589) g 21,397 1,160 h Accounts payable........................ 43,867 6,871 50,738 Other current liabilities............... 51,145 15,205 34,050 i 110,400 10,000 j ---------- ---------- ---------- ------------ Total current liabilities........... 113,261 34,653 34,621 182,535 ---------- ---------- ---------- ------------ Noncurrent liabilities: Long-term debt.......................... 370,615 80,590 (79,090) k 486,955 114,840 h Other noncurrent liabilities............ 32,888 13,842 10,000 j 73,090 16,360 l ---------- ---------- ---------- ------------ Total noncurrent liabilities........ 403,503 94,432 62,110 560,045 Redeemable Common Stock...................... 1,217 (1,217) m Equity...................................... 259,364 27,750 (27,750) m 259,364 ---------- ---------- ---------- ------------ Total liabilities and equity................ $ 776,128 $ 158,052 $ 67,764 $ 1,001,944 ========== ========== ========== ============
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2003 (In thousands, except per share data)
DIAMOND ACQUISITION JARDEN AS PRO FORMA REPORTED DIAMOND (1) ADJUSTMENTS LEHIGH (3) ------------------ ------------------- ------------------ ------------------- Net sales........................................... $ 587,657 $ 6,814 $ 90,681 Costs and expenses: Cost of sales.................................. 362,379 4,649 $ 36 n 63,476 Selling, general and administrative expenses... 131,995 884 3,936 Restricted Stock Charge........................ 21,833 Reorganization costs (2)....................... 1,536 - ------------------ ------------------- ------------------ ------------------- Operating income (loss)............................. 71,450 (255) (36) 23,269 Other expense (income).............................. - - - Interest expense (income), net...................... 19,184 921 (921) o 1,315 155 p 49 q ------------------ ------------------- ------------------ ------------------- Income (loss) before taxes.......................... 52,266 (1,176) 681 21,954 Income tax provision (benefit)...................... 20,488 (194) r (54) ------------------ ------------------- ------------------ ------------------- Net income (loss)................................... $ 31,778 $ (1,176) $ 875 $ 22,008 ================== =================== ================== =================== Basic earnings (loss) per share..................... $ 1.40 Diluted earnings (loss) per share................... $ 1.35 Weighted average shares outstanding: Basic.......................................... 22,663 Diluted........................................ 23,531 LEHIGH USPC ACQUISITION ACQUISITION PRO FORMA PRO FORMA PRO FORMA ADJUSTMENTS USPC (4) ADJUSTMENTS COMBINED --------------------- ----------------- ------------------ ------------- Net sales........................................... $ 123,934 $ 809,086 Costs and expenses: Cost of sales.................................. 248 s 73,786 $ 1,286 aa 505,860 Selling, general and administrative expenses... 652 t 23,415 779 bb 168,086 (128) u (375) v 6,928 w Restricted Stock Charge........................ 21,833 Reorganization costs (2)....................... 1,536 --------------------- ----------------- ------------------ ------------- Operating income (loss)............................. (7,325) 26,733 (2,065) 111,771 Other expense (income).............................. 779 (779) bb - Interest expense (income), net...................... 4,527 x 9,624 500 cc 30,284 (1,315) y (9,258) dd 4,856 ee 467 z 180 ff --------------------- ----------------- ------------------ ------------- Income (loss) before taxes.......................... (11,004) 16,330 2,436 81,487 Income tax provision (benefit)...................... 4,346 r 5,668 1,688 r 31,942 --------------------- ----------------- ------------------ ------------- Net income (loss)................................... $ (15,350) $ 10,662 $ 748 $ 49,545 ===================== ================= ================== ============= Basic earnings (loss) per share..................... $ 1.88 Diluted earnings (loss) per share................... $ 1.82 Weighted average shares outstanding: Basic.......................................... 3,623 gg 26,286 Diluted........................................ 3,623 gg 27,154
(1) The results for Diamond represent Diamond's unaudited actual results for the month ended January 31, 2003, which are not included in Jarden's results (2) On May 22, 2001, Diamond filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. Accordingly, its expenses related to the bankruptcy are included in "Reorganization Costs." (3) The results for Lehigh represent Lehigh's unaudited results for the eight months ended Augst 31, 2004, which are not included in Jarden's results. (4) The results for USPC represent USPC's audited results for the year ended September 28, 2003, which are not included in Jarden's results. UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2004 (In thousands, except per share data)
USPC ACQUISITION JARDEN PRO FORMA PRO FORMA AS REPORTED USPC ADJUSTMENTS COMBINED -------------- -------------- ----------------- ---------------- Net sales....................................... $ 158,324 $30,963 $ 189,287 Costs and expenses: Cost of sales................................ 107,019 17,961 $ 322 aa 125,302 Selling, general and administrative expenses. 33,530 6,539 (51) hh 40,401 383 bb -------------- -------------- ----------------- ---------------- Operating Income (loss)......................... 17,775 6,463 (654) 23,584 Other expense (income) - 383 (383) bb - Interest expense, net........................... 5,620 1,927 125 cc 7,306 (1,877) dd 1,214 ee 297 ff -------------- -------------- ----------------- ---------------- Income (loss) before taxes...................... 12,155 4,153 (30) 16,278 Income tax provision (benefit).................. 4,643 1,492 83 r 6,218 -------------- -------------- ----------------- ---------------- Net income (loss)............................... $ 7,512 $ 2,661 $ (113) $ 10,060 ============== ============== ================= ================ Basic earnings per share........................ $ 0.28 $ 0.37 Diluted earnings per share...................... $ 0.27 $ 0.36 Weighted average shares outstanding: Basic....................................... 27,045 27,045 Diluted..................................... 28,192 28,192
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (In thousands) Balance sheet adjustments: (a) Adjustment to reflect Jarden cash on hand used to fund a portion of the USPC acquisition. (b) Adjustment to reflect the estimated step-up in fair value of USPC manufacturing related machinery and equipment. (c) Adjustment to reflect the estimated step-up in fair value of trademarks to be recorded with the USPC acquisition. Trademarks have indefinite lives and therefore no amortization has been computed in the unaudited pro forma condensed consolidated financial statements. (d) Adjustment to reflect the estimated goodwill to be recorded with the USPC acquisition. (e) Adjustment to eliminate debt acquisition cost related to debt not assumed in the USPC Acquisition. (f) Adjustment to capitalize the debt issuance costs associated with the new senior term debt issued to fund the portion of the cash purchase price of the USPC Acquisition. The costs will be amortized over the term of the debt (approximately 4 years). (g) Adjustment to reflect elimination of USPC short term debt not assumed in the USPC Acquisition. (h) Adjustment to reflect borrowings on Jarden's senior credit facility used to fund the USPC Acquisition. (i) Adjustment to reflect a liability for the exercise of the put/call agreement resulting in the purchase of the remaining 24.6% of the shares of USPC. (j) Adjustment to reflect a liability for the portion of the purchase price withheld from the Sellers of USPC in order to fund potential indemnification claims. (k) Adjustment to reflect elimination of USPC long term debt not assumed in the USPC Acquisition. (l) Adjustments to reflect the deferred tax effect of the estimated step up in net assets of USPC from book value to fair value in conjunction with the USPC Acquisition. (m) Adjustment to reflect elimination of existing stockholders' equity of USPC. Statements of operations adjustments: (n) Adjustment to reflect depreciation expense on the step up in valuation of Diamond's manufacturing related machinery and equipment amortized over an average useful life of seven (7) years. (o) Adjustment to reflect the elimination of Diamond's historical interest expense. (p) Adjustment to reflect interest expense on the drawdown of Jarden's revolving credit facility and the issuance of term debt in order to fund a portion of the cash purchase price of the Diamond Acquisition based upon Jarden's effective borrowing rate on its senior credit facility. The effect of a 1/8% change in interest rates would be $35 per year. (q) Adjustment to reflect the elimination of Jarden's interest income related to cash on hand used to fund a portion of the cash purchase price of the Diamond Acquisition. (r) Adjustment to reflect an effective tax rate of 39.2% during 2003 and 38.2% during 2004 on the pre-tax results of the acquired business and related adjustments based on Jarden's effective tax rate for the period. (s) Adjustment to reflect the depreciation expense on the step up in valuation of Lehigh's manufacturing related machinery and equipment amortized over an average useful life of seven (7) years. (t) Adjustment to reflect rental expense for the Macungie, PA property not purchased with the Lehigh acquisition, but leased from the seller by Jarden in conjunction with the Lehigh Acquisition. (u) Adjustment to reflect the elimination of historical depreciation of the building not purchased in the Lehigh Acquisition. (v) Adjustment to reflect the elimination of Lehigh's historical management fee expense charged from its Parent. The management fee contract is being terminated in conjunction with the Lehigh Acquisition. (w) Adjustment to reflect the elimination of the historical stockholders' appreciation rights plan income. (x) Adjustment to reflect pro forma interest expense relating to: i. the $10 million borrowing under Jarden's revolving credit facility to partially fund the purchase price of the Lehigh acquisition, based upon Jarden's effective borrowing rate for its senior credit facility. ii. the $150 million term loan issued to fund the purchase price of the Lehigh Acquisition, based upon Jarden's effective borrowing rate for its senior credit facility. The effect of a 1/8% change in interest rates would be $200 per year (y) Adjustment to reflect the elimination of Lehigh's historical interest expense. (z) Adjustment to reflect amortization of debt issue costs for new senior term loan issued in conjunction with the Lehigh Acquisition. (aa) Adjustment to reflect depreciation expense on the estimated step up in valuation of USPC manufacturing related machinery and equipment amortized over an estimated useful life of seven (7) years. (bb) Adjustment to reflect the reclassification of USPC's other expense to selling, general and administrative expenses for consistency with Jarden's classification. (cc) Adjustment to reflect amortization of debt issue cost associated with second amended and restated credit facility. (dd) Adjustment to reflect the elimination of USPC's historical interest expense excluding interest expense related to assumed foreign debt. (ee) Adjustment to reflect pro forma interest expense relating to the $116 million borrowing under Jarden's Term Loan B credit facility to fund a portion of the purchase price of the USPC acquisition, based upon Jarden's effective borrowing rate for its senior credit facility. The effect of a 1/8% change in interest rates would be $145 per year. (ff) Adjustment to reflect the elimination of Jarden's interest income related to cash on hand primarily from the equity offering. Such cash was used to fund a portion of the cash purchase price of the USPC Acquisition. (gg) Adjustment to reflect the weighted average effect of 4,830 shares (stock split adjusted) issued on September 30, 2003 in the Company's equity offering. A portion of the cash received for this equity issuance was used to fund a portion of the cash purchase price of USPC. (hh) Adjustment to reflect the elimination of USPC Acquisition costs incurred and expensed by USPC and paid by the Seller at the closing of the USPC acquisition.