UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements
are based on our 2004 audited consolidated financial statements in the Company's
Annual Report on Form 10-K. The pro forma consolidated balance sheet as of
December 31, 2004 gives effect to the January 2005 acquisition (the "AHI
Acquisition") of American Household, Inc. and its subsidiaries ("AHI") and the
related financings (collectively the "Financings") as follows:
i. a new senior credit facility ("Senior Debt") consisting of a term loan
of $850 million (the "Term Loan") which was drawn at closing and a
$200 million revolving credit facility (the "Revolver"), which was
undrawn at closing. The proceeds of the Term Loan were used to finance
a portion of the cash purchase price and expenses of AHI and to repay
Jarden's existing senior debt;
ii. the issuance of 714,286 shares of the Company's common stock for
approximately $21.4 million;
iii. the issuance of 128,571 shares or approximately $128.6 million of a
new class of the Company's preferred (participating) stock, Series B
Convertible Preferred Stock ("Series B Preferred Stock"); and,
iv. the issuance of 200,000 shares or approximately $200 million of a new
class of the Company's preferred stock, Series C Mandatory Convertible
Preferred Stock ("Series C Preferred Stock").
The pro forma consolidated income statement for the year ended December 31, 2004
gives effect to the following transactions as if they occurred on January 1,
2004:
i. the AHI Acquisition; and,
ii. the June 2004 acquisition of Bicycle Holding, Inc. and its
subsidiaries including The United States Playing Card Company (the
"USPC Acquisition").
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 USPC and AHI consolidated financial statements with the
related notes incorporated by reference or included in the Company's Annual
Report on Form 10-K.
The pro forma adjustments related to the purchase price allocations for the USPC
and AHI Acquisitions 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 DECEMBER 31, 2004
(in millions)
AHI
ACQUISITION
JARDEN AS PRO FORMA PRO FORMA
REPORTED AHI ADJUSTMENTS COMBINED
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ASSETS
Current assets:
Cash and cash equivalents............... $ 20.7 $ 49.2 $ 47.6 (a) $ 117.5
Accounts receivable, net................ 127.5 279.0 - 406.5
Inventories, net........................ 154.2 318.4 14.5 (b) 487.1
Other current assets.................... 32.7 74.8 (4.0) (c) 100.8
(2.7) (d)
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Total current assets.................. 335.1 721.4 55.4 1,111.9
Property, plant and equipment, net........ 85.4 179.7 - 265.1
Goodwill and intangibles, net............. 602.4 285.9 297.8 (e) 1,186.1
Other assets.............................. 19.5 14.9 8.4 (d) 42.8
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Total assets.............................. $ 1,042.4 $ 1,201.9 $ 361.6 $ 2,605.9
======================================== ==============
LIABILITIES AND EQUITY
Current Liabilities:
Short-term debt and current portion of
long-term debt.......................... $ 17.0 $ 16.9 $ 8.5 (f) $ 21.8
(16.3) (g)
(4.3) (h)
Accounts payable........................ 48.9 154.9 - 203.8
Other current liabilities............... 87.8 218.7 3.3 (i) 309.8
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Total current liabilities............. 153.7 390.5 (8.8) 535.4
---------------------------------------- --------------
Noncurrent liabilities:
Long-term debt.......................... 470.5 100.8 841.5 (f) 1,026.5
(286.6) (g)
(99.7) (h)
Deferred taxes on income................ 41.0 88.8 13.6 (j) 143.4
Other noncurrent liabilities............ 43.2 165.3 (24.4) (k) 224.1
40.0 (l)
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Total noncurrent liabilities........ 554.7 354.9 484.4 1,394.0
Series C Preferred Stock.................... 199.3 (m) 199.3
Equity...................................... 334.0 456.5 (456.5) (n) 477.2
(6.2) (d)
149.4 (o)
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Total liabilities and equity................ $ 1,042.4 $ 1,201.9 $ 361.6 $ 2,605.9
======================================== ==============
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2004
(in millions, except per share data)
USPC AHI
ACQUISITION ACQUISITION
JARDEN PRO FORMA PRO FORMA PRO FORMA
AS REPORTED USPC (1) ADJUSTMENTS AHI (2) ADJUSTMENTS COMBINED
------------ ------------- -------------- --------------------------------------------
Net sales.............................. $ 838.6 $ 63.2 $ - $ 1,817.3 $ - $ 2,719.1
Costs and expenses:
Cost of sales........................ 563.2 36.6 (0.1) (p) 1,264.0 1,863.7
Selling, general and administrative
expenses........................... 146.9 14.3 (1.4) (q) 459.8 8.3 (v) 626.8
0.4 (r) 1.8 (w)
(3.3) (x)
Restructuring charges................ - - 22.8 22.8
Restricted stock..................... 32.4 - - - 32.4
------------ ------------- -------------- -------------------------- ------------
Operating Income (loss)................ 96.1 12.3 1.1 70.7 (6.8) 173.4
Other expense (income)................. - 0.4 (0.4) (r) 12.1 (8.3) (v) 3.8
Interest expense, net.................. 27.6 3.7 (3.6) (s) 19.8 (10.7) (y) 63.2
0.4 (t) (17.2) (z)
42.4 (aa)
0.8 (bb)
------------ ------------- -------------- -------------------------- ------------
Income (loss) before taxes............. 68.5 8.2 4.7 38.8 (13.8) 106.4
Income tax provision (benefit)......... 26.1 0.5 4.4 (u) 20.2 (10.7) (u) 40.5
----------------------------------------- -------------------------- ------------
Income (loss) from continuing
operations........................... $ 42.4 $ 7.7 $ 0.3 $ 18.6 $ (3.1) 65.9
============ ============= ============== ==========================
Paid in kind dividends on Series B
Preferred Stock...................... (cc) (4.5)
Paid in kind dividends on Series C
Preferred Stock...................... (dd) (8.2)
------------
Income available to common
stock holders........................ 53.2
Allocation:
Allocable to Series B Preferred Stock
holders.............................. (ee) (5.6)
Allocable to Series C Preferred Stock
holders.............................. (ff) (8.7)
------------
Income allocable to common
stock holders........................ $ 38.9
============
Earnings per share
Basic................................ $1.55 (gg) $ 1.39
Diluted.............................. $1.49 (gg) $ 1.35
Weighted average shares outstanding:
Basic................................ 27.4 0.7 (hh) 28.1
Diluted.............................. 28.5 0.7 (hh) 29.2
Depreciation and amortization.......... $ 19.2 $ 2.7 $ (0.1) (P) $ 36.7 $ 58.5
Capital expenditures................... $ 10.8 $ 1.8 - $ 30.6 $ 43.2
(1) Represent USPC's results for the six months ended June 2004, which are not
included in Jarden's results, as reported.
(2) Represents AHI's results for the year ended December 31, 2004, which are
not included in Jarden's results, as reported.
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Balance sheet adjustments:
(a) Adjustment to reflect cash proceeds from the AHI Acquisition financings in
excess of amounts used to fund the AHI Acquisition and related expenses.
(b) Adjustment to reflect inventory at fair market value for Jarden as the
purchaser.
(c) Adjustment to record Jarden's prepaid AHI Acquisition expenses as part of
the acquisition.
(d) Adjustment to capitalized debt issuance costs:
(i) to eliminate AHI's debt issuance costs (current and
non-current) related to debt not assumed (and therefore repaid)
in conjunction with the AHI Acquisition ($2.7 million and
$2.5million, respectively);
(ii) to eliminate Jarden's debt issuance costs ($6.2 million)
related to its existing debt repaid in conjunction with the
Financings and to adjust retained earnings for such amount as
the elimination will be taken as a one-time expense by Jarden
when incurred; and
(iii) to capitalize Jarden's new debt issuance costs ($17.1 million)
for the Senior Debt to be amortized over the term of the debt.
(e) Adjustment represents the excess of the purchase price (estimated at $878.4
million, including related acquisition costs) over the adjusted net assets
acquired ($580.6 million) preliminarily allocated to goodwill and
intangibles. The entries recorded in the pro forma balance sheet to adjust
net assets to fair market value include: (b) inventory step-up, (d)
elimination of AHI's debt issuance costs, (h) elimination of non-assumed
debt, (j) deferred tax liability, and (k) adjustment for pension and OPEB
plan liabilities.
(f) Adjustment to reflect issuance of the Term Loan.
(g) Adjustment to reflect the repayment of Jarden's existing senior debt
(current and non-current portions) in conjunction with the financing of the
AHI Acquisition.
(h) Adjustment to eliminate AHI's debt (current and non-current portions)
repaid in conjunction with the AHI Acquisition and not assumed by Jarden.
(i) Adjustment to reflect a liability for the severance amounts due to AHI
employees terminated in connection with the AHI Acquisition due and payable
at closing but being paid over the related severance period.
(j) Adjustment to reflect the deferred tax liability (using Jarden's effective
tax rate of 38%) related to the impact of the fair market valuation of
inventory recorded in entry (b) and the adjustment to the pension and OPEB
plan liabilities recorded in entry (k).
(k) Adjustment to reduce AHI's domestic and foreign pension and OPEB plan
liabilities for net unrecognized prior service benefits ($18.5 million) and
net unrecognized actuarial gain ($2.9 million) and to reclass the related
other comprehensive loss ($3 million).
(l) Adjustment to reflect a liability for the portion of the purchase price of
AHI withheld from the sellers of AHI in order to fund potential
indemnification claims.
(m) Adjustment to reflect the issuance of the Series C Preferred Stock ($200
million), net of pro rata issuance costs ($0.7 million).
(n) Adjustment to eliminate the existing stockholders' equity of AHI.
(o) Adjustment to reflect the issuance of common stock ($21.4 million) and
Series B Preferred Stock ($128.6 million), net of pro rata issuance costs
($0.6 million).
Income statement adjustments:
(p) Adjustment to eliminate excess depreciation expense resulting from the fair
market valuation of USPC fixed assets, amortized over the estimated useful
lives of the respective fixed asset categories, which range from 3 to 30
years.
(q) Adjustment to reflect the elimination of USPC acquisition costs incurred
and expensed by USPC and paid by the sellers of USPC at the closing of the
USPC Acquisition.
(r) Adjustment to reflect the reclassification of USPC's net other expense to
selling, general and administrative expenses for consistency with Jarden's
classification.
(s) Adjustment to reflect the elimination of USPC's historical interest expense
excluding interest expense related to assumed foreign debt ($0.1 million).
(t) 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.
(u) Adjustment to reflect an effective tax rate of 38% during 2004 on the
pre-tax results of the acquired businesses and related adjustments based on
Jarden's effective tax rate for the period.
(v) Adjustment to reclassify AHI's net foreign currency losses ($6.9 million)
and bank fees ($1.4 million) from other expenses to selling, general and
administrative expenses for consistency with Jarden's classification of
such expenses.
(w) Adjustment to reflect the annual compensation charge for the lapsing of
restrictions on the restricted shares granted ($3.6 million) in connection
with the AHI Acquisition; restrictions lapse over a two-year period.
(x) Adjustment to reflect the elimination of AHI acquisition costs incurred and
expensed by AHI and paid by the sellers of AHI at the closing of the AHI
Acquisition.
(y) Adjustment to eliminate historical interest expense related to Jarden's
debt repaid (via the issuance of new Senior Debt in conjunction with the
AHI Acquisition), including related interest rate swap activity.
(z) Adjustment to eliminate AHI's interest expense related to debt repaid (not
assumed) in conjunction with the AHI Acquisition.
(aa) Adjustment to reflect the interest expense related to the new Senior Debt
and related interest rate swap agreements at an estimated effective
interest rate of 5%. The effect of a 1/8% change in the variable interest
rate would be $0.5 million per year.
(bb) Adjustment to reflect annual amortization of capitalized debt issuance
costs ($2.5 million) associated with the new Senior Debt amortized over the
7 year term of the debt and elimination of the historical Jarden
amortization expense ($1.7 million) for capitalized debt issuance costs
related to the repaid Jarden senior debt.
(cc) Adjustment to reflect the paid-in-kind dividend on the Series B Preferred
Stock based on the stated dividend rate of 3.5% per annum.
(dd) Adjustment to reflect the paid-in-kind dividend of the Series C Preferred
Stock based on the stated dividend rate 3.5% for the first seven months
after issuance and 5.0% for the subsequent five months.
(ee) Equal to 10.5% of income available to common stock holders. Such percentage
is calculated as $128.6 million (face value of Series B Preferred Stock)
divided by $32 per share (4.0 million participating common share
equivalents) divided by total participating common share equivalents of
38.4 million. Total participating common share equivalents calculated as
the sum of 28.1 million basic weighted average shares outstanding,
4.0 million Series B Preferred Stock participating common share equivalents
and 6.3 million Series C Preferred Stock participating common share
equivalents.
(ff) Equal to 16.4% of income available to common stock holders. Such percentage
is calculated as 6.3 million participating common share equivalents divided
by total participating common share equivalents of 38.4 million. 6.3
million participating common share equivalents is calculated $200.0 million
(face value of Series C Preferred Stock) multiplied by 85.7% divided by $32
per share (5.4 million shares) plus $200 million multiplied by 14.3%
divided by $30 per share (0.9 million shares).
(gg) Calculated via the two-class method as income allocable to common stock
holders divided by basic weighted average shares outstanding. The Company
believes that based on discussions with the holders of the Series B and C
Preferred Stock, such holders will not receive common stock dividends and
accordingly the calculation of pro forma combined earnings per share on the
if converted method is presented below:
Income available to common stock holders....................... $ 53.2
Earnings per share
Basic........................................................ $ 1.66
Diluted...................................................... $ 1.60
Weighted average shares outstanding*
Basic........................................................ 32.1
Diluted...................................................... 33.2
*Reflects the conversion of the Series B Preferred Stock into 4 million
common share equivalents.
(hh) Adjustment to reflect the weighted average effect of 714,286 shares of
common stock issued to fund a portion of the consideration for the AHI
acquisition.
