Exhibit 99.2
The pro-forma condensed consolidated balance sheet of Compass Diversified Trust (“CODI) as of September 30, 2006 reflects the financial position of CODI after giving effect to the disposition of Crosman Acquisition Corporation (”the Disposition”) and the use of proceeds to repay amounts borrowed under CODI’s revolving credit facility (the “Use of Disposition Proceeds”) and assumes the disposition of Crosman Acquisition Corporation (“Crosman”) took place on September 30, 2006. | |||
The pro-forma condensed consolidated statement of operations for the period ended September 30, 2006 assumes the Disposition and Use of Disposition Proceeds took place on May 16, 2006 and is based on the operations of CODI for the nine months ended September 30, 2006. | |||
The pro-forma condensed consolidated financial statements have been prepared by CODI based upon assumptions deemed appropriate by it. These statements are not necessarily indicative of the future financial position or results of operations, or actual results that would have occurred had the transaction been in effect as of the dates presented. The pro-forma condensed consolidated financial statements of CODI do not reflect the refinancing of CODI’s bank credit facilities on November 21, 2006. The unaudited pro-forma consolidated financial statements should be read in conjunction with the CODI’s financial statements and related notes as reported in its Quarterly report on form 10-Q filed November 9, 2006. |
F-1 | Pro-forma Consolidated Balance Sheet at September 30, 2006 |
F-2 | Pro-forma Consolidated Statement of Operations for the nine-month ended September 30, 2006 (Includes Crosman’s results of operations beginning May 16, 2006 through September 30, 2006) |
F-3 | Explanatory notes to pro-forma condensed consolidated financial statements |
UNAUDITED PRO FORMA FINANCIAL INFORMATION
COMPASS DIVERSIFIED TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
COMPASS DIVERSIFIED TRUST
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
Historical | Subtract: | Pro Forma | ||||||||||||||
Sept. 30, | Crosman | Pro Forma | Sept. 30, | |||||||||||||
(in thousands) | 2006 | Segment | Adjustments | 2006 | ||||||||||||
ASSETS | ||||||||||||||||
Current assets | ||||||||||||||||
Cash and cash equivalents | $ | 13,049 | $ | 183 | $ | 44,929 | (a) | $ | 57,795 | |||||||
Receivables, net of allowance | 91,142 | 19,224 | — | 71,918 | ||||||||||||
Inventories | 22,162 | 18,372 | — | 3,790 | ||||||||||||
Prepaid expenses and other current assets | 10,140 | 3,396 | — | 6,744 | ||||||||||||
Current assets of discontinued operations | 542 | — | — | 542 | ||||||||||||
Total current assets | 137,035 | 41,175 | 44,929 | 140,789 | ||||||||||||
Property and equipment, net | 22,110 | 12,273 | — | 9,837 | ||||||||||||
Goodwill | 189,448 | 30,212 | — | 159,236 | ||||||||||||
Intangibles, net | 143,678 | 19,016 | — | 124,662 | ||||||||||||
Deferred debt issuance costs, net | 5,834 | — | — | 5,834 | ||||||||||||
Other non-current assets | 12,401 | 3,507 | — | 8,894 | ||||||||||||
Assets of discontinued operations | 466 | — | — | 466 | ||||||||||||
Total assets | $ | 510,972 | $ | 106,183 | $ | 44,929 | $ | 449,718 | ||||||||
LIABILITIES AND STOCKHOLDER’S EQUITY | ||||||||||||||||
Current liabilities | ||||||||||||||||
Accounts payable and accrued expenses | $ | 65,074 | $ | 15,061 | $ | (795 | )(d) | $ | 49,218 | |||||||
Distribution payable | 5,368 | — | — | 5,368 | ||||||||||||
Due to related party | 531 | — | 4,238 | (b) | 4,769 | |||||||||||
Working capital facility | 11,697 | — | (9,500 | )(c) | 2,197 | |||||||||||
Current liabilities of discontinued operations | 625 | — | — | 625 | ||||||||||||
Total current liabilities | 83,295 | 15,061 | (6,057 | ) | 62,177 | |||||||||||
Supplemental put obligation | 8,016 | — | — | 8,016 | ||||||||||||
Long-term debt | 60,000 | — | (60,000 | )(c) | — | |||||||||||
Deferred income taxes | 42,842 | 5,820 | — | 37,022 | ||||||||||||
Other non-current liabilities | 17,544 | 711 | — | 16,833 | ||||||||||||
Total liabilities | 211,697 | 21,592 | (66,057 | ) | 124,048 | |||||||||||
Minority interests | 25,956 | 6,507 | — | 19,449 | ||||||||||||
Stockholders’ equity | 273,319 | 78,084 | 110,986 | (e) | 306,221 | |||||||||||
Total liabilities and stockholders’ equity | $ | 510,972 | $ | 106,183 | $ | 44,929 | $ | 449,718 | ||||||||
F-1
UNAUDITED PRO FORMA FINANCIAL INFORMATION
COMPASS DIVERSIFIED TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED SEPTEMBER 30, 2006
COMPASS DIVERSIFIED TRUST
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED SEPTEMBER 30, 2006
Historical | Pro Forma | |||||||||||||||
Sept. 30, | Subtract: | Pro Forma | Sept. 30, | |||||||||||||
(in thousands, except per unit data) | 2006 | Crosman | Adjustments | 2006 | ||||||||||||
Net sales: | $ | 278,520 | $ | 39,253 | $ | $ | 239,267 | |||||||||
Cost of sales | 209,752 | 27,559 | — | 182,193 | ||||||||||||
Gross profit | 68,768 | 11,694 | — | 57,074 | ||||||||||||
Operating expenses: | ||||||||||||||||
Staffing expense | 20,439 | — | — | 20,439 | ||||||||||||
Selling, general and administrative expenses | 23,911 | 4,706 | — | 19,205 | ||||||||||||
Supplemental put expense | 8,016 | — | — | 8,016 | ||||||||||||
Fees to Manager | 2,814 | 241 | — | 2,573 | ||||||||||||
Research and development expense | 1,553 | — | — | 1,553 | ||||||||||||
Amortization expenses | 4,156 | 185 | — | 3,971 | ||||||||||||
Operating income | 7,879 | 6,562 | — | 1,317 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income | 447 | 29 | — | 418 | ||||||||||||
Interest expense | (3,414 | ) | (2 | ) | 3,383 | (f) | (29 | ) | ||||||||
Amortization of debt issuance costs | (479 | ) | — | — | (479 | ) | ||||||||||
Other income (expense), net | 594 | 195 | (2,400 | )(e) | (2001 | ) | ||||||||||
Income from continuing operations before income taxes and minority interests | 5,027 | 6,784 | 983 | (774 | ) | |||||||||||
Income tax expense | (5,163 | ) | (1,759 | ) | — | (3,404 | ) | |||||||||
Minority interests | (1,896 | ) | — | 804 | (g) | (1,092 | ) | |||||||||
Gain (loss) from continuing operations | $ | (2,032 | ) | $ | 5,025 | $ | 1,787 | $ | (5,270 | ) | ||||||
Basic and diluted loss from continuing operations per share | $ | (0.20 | ) | $ | 0.50 | $ | 0.18 | $ | (0.52 | ) | ||||||
Basic weighted average number of shares outstanding – basic and fully diluted | 10,031 | 10,031 | 10,031 | 10,031 | ||||||||||||
F-2
Explanatory Notes:
(a) | As a result of the Disposition and Use of Disposition Proceeds, cash increases by $44.9 million. The components of the change is as follows: |
(in thousands) | ||||
Net Change in Cash | ||||
Estimated proceeds from the sale of Crosman after minority interest | $ | 117,624 | ||
Repayment of outstanding term loan | (50,000 | ) | ||
Repayment of outstanding delayed draw term loan | (10,000 | ) | ||
Repayment of revolving credit facility | (9,500 | ) | ||
Term loans prepayment penalty | (2,400 | ) | ||
Accrued interest | (795 | ) | ||
Net change in cash | $ | 44,929 | ||
(b) | Represents accrual of CGM’s profit allocation from the sale of Crosman. | |
(c) | Represents the repayment of the outstanding term loans and revolving credit facility at CODI. | |
(d) | Represents the elimination of accrued interest on the term loans and revolving credit facility. | |
(e) | As a result of the Disposition and Use of Disposition Proceeds, stockholders’ equity increases by $29.3 million. The components of the change is as follows: |
(in thousands) | ||||
Sale of Crosman | ||||
Estimated proceeds from the sale before allocation | $ | 117,624 | ||
Net assets sold | (78,084 | ) | ||
CGM profit allocation | (4,238 | ) | ||
Pro-forma gain on sale of Crosman | 35,302 | |||
Deduct: | ||||
Term loans prepayment penalty | (2,400 | ) | ||
Net change in Stockholders’ equity and minority interest | $ | 32,902 | ||
(f) | Reflects the elimination of consolidated interest expense of $3.4 million due to the Use of Disposition Proceeds to retire debt, (see (c) above. | |
(g) | Represents the minority interest in Crosman’s income from operations during the period. |
F-3