LAWSON PRODUCTS INC/NEW/DE/ - FORM 8-K - EX-99.2 - EXHIBIT 99.2 - September 3, 2010

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8-K - FORM 8-K - LAWSON PRODUCTS INC/NEW/DE/c05660e8vk.htm
EX-2.1 - EXHIBIT 2.1 - LAWSON PRODUCTS INC/NEW/DE/c05660exv2w1.htm
EX-99.1 - EXHIBIT 99.1 - LAWSON PRODUCTS INC/NEW/DE/c05660exv99w1.htm
EX-10.1 - EXHIBIT 10.1 - LAWSON PRODUCTS INC/NEW/DE/c05660exv10w1.htm
EXHIBIT 99.2
Lawson Products, Inc.
Pro Forma Condensed Consolidated Financial Information
(Unaudited)
On September 1, 2010, Lawson Products Inc. (“Lawson” or the “Company”) announced the sale of substantially all of the assets of Assembly Component Systems, Inc. (“ACS”), a wholly owned subsidiary, to Supply Technologies LLC (“Supply Technologies”), a wholly owned company of Park-Ohio Holdings Corp.
Under the terms of the Asset Purchase Agreement dated August 31, 2010 (the “Agreement”), Supply Technologies purchased substantially all of the assets of ACS for $19.0 million. Of the total consideration, $16.0 million was paid to Lawson in cash on September 1, 2010 and the remaining $3.0 million will be paid in quarterly installments over the next three years, subject to the terms of a subordinated promissory note between Supply Technologies and Lawson. In addition, Supply Technologies assumed certain liabilities of ACS. The purchase price may be adjusted based on the final value of the net assets and liabilities of ACS as of August 31, 2010.
The unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2010, set forth below has been presented after giving effect to the sale of ACS (the “Sale”) as if it had occurred on June 30, 2010. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the six-month period ended June 30, 2010 and for the years ended December 31, 2009, 2008 and 2007 set forth below have been presented after giving effect to the Sale as if it had occurred at the beginning of the period presented, and does not assume any interest income on cash proceeds.
The unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 have been derived primarily from the audited Consolidated Financial Statements of the Company included in its fiscal 2009 Annual Report on Form 10-K. The unaudited Pro Forma Condensed Consolidated Statement of Operations for the six-months ended June 30, 2010 and the unaudited Pro Forma Condensed Consolidated Balance Sheet as of June 30, 2010, have been derived primarily from the unaudited Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2010. The unaudited pro forma financial statement information is based upon available information and assumptions that the Company believes are reasonable under the circumstance and were prepared to illustrate the estimated effects of the Sale.
The unaudited pro forma financial statement information has been provided for informational purposes and should not be considered indicative of the financial condition or results of operations that would have been achieved had the Sale occurred as of the periods presented. In addition, the unaudited pro forma financial statement information does not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The unaudited pro forma financial statement information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its fiscal 2009 Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, and June 30, 2010, that the Company filed with the Securities and Exchange Commission in 2010.

 

 

 

Lawson Products, Inc.
Pro Forma Condensed Consolidated Balance Sheet
(Dollars in thousands, except per share data)
(Unaudited)
                         
    June 30, 2010  
            ACS        
            Pro Forma        
    As Reported (1)     Adjustments     Pro Forma  
ASSETS
                        
 
                        
Current assets:
                        
Cash and cash equivalents
   $ 8,616     $ 16,000 (2)   $ 24,616  
Accounts receivable, less allowance for doubtful accounts
     46,372       (8,691 )(3)     37,681  
Inventories
     75,067       (16,972 )(3)     58,095  
Miscellaneous receivables and prepaid expenses
     11,567       1,758 (4)     13,325  
Deferred income taxes
     3,896       (1,542 )(5)     2,354  
Discontinued assets
     464       —       464  
 
                  
Total current assets
     145,982       (9,447 )     136,535  
 
                        
Property, plant and equipment, less accumulated depreciation and amortization
     40,961       (149 )(3)     40,812  
 
                        
Cash value of life insurance
     17,040       —       17,040  
Deferred income taxes
     12,977       —       12,977  
Goodwill
     27,875       —       27,875  
Other assets
     2,490       2,250 (6)     4,740  
 
                  
 
                        
Total assets
   $ 247,325     $ (7,346 )   $ 239,979  
 
                  
 
                        
LIABILITIES AND STOCKHOLDERS’ EQUITY
                        
 
                        
Current liabilities:
                        
Accounts payable
   $ 23,233     $ (4,702 )(7)   $ 18,531  
Settlement payable
     10,000       —       10,000  
Accrued expenses and other liabilities
     29,857       1,469 (8)     31,326  
 
                  
Total current liabilities
     63,090       (3,233 )     59,857  
 
                  
 
                        
Revolving line of credit
     5,150       —       5,150  
Security bonus plan
     25,799       —       25,799  
Deferred compensation
     10,946       —       10,946  
Other
     2,654       —       2,654  
 
                  
 
     44,549       —       44,549  
 
                  
 
                        
Stockholders’ equity:
                        
Preferred stock, $1 par value:
                        
Authorized — 500,000 shares, Issued and outstanding — None
     —       —       —  
Common stock, $1 par value:
                        
Authorized — 35,000,000 shares, Issued and outstanding — 8,522,001 shares
     8,522       —       8,522  
Capital in excess of par value
     4,951       —       4,951  
Retained earnings
     124,884       (4,113 )(9)     120,771  
Accumulated other comprehensive income
     1,329       —       1,329  
 
                  
Stockholders’ equity
     139,686       (4,113 )     135,573  
 
                  
Total liabilities and stockholders’ equity
   $ 247,325     $ (7,346 )   $ 239,979  
 
                  
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

 

 

Lawson Products, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
(Unaudited)
                         
    Six Months Ended June 30, 2010  
            ACS        
            Pro Forma        
    As Reported (10)     Adjustments     Pro Forma  
Net sales
   $ 196,696     $ (25,858 )   $ 170,838  
Cost of goods sold
     82,584       (19,002 )     63,582  
 
                  
Gross profit
     114,112       (6,856 )     107,256  
 
                        
Operating expenses:
                        
Selling, general and administrative expenses
     106,252       (6,118 )     100,134  
Severance and other charges
     1,699       —       1,699  
Gain on disposal of property, plant and equipment
     (1,701 )     —       (1,701 )
 
                  
Operating income
     7,862       (738 )     7,124  
 
                        
Other income/expense, net
     (179 )     (55 )     (234 )
 
                  
 
                        
Income from continuing operations before income taxes
     7,683       (793 )     6,890  
Income taxes
     3,567       (334 )     3,233  
 
                  
 
                        
Income from continuing operations
   $ 4,116     $ (459 )   $ 3,657  
 
                  
 
                        
Basic and diluted income from continuing operations per share of common stock
   $ 0.48     $ (0.05 )   $ 0.43  
 
                  
 
                        
Weighted average shares outstanding:
                        
Basic
     8,522       8,522       8,522  
Diluted
     8,526       8,526       8,526  
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

 

 

Lawson Products, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
(Unaudited)
                         
    Year Ended December 31, 2009  
            ACS        
            Pro Forma        
    As Reported (11)     Adjustments     Pro Forma  
Net sales
   $ 378,881     $ (46,427 )   $ 332,454  
Cost of goods sold
     161,104       (36,986 )     124,118  
 
                  
Gross profit
     217,777       (9,441 )     208,336  
 
                        
Operating expenses:
                        
Selling, general and administrative expenses
     215,123       (12,668 )     202,455  
Severance and other charges
     6,820       (284 )     6,536  
Settlement and related costs
     154       —       154  
Impairment of long-lived assets
     1,267       (224 )     1,043  
 
                  
Operating loss
     (5,587 )     3,735       (1,852 )
 
                        
Other income/expense, net
     (150 )     142       (8 )
 
                  
 
                        
Loss from continuing operations before income taxes
     (5,737 )     3,877       (1,860 )
Income taxes
     (3,121 )     1,446       (1,657 )
 
                  
 
                        
Loss from continuing operations
   $ (2,616 )   $ 2,431     $ (185 )
 
                  
 
                        
Basic and diluted loss from continuing operations per share of common stock
   $ (0.31 )   $ 0.29     $ (0.02 )
 
                  
 
                        
Basic and diluted weighted average shares outstanding
     8,522       8,522       8,522  
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

 

 

Lawson Products, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
(Unaudited)
                         
    Year Ended December 31, 2008  
            ACS        
            Pro Forma        
    As Reported (11)     Adjustments     Pro Forma  
Net sales
   $ 485,207     $ (62,143 )   $ 423,064  
Cost of goods sold
     206,209       (52,935 )     153,274  
 
                  
Gross profit
     278,998       (9,208 )     269,790  
 
                        
Operating expenses:
                        
Selling, general and administrative expenses
     256,060       (13,486 )     242,574  
Severance and other charges
     9,252       6       9,258  
Settlement and related costs
     31,666       —       31,666  
Impairment of goodwill
     2,251       (2,251 )     —  
 
                  
Operating loss
     (20,231 )     6,523       (13,708 )
 
                        
Other income/expense, net
     (469 )     307       (162 )
 
                  
 
                        
Loss from continuing operations before income taxes
     (20,700 )     6,830       (13,870 )
Income taxes
     6,360       2,453       8,813  
 
                  
 
                        
Loss from continuing operations
   $ (27,060 )   $ 4,377     $ (22,683 )
 
                  
 
                        
Basic and diluted loss from continuing operations per share of common stock
   $ (3.18 )   $ 0.51     $ (2.66 )
 
                  
 
                        
Basic and diluted weighted average shares outstanding
     8,522       8,522       8,522  
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

 

 

Lawson Products, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
(Unaudited)
                         
    Year Ended December 31, 2007  
            ACS        
            Pro Forma        
    As Reported (11)     Adjustments     Pro Forma  
Net sales
   $ 512,543     $ (67,437 )   $ 445,106  
Cost of goods sold
     208,714       (51,027 )     157,687  
 
                  
Gross profit
     303,829       (16,410 )     287,419  
 
                        
Operating expenses:
                        
Selling, general and administrative expenses
     265,267       (12,820 )     252,447  
Severance and other charges
     12,328       (509 )     11,819  
Settlement and related costs
     5,793       —       5,793  
 
                  
Operating income
     20,441       (3,081 )     17,360  
 
                        
Other income/expense, net
     (369 )     (2 )     (371 )
 
                  
 
                        
Income from continuing operations before income taxes
     20,072       (3,083 )     16,989  
Income taxes
     8,740       (1,379 )     7,361  
 
                  
 
                        
Income from continuing operations
   $ 11,332     $ (1,704 )   $ 9,628  
 
                  
 
                        
Basic and diluted income from continuing operations per share of common stock
   $ 1.33     $ (0.20 )   $ 1.13  
 
                  
 
                        
Weighted average shares outstanding:
                        
Basic
     8,522       8,522       8,522  
Diluted
     8,523       8,523       8,523  
See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

 

 

 

Lawson Products, Inc.
Notes to the Pro Forma Condensed Consolidated Financial Statements
(Unaudited)
(1)   Represents balances as reported on the unaudited Condensed Consolidated Balance Sheet included in the Company’s Form 10-Q for the quarter ended June 30, 2010.
 
(2)   Represents cash proceeds received from purchaser on September 1, 2010.
 
(3)   Represents asset balances that were acquired by purchaser pursuant to the Agreement.
 
(4)   Represents the $0.8 million current portion of the note receivable from the purchaser, $1.5 million of tax asset balances that were transferred from deferred income taxes to income taxes receivable as a result of the transaction, offset by $0.5 million of miscellaneous receivables and prepaid expenses that were acquired by the purchaser.
 
(5)   Tax asset balances that were transferred from deferred income taxes to income taxes receivable as a result of the transaction.
 
(6)   Represents the $2.2 million long term portion of the note receivable from the purchaser.
 
(7)   Represents accounts payables that were assumed by purchaser pursuant to the Agreement.
 
(8)   Represents $1.7 million of estimated transaction costs and working capital adjustments related to the Sale, offset by $0.4 million of accrued liabilities that were assumed by purchaser pursuant to the Agreement.
 
(9)   Represents the estimated pre-tax loss on the Sale.
 
(10)   Represents results of operations on the unaudited Condensed Consolidated Statements of Operations included in the Company’s Form 10-Q for the six months ended June 30, 2010.
 
(11)   Represents results of operations on the Consolidated Statements of Operations included in the Company’s Form 10-K for the years ended December 31, 2009, 2008 and 2007.

 

 

LAWSON PRODUCTS INC/NEW/DE/ Reports