Patrick Industries (PATK) 8-K/A Completion of Acquisition or Disposition of Assets

Exhibit 99.3

Unaudited Pro Forma Condensed Combined Financial Statements

On October 26, 2012, Patrick Industries, Inc. (“Patrick” or the “Company”) acquired certain assets of Middlebury Hardwood Products, Inc. and Affiliate (collectively, “Middlebury Hardwoods”),  a manufacturer and distributor of hardwood cabinet doors, components, fascia and other hardwood products for the recreational vehicle, manufactured housing, and residential kitchen cabinet industries.

The unaudited pro forma condensed combined statement of income for the fiscal year ended December 31, 2011 gives effect to the acquisition as if it had been completed on January 1, 2011, the first day of Patrick’s 2011 fiscal year.  Patrick’s audited consolidated statement of income for the fiscal year ended December 31, 2011 has been combined with Middlebury Hardwoods’ audited consolidated statement of income for the fiscal year then ended.  The unaudited pro forma condensed combined statement of income for the nine months ended September 30, 2012 combines the unaudited condensed consolidated statement of income of Patrick for the nine months ended September 30, 2012 and Middlebury Hardwoods’ unaudited condensed combined statement of income for the nine months ended September 29, 2012, and gives effect to the transaction as if it had been completed on January 1, 2011.

The unaudited pro forma condensed combined balance sheet as of September 30, 2012 gives effect to the acquisition as if it had been completed on such date and combines the unaudited condensed consolidated balance sheets of Patrick and Middlebury Hardwoods as of September 30, 2012 and September 29, 2012, respectively.

The historical consolidated financial statement information has been adjusted to give pro forma effect to events that are (i) directly attributable to the transaction, (ii) factually supportable and (iii) with respect to the statements of income, expected to have a continuing impact on the combined results. All pro forma financial statements use Patrick’s period-end dates and no adjustments were made to Middlebury Hardwoods’ information for its different period-end dates.

The unaudited pro forma condensed combined financial information was prepared in accordance with the regulations of the U.S. Securities and Exchange Commission. The pro forma adjustments reflecting the completion of the transaction are based upon the acquisition method of accounting in accordance with ASC 805 and upon the assumptions set forth in the notes to the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined balance sheet has been adjusted to reflect the preliminary allocation of the estimated purchase price to identifiable net assets acquired including an amount for goodwill representing the difference between the purchase price and the fair value of the identifiable net assets.  Amounts preliminarily allocated to tangible and intangible assets with definite lives may change, which could result in a material change in amortization of such assets.  The final allocation of the purchase price will be determined after completion of an analysis of the fair value of Middlebury Hardwoods’ assets and liabilities.  Accordingly, the final acquisition accounting adjustments may be materially different from the unaudited pro forma adjustments.

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  The cash portion of the purchase price of Middlebury Hardwoods was funded through borrowings under a five-year $80 million revolving secured senior credit facility established on October 24, 2012 (the “2012 Credit Facility”).  The 2012 Credit Facility replaced the Company’s previous asset-based revolving senior secured credit facility. The unaudited pro forma condensed combined financial statements reflect only the financing of the Middlebury Hardwoods acquisition under the 2012 Credit Facility.

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PATRICK INDUSTRIES, INC.
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2012
				Middlebury
(thousands)	Patrick			Hardwoods		Pro Forma				Pro Forma
	Historical			Historical		Adjustments				Combined
ASSETS
Current assets
Cash and cash equivalents	$	888		$	25	$	(25	)	A	$	126
							19,000		B
							(19,762	)	C
Trade receivables, net of allowance for doubtful
accounts		31,650			1,776		-				33,426
Inventories		40,978			2,125		28		D		43,131
Prepaid expenses and other		3,074			57		-				3,131
Total current assets		76,590			3,983		(759	)			79,814
Property, plant and equipment, net		28,602			5,206		-				33,808
Goodwill and other intangible assets, net		20,033			-		13,502		E		33,535
Deferred tax assets, net of valuation allowance		4,430			-		-				4,430
Deferred financing costs, net of accumulated amortization		1,472			-		-				1,472
Other non-current assets		650			-		-				650
TOTAL ASSETS	$	131,777		$	9,189	$	12,743			$	153,709
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Current maturities of long-term debt	$	1,000		$	889	$	(889	)	F	$	1,000
Note payable, bank		-			647		(647	)	F		-
Accounts payable		27,005			1,358		-				28,363
Accrued liabilities		10,579			1,574		-				12,153
Total current liabilities		38,584			4,468		(1,536	)			41,516
Long-term debt, less current maturities and discount		32,089			1,689		(1,689	)	F		51,089
							19,000		G
Note payable, stockholder, less current maturities		-			788		(788	)	F		-
Deferred compensation and other		3,438			-		-				3,438
TOTAL LIABILITIES		74,111			6,945		14,987				96,043
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS’ EQUITY
Preferred stock		-			-		-				-
Common stock		55,498			124		(124	)	H		55,498
Accumulated other comprehensive loss		(183	)		-		-				(183	)
Additional paid-in-capital		3,983			743		(743	)	H		3,983
Retained earnings (accumulated deficit)		(1,632	)		1,234		(1,234	)	H		(1,632	)
Noncontrolling interest		-			143		(143	)	I		-
TOTAL SHAREHOLDERS’ EQUITY		57,666			2,244		(2,244	)			57,666
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	131,777		$	9,189	$	12,743			$	153,709
See accompanying notes to unaudited pro forma condensed combined financial statements.

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PATRICK INDUSTRIES, INC.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2011
(thousands except per share data)				Middlebury
	Patrick			Hardwoods			Pro Forma				Pro Forma
	Historical			Historical			Adjustments				Combined
NET SALES	$	307,822		$	32,323		$	-			$	340,145
Cost of Goods Sold		263,514			28,633			-				292,147
GROSS PROFIT		44,308			3,690			-				47,998
Operating Expenses:
Warehouse & delivery		13,645			438			-				14,083
Selling, general & administrative		16,603			1,640			-				18,243
Amortization of intangible assets		829			-			748		A		1,577
Gain on sale of fixed assets and acquisition of business		(244	)		-			-				(244	)
Total Operating Expenses		30,833			2,078			748				33,659
OPERATING INCOME		13,475			1,612			(748	)			14,339
Interest expense, net		4,469			289			(289	)	B		5,229
								760		C
Stock warrants revaluation		699			-			-				699
Income before income tax credit		8,307			1,323			(1,219	)			8,411
Income tax credit		(163	)		-			-				(163	)
NET INCOME	$	8,470			1,323			(1,219	)		$	8,574
Noncontrolling interest in net income of consolidated
variable interest entity					(156	)		156		D
Net Income to the Controlling Interest				$	1,167		$	(1,063	)
Basic net income per common share	$	0.87									$	0.88
Diluted net income per common share	$	0.83									$	0.84
Weighted average shares outstanding -  Basic		9,757										9,757
Diluted		10,156										10,156
See accompanying notes to unaudited pro forma condensed combined financial statements.

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PATRICK INDUSTRIES, INC.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2012
(thousands except per share data)
				Middlebury
	Patrick			Hardwoods			Pro Forma				Pro Forma
	Historical			Historical			Adjustments				Combined
NET SALES	$	331,239		$	28,627		$	-			$	359,866
Cost of Goods Sold		280,063			25,008			-				305,071
GROSS PROFIT		51,176			3,619			-				54,795
Operating Expenses:
Warehouse & delivery		11,741			332			-				12,073
Selling, general & administrative		16,256			1,507			-				17,763
Amortization of intangible assets		992			-			561		A		1,553
Gain on sale of fixed assets and acquisition of business		(237	)		-			-				(237	)
Total Operating Expenses		28,752			1,839			561				31,152
OPERATING INCOME		22,424			1,780			(561	)			23,643
Interest expense, net		2,465			169			(169	)	B		3,035
								570		C
Stock warrants revaluation		1,731			-			-				1,731
Income before income tax credit		18,228			1,611			(962	)			18,877
Income tax credit		(6,650	)		-			-				(6,650	)
NET INCOME	$	24,878			1,611			(962	)		$	25,527
Noncontrolling interest in net income of consolidated
variable interest entity					(130	)		130		D
Net Income to the Controlling Interest				$	1,481		$	(832	)
Basic net income per common share	$	2.38									$	2.44
Diluted net income per common share	$	2.32									$	2.38
Weighted average shares outstanding -  Basic		10,473										10,473
Diluted		10,705										10,705
See accompanying notes to unaudited pro forma condensed combined financial statements.

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PATRICK INDUSTRIES, INC.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

as of September 30, 2012 and for the year ended December 31, 2011

and for the nine months ended September 30, 2012

(thousands except per share information)

1.   Estimated Purchase Price

On October 26, 2012, Patrick acquired certain assets of Middlebury Hardwoods, a manufacturer and distributor of hardwood cabinet doors, components, fascia and other hardwood products for the recreational vehicle, manufactured housing, and residential kitchen cabinet industries.

The net cash purchase price for Middlebury Hardwoods was approximately $20.3 million at the acquisition date.  The acquisition was funded through borrowings under the Company’s 2012 Credit Facility and included the acquisition of accounts receivable, inventories, prepaid expenses, property, plant and equipment, and certain identifiable intangible assets.  Subsequent to the acquisition date, the net cash purchase price decreased by approximately $0.5 million to approximately $19.8 million reflecting certain working capital adjustments.

The preliminary allocation of the estimated purchase price is based on the estimated fair values of Middlebury Hardwoods’ assets acquired and liabilities assumed in the acquisition.  In addition, the purchase price allocation is based on Middlebury Hardwoods’ historical balance sheet as of September 29, 2012.  Purchase price allocations to net tangible assets and goodwill and other identifiable intangible assets acquired are as follows:

(thousands)
Net tangible assets (1)	$	6,260
Goodwill and other identifiable intangible assets (2)		13,502
Total cash net purchase price	$	19,762

(1) Purchase price allocations to net tangible assets are based on preliminary estimates of fair value calculations and should not be considered final.  The final calculation of fair value for the net tangible assets will be based on the Middlebury Hardwoods' balance sheet as of the October 26, 2012 acquisition date.

(2) Purchase price allocations to goodwill and other identifiable intangible assets are based on preliminary estimates of fair value calculations and should not be considered final.  All such long-lived assets have been assigned preliminary estimated useful lives used to compute pro forma amortization charges included in the accompanying unaudited pro forma condensed combined statements of income.  The excess of the purchase price over the estimated fair value of identifiable net assets acquired has been classified as goodwill.

2.   Financing

The cash portion of the purchase price of the Middlebury Hardwoods acquisition was funded through borrowings under the 2012 Credit Facility.

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3.   Unaudited Pro Forma Condensed Combined Balance Sheet Adjustments

A. Eliminate Middlebury Hardwoods historical cash.

B. Cash proceeds from borrowings under the 2012 Credit Facility to fund the Middlebury Hardwoods acquisition.

C. Cash paid for the acquisition of Middlebury Hardwoods consisted of the following:

(thousands)
Borrowings under 2012 Credit Facility	$	19,000
Cash on hand		762
Total	$	19,762

D. Adjustment to step-up Middlebury Hardwoods’ inventories to fair value.

E. Record the excess purchase price over the estimated fair value of identifiable net assets acquired that will be recorded as goodwill.  In addition, record the estimated fair value of the acquired identifiable intangible assets based on a preliminary appraisal.  The amount of intangible assets, estimated useful lives and amortization methodologies are subject to completion of the final appraisal.  Preliminary classification of intangible assets is as follows:

(thousands)	Value		Estimated Useful Life
Trademarks	$	410	Indefinite
Customer relationships		7,010	10 years
Non-compete agreements		140	3 years
Net intangible assets included in pro forma adjustment	$	7,560

F. Record elimination of Middlebury Hardwoods debt upon closing of the transaction.

G. Record borrowings under the 2012 Credit Facility to fund the cash portion of the purchase price of the Middlebury Hardwoods acquisition.

H. Eliminate Middlebury Hardwoods historical common stock outstanding, additional paid-in-capital and retained earnings.

I. Eliminate Middlebury Hardwoods historical non-controlling interest which represents the portion of equity in its affiliate that is not attributable, directly or indirectly, to Middlebury Hardwoods.

4.   Unaudited Pro Forma Condensed Combined Statements of Operations Adjustments

A. Record amortization expense related to the estimated fair value of acquired identifiable finite-lived intangible assets using average estimated lives ranging from 3 to 10 years.  Upon completion of final intangible asset appraisals and classifications, actual amortization may differ from this calculation.

B. Eliminate Middlebury Hardwoods historical interest expense.

C. Record interest expense on the borrowings of $19.0 million under the 2012 Credit Facility to fund the Middlebury Hardwoods acquisition at the estimated base rate plus the applicable margin in effect at the time of borrowing.

D. Eliminate Middlebury Hardwoods historical non-controlling interest in the net income of its affiliate.

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