UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma financial information for the year ended
December 31, 2003 and as of and for the three months ended March 31, 2004 has
been derived from our audited and unaudited consolidated financial statements as
of such date and for such period and gives pro forma effect to (collectively,
the "Transactions"):
i. the February 2003 acquisition (the "Diamond Acquisition") of
substantially all of the assets of Diamond Brands International, Inc.
and its subsidiaries ("Diamond") including the related financing;
ii. the August 2003 acquisition (the "Lehigh Acquisition") of Lehigh
Consumer Products Corporation and its subsidiary ("Lehigh") including
the related amendment and restatement of our senior credit facility and
issuance of an additional $150 million of term debt thereunder;
iii. the September 2003 equity issuance, a portion of the proceeds of which
were used to fund a portion of the cash purchase price of USPC (see
below); and,
iv. the June 2004 acquisition of Bicycle Holding, Inc. and its subsidiaries
including The United States Playing Card Company (the "USPC
acquisition) and the related second amendment and restatement of our
senior credit facility which included the issuance of an additional
$116 million of term debt thereunder.
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 Lehigh, Diamond and USPC consolidated financial
statements with the related notes incorporated by reference or included herein.
The pro forma adjustments related to the purchase price allocations for the USPC
Acquisition 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 MARCH 31, 2004
(In thousands)
USPC
ACQUISITION
JARDEN PRO FORMA PRO FORMA
AS REPORTED USPC ADJUSTMENTS COMBINED
----------- ---- ----------- --------
ASSETS
Current assets:
Cash and cash equivalents............... $ 82,351 $ 1,704 $ (69,700) a $ 14,355
Accounts receivable, net................ 88,579 20,313 108,892
Inventories, net........................ 133,189 18,179 151,368
Other current assets.................... 24,219 2,459 26,6789
---------- ---------- ---------- ------------
Total current assets................ 328,338 42,655 (69,700) 301,293
Property, plant and equipment, net.......... 72,769 20,376 9,000 b 102,145
Intangibles, net.............................. 82,927 17,596 33,828 c 134,351
Goodwill...................................... 273,665 72,961 95,171 d 441,797
Other assets.................................. 18,429 4,464 (2,535) e 22,358
2,000 f
---------- ---------- ---------- ------------
Total assets.................................. $ 776,128 $ 158,052 $ 67,764 $ 1,001,944
========== ========== ========== ============
LIABILITIES AND EQUITY
Current Liabilities:
Short-term debt and current portion
long-term debt....................... $ 18,249 $ 12,577 $ (10,589) g 21,397
1,160 h
Accounts payable........................ 43,867 6,871 50,738
Other current liabilities............... 51,145 15,205 34,050 i 110,400
10,000 j
---------- ---------- ---------- ------------
Total current liabilities........... 113,261 34,653 34,621 182,535
---------- ---------- ---------- ------------
Noncurrent liabilities:
Long-term debt.......................... 370,615 80,590 (79,090) k 486,955
114,840 h
Other noncurrent liabilities............ 32,888 13,842 10,000 j 73,090
16,360 l
---------- ---------- ---------- ------------
Total noncurrent liabilities........ 403,503 94,432 62,110 560,045
Redeemable Common Stock...................... 1,217 (1,217) m
Equity...................................... 259,364 27,750 (27,750) m 259,364
---------- ---------- ---------- ------------
Total liabilities and equity................ $ 776,128 $ 158,052 $ 67,764 $ 1,001,944
========== ========== ========== ============
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2003
(In thousands, except per share data)
DIAMOND
ACQUISITION
JARDEN AS PRO FORMA
REPORTED DIAMOND (1) ADJUSTMENTS LEHIGH (3)
------------------ ------------------- ------------------ -------------------
Net sales........................................... $ 587,657 $ 6,814 $ 90,681
Costs and expenses:
Cost of sales.................................. 362,379 4,649 $ 36 n 63,476
Selling, general and administrative expenses... 131,995 884 3,936
Restricted Stock Charge........................ 21,833
Reorganization costs (2)....................... 1,536 -
------------------ ------------------- ------------------ -------------------
Operating income (loss)............................. 71,450 (255) (36) 23,269
Other expense (income).............................. - - -
Interest expense (income), net...................... 19,184 921 (921) o 1,315
155 p
49 q
------------------ ------------------- ------------------ -------------------
Income (loss) before taxes.......................... 52,266 (1,176) 681 21,954
Income tax provision (benefit)...................... 20,488 (194) r (54)
------------------ ------------------- ------------------ -------------------
Net income (loss)................................... $ 31,778 $ (1,176) $ 875 $ 22,008
================== =================== ================== ===================
Basic earnings (loss) per share..................... $ 1.40
Diluted earnings (loss) per share................... $ 1.35
Weighted average shares outstanding:
Basic.......................................... 22,663
Diluted........................................ 23,531
LEHIGH USPC
ACQUISITION ACQUISITION
PRO FORMA PRO FORMA PRO FORMA
ADJUSTMENTS USPC (4) ADJUSTMENTS COMBINED
--------------------- ----------------- ------------------ -------------
Net sales........................................... $ 123,934 $ 809,086
Costs and expenses:
Cost of sales.................................. 248 s 73,786 $ 1,286 aa 505,860
Selling, general and administrative expenses... 652 t 23,415 779 bb 168,086
(128) u
(375) v
6,928 w
Restricted Stock Charge........................ 21,833
Reorganization costs (2)....................... 1,536
--------------------- ----------------- ------------------ -------------
Operating income (loss)............................. (7,325) 26,733 (2,065) 111,771
Other expense (income).............................. 779 (779) bb -
Interest expense (income), net...................... 4,527 x 9,624 500 cc 30,284
(1,315) y (9,258) dd
4,856 ee
467 z 180 ff
--------------------- ----------------- ------------------ -------------
Income (loss) before taxes.......................... (11,004) 16,330 2,436 81,487
Income tax provision (benefit)...................... 4,346 r 5,668 1,688 r 31,942
--------------------- ----------------- ------------------ -------------
Net income (loss)................................... $ (15,350) $ 10,662 $ 748 $ 49,545
===================== ================= ================== =============
Basic earnings (loss) per share..................... $ 1.88
Diluted earnings (loss) per share................... $ 1.82
Weighted average shares outstanding:
Basic.......................................... 3,623 gg 26,286
Diluted........................................ 3,623 gg 27,154
(1) The results for Diamond represent Diamond's unaudited actual results for
the month ended January 31, 2003, which are not included in Jarden's
results
(2) On May 22, 2001, Diamond filed voluntary petitions for reorganization under
Chapter 11 of the United States Bankruptcy Code. Accordingly, its expenses
related to the bankruptcy are included in "Reorganization Costs."
(3) The results for Lehigh represent Lehigh's unaudited results for the eight
months ended Augst 31, 2004, which are not included in Jarden's results.
(4) The results for USPC represent USPC's audited results for the year ended
September 28, 2003, which are not included in Jarden's results.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2004
(In thousands, except per share data)
USPC
ACQUISITION
JARDEN PRO FORMA PRO FORMA
AS REPORTED USPC ADJUSTMENTS COMBINED
-------------- -------------- ----------------- ----------------
Net sales....................................... $ 158,324 $30,963 $ 189,287
Costs and expenses:
Cost of sales................................ 107,019 17,961 $ 322 aa 125,302
Selling, general and administrative expenses. 33,530 6,539 (51) hh 40,401
383 bb
-------------- -------------- ----------------- ----------------
Operating Income (loss)......................... 17,775 6,463 (654) 23,584
Other expense (income) - 383 (383) bb -
Interest expense, net........................... 5,620 1,927 125 cc 7,306
(1,877) dd
1,214 ee
297 ff
-------------- -------------- ----------------- ----------------
Income (loss) before taxes...................... 12,155 4,153 (30) 16,278
Income tax provision (benefit).................. 4,643 1,492 83 r 6,218
-------------- -------------- ----------------- ----------------
Net income (loss)............................... $ 7,512 $ 2,661 $ (113) $ 10,060
============== ============== ================= ================
Basic earnings per share........................ $ 0.28 $ 0.37
Diluted earnings per share...................... $ 0.27 $ 0.36
Weighted average shares outstanding:
Basic....................................... 27,045 27,045
Diluted..................................... 28,192 28,192
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands)
Balance sheet adjustments:
(a) Adjustment to reflect Jarden cash on hand used to fund a portion of
the USPC acquisition.
(b) Adjustment to reflect the estimated step-up in fair value of USPC
manufacturing related machinery and equipment.
(c) Adjustment to reflect the estimated step-up in fair value of
trademarks to be recorded with the USPC acquisition. Trademarks have
indefinite lives and therefore no amortization has been computed in
the unaudited pro forma condensed consolidated financial statements.
(d) Adjustment to reflect the estimated goodwill to be recorded with the
USPC acquisition.
(e) Adjustment to eliminate debt acquisition cost related to debt not
assumed in the USPC Acquisition.
(f) Adjustment to capitalize the debt issuance costs associated with the
new senior term debt issued to fund the portion of the cash purchase
price of the USPC Acquisition. The costs will be amortized over the
term of the debt (approximately 4 years).
(g) Adjustment to reflect elimination of USPC short term debt not
assumed in the USPC Acquisition.
(h) Adjustment to reflect borrowings on Jarden's senior credit facility
used to fund the USPC Acquisition.
(i) Adjustment to reflect a liability for the exercise of the put/call
agreement resulting in the purchase of the remaining 24.6% of the
shares of USPC.
(j) Adjustment to reflect a liability for the portion of the purchase
price withheld from the Sellers of USPC in order to fund potential
indemnification claims.
(k) Adjustment to reflect elimination of USPC long term debt not assumed
in the USPC Acquisition.
(l) Adjustments to reflect the deferred tax effect of the estimated step
up in net assets of USPC from book value to fair value in
conjunction with the USPC Acquisition.
(m) Adjustment to reflect elimination of existing stockholders' equity
of USPC.
Statements of operations adjustments:
(n) Adjustment to reflect depreciation expense on the step up in
valuation of Diamond's manufacturing related machinery and equipment
amortized over an average useful life of seven (7) years.
(o) Adjustment to reflect the elimination of Diamond's historical
interest expense.
(p) Adjustment to reflect interest expense on the drawdown of Jarden's
revolving credit facility and the issuance of term debt in order to
fund a portion of the cash purchase price of the Diamond Acquisition
based upon Jarden's effective borrowing rate on its senior credit
facility. The effect of a 1/8% change in interest rates would be $35
per year.
(q) Adjustment to reflect the elimination of Jarden's interest income
related to cash on hand used to fund a portion of the cash purchase
price of the Diamond Acquisition.
(r) Adjustment to reflect an effective tax rate of 39.2% during 2003 and
38.2% during 2004 on the pre-tax results of the acquired business
and related adjustments based on Jarden's effective tax rate for the
period.
(s) Adjustment to reflect the depreciation expense on the step up in
valuation of Lehigh's manufacturing related machinery and equipment
amortized over an average useful life of seven (7) years.
(t) Adjustment to reflect rental expense for the Macungie, PA property
not purchased with the Lehigh acquisition, but leased from the
seller by Jarden in conjunction with the Lehigh Acquisition.
(u) Adjustment to reflect the elimination of historical depreciation of
the building not purchased in the Lehigh Acquisition.
(v) Adjustment to reflect the elimination of Lehigh's historical
management fee expense charged from its Parent. The management fee
contract is being terminated in conjunction with the Lehigh
Acquisition.
(w) Adjustment to reflect the elimination of the historical
stockholders' appreciation rights plan income.
(x) Adjustment to reflect pro forma interest expense relating to:
i. the $10 million borrowing under Jarden's revolving credit
facility to partially fund the purchase price of the Lehigh
acquisition, based upon Jarden's effective borrowing rate
for its senior credit facility.
ii. the $150 million term loan issued to fund the purchase price
of the Lehigh Acquisition, based upon Jarden's effective
borrowing rate for its senior credit facility. The effect of
a 1/8% change in interest rates would be $200 per year
(y) Adjustment to reflect the elimination of Lehigh's historical
interest expense.
(z) Adjustment to reflect amortization of debt issue costs for new
senior term loan issued in conjunction with the Lehigh Acquisition.
(aa) Adjustment to reflect depreciation expense on the estimated step up
in valuation of USPC manufacturing related machinery and equipment
amortized over an estimated useful life of seven (7) years.
(bb) Adjustment to reflect the reclassification of USPC's other expense
to selling, general and administrative expenses for consistency with
Jarden's classification.
(cc) Adjustment to reflect amortization of debt issue cost associated
with second amended and restated credit facility.
(dd) Adjustment to reflect the elimination of USPC's historical interest
expense excluding interest expense related to assumed foreign debt.
(ee) Adjustment to reflect pro forma interest expense relating to the
$116 million borrowing under Jarden's Term Loan B credit facility to
fund a portion of the purchase price of the USPC acquisition, based
upon Jarden's effective borrowing rate for its senior credit
facility. The effect of a 1/8% change in interest rates would be
$145 per year.
(ff) 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.
(gg) Adjustment to reflect the weighted average effect of 4,830 shares
(stock split adjusted) issued on September 30, 2003 in the Company's
equity offering. A portion of the cash received for this equity
issuance was used to fund a portion of the cash purchase price of
USPC.
(hh) Adjustment to reflect the elimination of USPC Acquisition costs
incurred and expensed by USPC and paid by the Seller at the closing
of the USPC acquisition.