Exhibit 99.3
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
Set forth below is unaudited pro forma consolidated financial data for Safety Products Holdings, Inc. (“Safety Products”), as the successor to NSP Holdings L.L.C. (“NSP Holdings”). The unaudited consolidated financial data set forth below were derived by the application of pro forma adjustments to NSP Holdings’ and Safety Products’ historical financial statements.
The unaudited pro forma statement of operations data for the nine months ended October 1, 2005 and the year ended December 31, 2004 give pro forma effect to (1) the offering by Safety Products of $25.0 million 11 3/4% Senior Pay in Kind Notes due 2012 and the application of the net proceeds thereof, (2) the consummation of the acquisition by Safety Products of all the issued and outstanding equity interests of the subsidiaries of NSP Holdings and the related financing transactions (the “Norcross Transaction”), (3) the issuance by NSP Holdings and NSP Holdings Capital Corp. (“NSP Capital”) of $100 million 11 3/4% Senior Pay in Kind Notes due 2012 (the “Existing Holdings Notes”), (4) the assumption by Safety Products of the obligations of NSP Holdings under the Existing Holdings Notes, and (5) the acquisition by Norcross Safety Products L.L.C. (“Norcross”) of The Fibre-Metal Products Company (“Fibre-Metal”) on November 1, 2005 (the “FMP Transaction”), in each case as if these transactions had occurred on January 1, 2004. The unaudited pro forma balance sheet data as of October 1, 2005 presented herein gives pro forma effect to the FMP Transaction, while the other foregoing items occurred prior to October 1, 2005, and are therefore reflected in the October 1, 2005 historical balance sheet.
The unaudited pro forma consolidated balance sheet as of October 1, 2005 has been derived from combining the balance sheets of Safety Products and Fibre-Metal and applying the pro forma adjustments described in the accompanying notes. The unaudited pro forma consolidated statement of operations for the year ended December 31, 2004 has been derived from combining the historical statements of NSP Holdings and Fibre-Metal and applying the pro forma adjustments described in the accompanying notes. The unaudited pro forma consolidated statement of operations for the nine months ended October 1, 2005 has been derived from combining (1) the historical statement of operations for NSP Holdings for the period from January 1, 2005 through July 19, 2005, (2) the historical statement of operations for Safety Products for the period from July 20, 2005 through October 1, 2005, and (3) the historical statement of operations for Fibre-Metal for the nine months ended September 30, 2005 and applying the pro forma adjustments described in the accompanying notes.
The adjustments give pro forma effect to the FMP Transaction, which will be accounted for as a purchase in accordance with Statement of Financial Accounting Standards No. 141, “Business Combinations.” The total purchase price will be allocated to net assets acquired and liabilities assumed based upon estimates of fair value. The pro forma adjustments were based on a preliminary assessment of the fair value of the tangible and intangible assets and liabilities by management. The final purchase price allocation will be based on a formal valuation analysis by an outside appraisal firm and may include an adjustment to the amounts recorded for the value of inventory, property, plant and equipment, identifiable intangible assets and goodwill.
The adjustments to the unaudited pro forma consolidated statements of operations are based upon available information and certain assumptions that Safety Products’ believes are reasonable. You should read the unaudited pro forma consolidated financial data and the accompanying notes in conjunction with the audited historical financial statements and the accompanying notes thereto and the other financial information contained in Safety Products’ Registration Statement on Form S-4 (Registration No. 333-130361).
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF OCTOBER 1, 2005
(in thousands)
| | Safety
Products | | Fibre-
Metal | | Pro Forma
Adjustments | | Safety
Products
Pro Forma | |
Assets | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | | $ | 4,241 | | 3,089 | | $ | (3,064 | )(1) | $ | 4,266 | |
Accounts receivable, net | | 73,919 | | 5,549 | | | | 79,468 | |
Inventories | | 90,479 | | 6,178 | | | | 96,657 | |
Deferred income taxes | | 61 | | — | | | | 61 | |
Prepaid expenses and other current assets | | 2,494 | | 618 | | (300 | )(2) | 2,812 | |
Total current assets | | 171,194 | | 15,434 | | (3,364 | ) | 183,264 | |
| | | | | | | | | |
Property, plant, and equipment, net | | 63,838 | | 5,430 | | (2,397 | )(3) | 66,871 | |
Deferred financing costs, net | | 19,212 | | — | | 1,275 | (4) | 20,487 | |
Goodwill | | 116,817 | | — | | 56,172 | (5) | 172,989 | |
Other intangible assets, net | | 238,405 | | — | | | | 238,405 | |
Other noncurrent assets | | 5,564 | | 1,011 | | (721 | )(2) | 5,854 | |
Total assets | | $ | 615,030 | | $ | 21,875 | | $ | 50,965 | | $ | 687,870 | |
| | | | | | | | | |
Liabilities and equity | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | | 20,667 | | 1,515 | | | | 22,182 | |
Accrued expenses | | 26,809 | | 1,224 | | | | 28,033 | |
Current maturities of long- term obligations | | 938 | | — | | | | 938 | |
Total current liabilities | | 48,414 | | 2,739 | | — | | 51,153 | |
| | | | | | | | | |
Pension, postretirement, and deferred compensation | | 32,571 | | 932 | | (831 | )(6) | 32,672 | |
Long-term obligations | | 373,981 | | 1,806 | | 68,194 | (7) | 443,981 | |
Other noncurrent liabilities | | 1,620 | | — | | | | 1,620 | |
Deferred income taxes | | 50,861 | | — | | | | 50,861 | |
Minority interest | | 175 | | — | | | | 175 | |
| | 459,208 | | 2,738 | | 67,363 | | 529,309 | |
| | | | | | | | | |
Equity: | | | | | | | | | |
Common shares | | 109,670 | | — | | | | 109,670 | |
Contributed capital | | — | | 1,940 | | (1,940 | )(8) | — | |
Accumulated deficit | | (5,023 | ) | 14,679 | | (14,679 | )(8) | (5,023 | ) |
Accumulated other comprehensive income (loss) | | 2,761 | | (221 | ) | 221 | (8) | 2,761 | |
Total equity (deficit) | | 107,408 | | 16,398 | | (16,398 | ) | 107,408 | |
Total liabilities and equity (deficit) | | $ | 615,030 | | $ | 21,875 | | $ | 50,965 | | $ | 687,870 | |
See accompanying notes to the unaudited pro forma consolidated financial information.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
NINE MONTHS ENDED OCTOBER 1, 2005
(in thousands)
| | NSP Holdings
January 1, 2005
through July 19,
2005 | | Safety
Products
July 20,
2005
through
October 1,
2005 | | Combined
Nine
Months
ended
October 1,
2005 | | Fibre-Metal | | Pro Forma
Adjustments | | Safety
Products Pro
Forma | |
Statement of Operations Data: | | | | | | | | | | | | | |
Net sales | | $ | 273,074 | | $ | 85,738 | | $ | 358,812 | | $ | 26,508 | | | | | $ | 385,320 | |
Cost of goods sold | | 171,645 | | 58,271 | | 229,916 | | 13,216 | | $ | (3,257 | )(9) | 241,254 | |
| | | | | | | | | | 1,379 | (10) | | |
Gross profit | | 101,429 | | 27,467 | | 128,896 | | 13,292 | | 1,878 | | 144,066 | |
Operating expenses: | | | | | | | | | | | | | |
Selling | | 26,892 | | 8,413 | | 35,305 | | 1,852 | | | | 37,157 | |
Distribution | | 14,634 | | 4,427 | | 19,061 | | 2,021 | | | | 21,082 | |
General and administrative | | 24,956 | | 7,834 | | 32,790 | | 4,004 | | 434 | (11) | 37,228 | |
Amortization of intangibles | | 329 | | 4,732 | | 5,061 | | — | | 1,442 | (12) | 6,503 | |
Management incentive compensation | | 16,388 | | — | | 16,388 | | — | | | | 16,388 | |
Total operating expenses | | 83,199 | | 25,406 | | 108,605 | | 7,877 | | 1,876 | | 118,358 | |
Income from operations | | 18,230 | | 2,061 | | 20,291 | | 5,415 | | 2 | | 25,708 | |
Other expense (income): | | | | | | | | | | | | | |
Interest expense | | 24,584 | | 7,151 | | 31,735 | | 140 | | 1,254 | (13) | 34,908 | |
| | | | | | | | | | (110 | )(14) | | |
| | | | | | | | | | 7,935 | (15) | | |
| | | | | | | | | | (9,244 | )(16) | | |
| | | | | | | | | | 17 | (17) | | |
| | | | | | | | | | 3,317 | (18) | | |
| | | | | | | | | | (136 | )(19) | | |
Interest income | | (914 | ) | (39 | ) | (953 | ) | (2 | ) | 450 | (20) | (505 | ) |
Seller transaction expenses | | 4,646 | | — | | 4,646 | | — | | (4,646(21 | ) | — | |
Other, net | | 745 | | (110 | ) | 635 | | (6 | ) | | | 629 | |
(Loss) income before income taxes and minority interest | | (10,831 | ) | (4,941 | ) | (15,772 | ) | 5,283 | | 1,165 | | (9,324 | ) |
Income tax expense | | 3,619 | | 84 | | 3,703 | | 580 | | — | | 4,283 | |
Minority interest | | 13 | | (2 | ) | 11 | | — | | — | | 11 | |
Net (loss) income | | $ | (14,463 | ) | $ | (5,023 | ) | $ | (19,486 | ) | $ | 4,703 | | $ | 1,165 | | $ | (13,618 | ) |
| | | | | | | | | | | | | | | | | | | | | |
See accompanying notes to the unaudited pro forma consolidated financial information.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2004
(in thousands)
| | Safety | | | | | | | |
| | NSP | | Fibre- | | Pro Forma | | Products | |
| | Holdings | | Metal | | Adjustments | | Pro Forma | |
Statement of Operations Data: | | | | | | | | | |
Net sales | | $ | 440,280 | | $ | 30,684 | | | | $ | 470,964 | |
Cost of goods sold | | 281,924 | | 15,709 | | $ | 2,364 | (10) | 299,997 | |
Gross profit | | 158,356 | | 14,975 | | (2,364 | ) | 170,967 | |
Operating expenses: | | | | | | | | | |
Selling | | 41,901 | | 2,690 | | | | 44,591 | |
Distribution | | 22,452 | | 2,463 | | | | 24,915 | |
General and administrative | | 41,721 | | 4,859 | | 744 | (11) | 47,324 | |
Amortization of intangibles | | 517 | | — | | 11,592 | (12) | 12,109 | |
Strategic alternatives | | 616 | | — | | | | 616 | |
Total operating expenses | | 107,207 | | 10,012 | | 12,336 | | 129,555 | |
Income (loss) from operations | | 51,149 | | 4,963 | | (14,700 | ) | 41,412 | |
Other expense (income): | | | | | | | | | |
Interest expense | | 35,962 | | 191 | | 12,095 | (13) | 43,297 | |
| | | | | | (6,150 | )(14) | | |
| | | | | | 11,421 | (15) | | |
| | | | | | (14,530 | )(16) | | |
| | | | | | 37 | (17) | | |
| | | | | | 4,462 | (18) | | |
| | | | | | (191 | )(19) | | |
Interest income | | (213 | ) | (14 | ) | | | (227 | ) |
Other, net | | 1,539 | | 2 | | | | 1,541 | |
Income (loss) before income taxes and minority interest | | 13,861 | | 4,784 | | (21,844 | ) | (3,199 | ) |
Income tax expense | | 3,195 | | 439 | | | | 3,634 | |
Minority interest | | 25 | | — | | | | 25 | |
Net income (loss) | | $ | 10,641 | | $ | 4,345 | | $ | (21,844 | ) | $ | (6,858 | ) |
See accompanying notes to the unaudited pro forma consolidated financial information.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
(in thousands)
(1) To eliminate cash not acquired related to the FMP Transaction.
(2) Represents assets not acquired related to the FMP Transaction.
(3) Represents property, plant, and equipment not acquired related to the FMP Transaction.
(4) Represents deferred financing fees on additional term loan related to the FMP Transaction.
(5) Excess of purchase price over net assets acquired related to the FMP Transaction.
(6) Represents liabilities not assumed related to the FMP Transaction.
(7) Represents term loan borrowing of $65,000 and revolver borrowings of $5,000, net of debt not assumed of $1,806 related to the FMP Transaction.
(8) Represents elimination of existing equity accounts related to the FMP Transaction.
(9) To eliminate impact of inventory step-up related to fair value adjustment recorded as part of the Norcross Transaction.
(10) Represents additional depreciation expense related to fair value adjustment on property, plant and equipment recorded as part of the Norcross Transaction.
(11) Represents additional depreciation expense related to fair value adjustment on property, plant and equipment recorded as part of the Norcross Transaction.
(12) Represents additional amortization of intangible assets related to the Norcross Transaction.
(13) Represents increase in interest expense to reflect issuance of the Existing Holdings Notes as follows:
| | Year ended | | Nine Months ended | |
| | December 31, 2004 | | October 1, 2005 | |
Increase in PIK interest on the Existing Holdings Notes at 11.75% | | $ | 12,095 | | $ | 1,254 | |
| | | | | | | |
(14) Represents decrease in interest expense to reflect the use of proceeds from the issuance of the Existing Holdings Notes as follows:
| | Year ended | | Nine Months ended | |
| | December 31, 2004 | | October 1, 2005 | |
Reduction of dividends related to repurchase of $60,000 of preferred units at 10.0% | | $ | (6,150 | ) | $ | (110 | ) |
| | | | | | | |
(15) Represents increase in interest expense to reflect the Norcross Transaction as follows:
| | Year ended | | Nine Months ended | |
| | December 31, 2004 | | October 1, 2005 | |
Increase in PIK interest on $25,000 of the outstanding notes at 11.75% | | $ | 3,024 | | $ | 1,927 | |
Increase in interest expense on new term loan $88,000 at 6.0% | | 5,254 | | 4,273 | |
Increase in amortization of deferred financing fees | | 3,143 | | 1,735 | |
| | $ | 11,421 | | $ | 7,935 | |
(16) Represents decrease in interest expense to reflect the Norcross Transaction as follows:
| | Year ended
December 31, 2004 | | Nine Months ended
October 1, 2005 | |
Reduction of interest expense related to repayment of term loan | | $ | (5,151 | ) | $ | (3,090 | ) |
Reduction of dividends related to repurchase of preferred units at 10.0% | | (7,343 | ) | (4,723 | ) |
Reduction of interest expense related to payment of other senior debt | | (46 | ) | (21 | ) |
Reduction of interest expense related to payment of other subordinated debt | | (213 | ) | (99 | ) |
Reduction of amortization of deferred financing fees related to write-off of existing deferred financing fees | | (1,777 | ) | (1,311 | ) |
| | $ | (14,530 | ) | $ | (9,244 | ) |
(17) Represents the following to reflect the Norcross Transaction:
| | Year ended | | Nine Months ended | |
| | December 31, 2004 | | October 1, 2005 | |
Eliminate historical original issue discount on the Norcross senior subordinated notes | | $ | (92 | ) | $ | (58 | ) |
Increase in amortization of original issue discount related to $25,000 of the outstanding notes | | 232 | | 135 | |
Reduction of interest expense related to amortization of premium recorded to reflect Norcross senior subordinated notes at fair market value | | (1,092 | ) | (637 | ) |
Increase in interest expense related to amortization of discount recorded to reflect Existing Holdings Notes at fair market value | | 989 | | 577 | |
| | $ | 37 | | $ | 17 | |
(18) Represents the following to reflect the FMP Transaction:
| | Year ended | | Nine months ended | |
| | December 31, 2004 | | October 1, 2005 | |
Increase in interest expense related to $65,000 increase in the term loan at 6.0% | | $ | 3,881 | | $ | 2,881 | |
Increase in interest expense related to $5,000 increase in revolving credit facility at 6.25% | | 313 | | 234 | |
Increase in amortization of deferred financing fees | | 268 | | 202 | |
| | $ | 4,462 | | $ | 3,317 | |
(19) Eliminate interest expense for debt not assumed as part of the FMP Transaction.
(20) Represents reduction of interest income related to cash not acquired at NSP Holdings as part of the Norcross Transaction.
(21) Represents elimination of seller transaction expenses recorded as part of the Norcross Transaction.
