Exhibit 99.2
American Seafoods Group LLC
Unaudited Pro Forma Condensed Consolidated Financial Statements
As of September 30, 2002 and for the year ended December 31, 2001 and
nine months ended September 30, 2002
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements have been derived by the application of pro forma adjustments to the historical consolidated financial statements of American Seafoods Group LLC (ASG) and Southern Pride Catfish Company, Inc. (SPC). Effective as of December 16, 2002, ASG purchased substantially all of the assets of SPC, an Alabama corporation engaged in the business of catfish harvesting, processing and distribution. The acquired assets include, among other things, certain real property, fixtures, equipment, accounts receivable, intellectual property, customer and other contracts, and cash on hand. The purchase price was approximately $41.8 million in cash. In addition, ASG assumed substantially all of the liabilities of SPC, other than certain specifically excluded liabilities, and paid off bank debt of SPC in the amount of $2.35 million. The acquisition was financed with additional indebtedness of $50 million under ASG’s senior credit facility. The unaudited pro forma condensed consolidated balance sheet gives effect to the acquisition of substantially all of the assets and liabilities of SPC (the Acquisition) as if the Acquisition had occurred on September 30, 2002. Allocations of costs of the Acquisition are preliminary. The unaudited pro forma condensed consolidated statements of operations give effect to the Acquisition as if the Acquisition had been consummated on January 1, 2001.
Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with these unaudited pro forma condensed consolidated financial statements. Management believes that the assumptions used provide a reasonable basis for presenting the significant effects directly attributable to the Acquisition; however, the unaudited pro forma condensed consolidated financial statements should not be considered indicative of actual results that would have been achieved had the Acquisition been consummated on the date or for the periods indicated and do not purport to indicate consolidated balance sheet data or results of operations as of any future date or for any future period.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the SPC financial statements and related notes included in this Form 8-K/A and the ASG unaudited condensed consolidated financial statements and related notes included in ASG’s Form 10-Q as of and for the nine months ended September 30, 2002 and the ASG financial statements and related notes as of and for the year ended December 31, 2001, included in ASG’s registration statement on Form S-4 dated October 16, 2002.
AMERICAN SEAFOODS GROUP LLC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 2002
(In thousands)
ASG | SPC | Pro Forma Adjustments | Pro Forma | ||||||||||||
Assets: | |||||||||||||||
Cash | $ | 376 |
| $ | 1,292 | $ | 4,281 | (a) | $ | 5,949 |
| ||||
Receivables, net |
| 36,610 |
|
| 8,170 |
| 44,780 |
| |||||||
Inventories |
| 49,235 |
|
| 2,637 |
| 237 | (b) |
| 52,109 |
| ||||
Other current assets |
| 26,599 |
|
| 385 |
| 26,984 |
| |||||||
Total current assets |
| 112,820 |
|
| 12,484 |
| 4,518 |
|
| 129,822 |
| ||||
Property, vessels, plant, and equipment, net |
| 223,112 |
|
| 16,191 |
| 10,052 | (c) |
| 249,355 |
| ||||
Other assets: | |||||||||||||||
Deferred financing fees, net |
| 32,624 |
|
| — |
| 963 | (d) |
| 33,587 |
| ||||
Other noncurrent assets, net |
| 112,506 |
|
| — |
| 4,904 | (e) |
| 117,410 |
| ||||
Goodwill, net |
| 33,021 |
|
| — |
| 6,066 | (f) |
| 39,087 |
| ||||
Total assets | $ | 514,083 |
| $ | 28,675 | $ | 26,503 |
| $ | 569,261 |
| ||||
Liabilities and members’ deficit / stockholder’s equity: | |||||||||||||||
Current portion of long-term debt and notes payable | $ | 15,735 |
| $ | 2,350 | $ | | | $ | 15,735 |
| ||||
Other current liabilities |
| 49,898 |
|
| 5,456 |
| (278 | )(h) |
| 55,076 |
| ||||
Total current liabilities |
| 65,633 |
|
| 7,806 |
| (2,628 | ) |
| 70,811 |
| ||||
Long-term debt, net of current portion |
| 489,574 |
|
| — |
| 50,000 | (i) |
| 539,574 |
| ||||
Other non-current liabilities |
| 18,927 |
|
| — |
| 18,927 |
| |||||||
Members’ deficit / stockholder’s equity |
| (60,051 | ) |
| 20,869 |
| (20,869 | ) |
| (60,051 | ) | ||||
Total liabilities and members’ deficit/ stockholder’s equity | $ | 514,083 |
| $ | 28,675 | $ | 26,503 |
| $ | 569,261 |
| ||||
AMERICAN SEAFOODS GROUP LLC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2001
(In thousands)
ASG | SPC | Pro Forma Adjustments | Pro Forma | |||||||||||||
Revenue | $ | 336,839 |
| $ | 101,730 |
| $ | 438,569 |
| |||||||
Cost of sales |
| 209,600 |
|
| 79,641 |
|
| (476 | )(j) |
| 290,556 |
| ||||
| 1,791 | (k) | ||||||||||||||
Gross profit |
| 127,239 |
|
| 22,089 |
|
| (1,315 | ) |
| 148,013 |
| ||||
Selling, general and administrative expenses |
| 59,855 |
|
| 17,992 |
|
| (2,447 | )(l) |
| 75,400 |
| ||||
Amortization and depreciation of other assets |
| 33,877 |
|
| 388 |
|
| 520 | (m) |
| 34,785 |
| ||||
Operating profit |
| 33,507 |
|
| 3,709 |
|
| 612 |
|
| 37,828 |
| ||||
Interest income (expense), net |
| (34,872 | ) |
| 50 |
|
| (2,524 | )(n) |
| (37,484 | ) | ||||
| (138 | )(o) | ||||||||||||||
Other income (expense), net |
| 17,641 |
|
| (54 | ) |
| 17,587 |
| |||||||
Income before income taxes |
| 16,276 |
|
| 3,705 |
|
| (2,050 | ) |
| 17,931 |
| ||||
Income tax benefit |
| (13 | ) |
| — |
|
| — |
|
| (13 | ) | ||||
Net income | $ | 16,289 |
| $ | 3,705 |
| $ | (2,050 | ) | $ | 17,944 |
| ||||
AMERICAN SEAFOODS GROUP LLC
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2002
(In thousands)
ASG | SPC | Pro Forma Adjustments | Pro Forma | |||||||||||||
Revenue | $ | 251,235 |
| $ | 74,813 |
| $ | 326,048 |
| |||||||
Cost of sales |
| 143,451 |
|
| 57,100 |
|
| (462 | )(j) |
| 201,432 |
| ||||
| 1,343 | (k) | ||||||||||||||
Gross profit |
| 107,784 |
|
| 17,713 |
|
| (881 | ) |
| 124,616 |
| ||||
Selling, general and administrative expenses |
| 58,318 |
|
| 12,776 |
|
| 69 | (l) |
| 71,163 |
| ||||
Amortization and depreciation of other assets |
| 4,986 |
|
| 234 |
|
| 390 | (m) |
| 5,610 |
| ||||
Operating profit |
| 44,480 |
|
| 4,703 |
|
| (1,340 | ) |
| 47,843 |
| ||||
Interest income (expense), net |
| (27,749 | ) |
| 23 |
|
| (2,019 | )(n) |
| (29,848 | ) | ||||
| (103 | )(o) | ||||||||||||||
Other income (expense), net |
| (551 | ) |
| (103 | ) |
| (654 | ) | |||||||
Income before income taxes |
| 16,180 |
|
| 4,623 |
|
| (3,462 | ) |
| 17,341 |
| ||||
Income tax provision |
| 48 |
|
| — |
|
| 48 |
| |||||||
Income from continuing operations |
| 16,132 |
|
| 4,623 |
|
| (3,462 | ) |
| 17,293 |
| ||||
Discontinued operations |
| (445 | ) |
| — |
|
| (445 | ) | |||||||
Net income | $ | 15,687 |
| $ | 4,623 |
| $ | (3,462 | ) | $ | 16,848 |
| ||||
AMERICAN SEAFOODS GROUP LLC
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands)
As of September 30, 2002 and for the Year Ended December 31, 2001
and Nine Months Ended September 30, 2002
These pro forma adjustments take into consideration that ASG management has allocated the cost of acquiring SPC to the assets acquired and liabilities assumed based on their estimated fair values at the date of the Acquisition. These estimates are preliminary and actual results could differ from these estimates. Asset lives were estimated considering provisions that impact the useful life as well as demand, competition and other factors.
| (a) | Adjustment for the cash retained by ASG of $4,886 from the proceeds of the debt used to fund the Acquisition less $605 of transaction costs paid by ASG. |
| (b) | Inventories purchased as part of the Acquisition were recorded at estimated selling prices less the sum of costs of disposal and a reasonable profit allowance for the selling effort. |
| (c) | Property, plant, and equipment purchased as part of the Acquisition were recorded at amounts based on estimates of fair value. |
| (d) | Financing fees associated with the additional funding used to complete the acquisition were recorded as deferred financing fees based on amounts incurred. |
| (e) | Other non-current assets include tradename, customer relationships and a non-compete agreement at estimated fair values. |
| (f) | Goodwill represents the excess of cost over the fair value of net assets purchased as part of the Acquisition. The goodwill reflected on this pro forma balance sheet differs from the amount that will actually be recorded because the pro forma balance sheet is as of September 30, 2002 whereas the acquisition closed on December 16, 2002 . |
| (g) | At closing, ASG repaid the existing SPC debt balance. |
| (h) | The contingent liability relating to the National Labor Relations Board matter was not assumed as part of the Acquisition. |
| (i) | The Acquisition was funded by debt of $50,000. |
| (j) | Adjustment for the amounts paid to the SPC selling shareholder for catfish purchases in excess of amounts that would be due based on a catfish supply agreement entered into contemporaneously with the Acquisition. |
| (k) | Adjustment is to adjust for additional depreciation of production-related assets resulting from the step-up to fair values. |
| (l) | Adjustment for the difference between historical compensation and bonuses paid to the SPC selling shareholder and the amounts to be paid to the SPC selling shareholder subsequent to the Acquisition based on an employment agreement entered into contemporaneously with the Acquisition. |
AMERICAN SEAFOODS GROUP LLC
NOTES TO UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
(Dollar amounts in thousands)
| (m) | Adjustment for amortization of the fair value of customer relationships and the tradename over their estimated lives of ten years and amortization of the non-compete agreement over the contractual life of five years. |
| (n) | Adjustment for interest cost of the funds borrowed to complete the acquisition at 5.2% and 5.5% for the year ended December 31, 2001 and nine months ended September 30, 2002, respectively. These interest rates are based on the average interest rates on the outstanding ASG senior notes. Interest expense of $76 and $44, respectively, was eliminated as it related to existing SPC debt that was repaid as part of the Acquisition. A change of 1/8% in the interest rate would result in a change to interest expense of $63 for the year ended December 31, 2001 and $47 for the nine months ended September 30, 2002. |
| (o) | Adjustment for amortization of the deferred financing fees over the remaining term of the debt through its maturity date of March 31, 2009, using the straight-line method, which approximates the effective interest method for the periods presented. |
| (p) | SPC incurred and expensed approximately $350 of costs associated with the Acquisition during the nine months ended September 30, 2002. There is no pro forma adjustment for these costs because they will not have a continuing impact. |
| (q) | Inventories purchased in connection with the Acquisition were recorded at estimated selling prices less the sum of costs of disposal and a reasonable profit allowance for the selling effort. The expensing of the inventory step-up of $237 is not reflected as a pro forma adjustment because it will not have a continuing impact. |
