Exhibit 99.3
PRO FORMA FINANCIAL DATA
(unaudited)
The following unaudited pro forma statements of operations for the twelve
months ended June 30, 2000 reflect the historical accounts of the Registrant for
that period, adjusted to give pro forma effect to the Safe Passage acquisition
as if the transaction had occurred at the beginning of the period presented.
The following unaudited pro forma balance sheet as of June 30, 2000
reflects the historical accounts of the Registrant as of that date adjusted to
give pro forma effect to the Safe Passage acquisition as if the transaction had
occurred as of June 30, 2000.
The pro forma financial data and accompanying notes should be read in
conjunction with the Consolidated Financial Statements and related notes
included in the Registrant's 2000 Annual Report on Form 10-K previously filed
with the Securities and Exchange Commission (the "Commission"), and the Form
10-Q for the quarter ended September 30, 2000 previously filed with the
Commission. The Registrant believes that the assumptions used in the following
statements provide a reasonable basis on which to present the pro forma
financial data. The pro forma financial data is provided for informational
purposes only and should not be construed to be indicative of the Registrant's
financial condition or results of operations had the Safe Passage acquisition
been consummated on the dates assumed and are not intended to project the
Registrant's financial condition on any future date or results of operations for
any future period.
28
<PAGE>
PRO FORMA STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED JUNE 30, 2000
(dollars in thousands, except share data)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
Historical Adjustments Pro Forma
----------- ----------- -----------
<S> <C> <C> <C>
Net sales ..................................... $ 6,713 $ 1,953(1) $ 8,666
Cost of goods sold ............................ 3,775 132(1) 3,907
----------- ----------- -----------
Gross Profit ........................... 2,938 1,821 4,759
----------- ----------- -----------
Operating Expenses:
Selling ................................. 454 -- 454
General and administrative .............. 1,714 1,526(1) 3,240
Goodwill amortization ................... 228 302(2) 530
----------- ----------- -----------
Operating income ........................ 542 (7) 535
Other income (expense):
Investment and interest income ............... 337 (102)(3) 235
Interest expense ............................. (174) (21)(1) (195)
----------- ----------- -----------
Income (loss) from operations
before income taxes and minority
interest ................................ 705 (130) 575
Provision for income taxes .................... 31 22(4) 53
----------- ----------- -----------
Income (loss) from operations
before minority interest ............... 674 (152) 522
Minority interest ............................ -- (50)(5) (50)
----------- ----------- -----------
Net income (loss) ...................... 674 (202) 472
Preferred dividends ........................... 109 -- 109
----------- ----------- -----------
Income (loss) from operations
available to common shareholders ....... $ 565 $ (202) $ 363
----------- ----------- -----------
Income per share:
Basic ......................................... $ .39 $ .25
----------- -----------
Diluted ....................................... $ .37 $ .25
----------- -----------
Weighted average shares:
Basic ......................................... 1,464,465 1,464,465
----------- -----------
Diluted ....................................... 1,834,968 1,834,968
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
pro forma financial statements.
29
<PAGE>
FOOTNOTES TO PRO FORMA STATEMENT OF OPERATIONS
(dollars in thousands)
(unaudited)
(1) Historical sales, cost of sales and operating expenses of Safe Passage for
the twelve month period ended June 30, 2000.
(2) Amortization of goodwill for the twelve month period ended June 30, 2000.
Goodwill of $2,115 is being amortized on a straight line basis over a 7
year life. As of the September 14, 2000 Acquisition date, the opening
balance sheet goodwill resulting from the Acquisition was approximately
$1,803. The decrease in goodwill from the pro forma amount noted above is
a result of the operating results of Safe Passage from June 30, 2000
through September 13, 2000.
(3) Reduction of the Registrant's investment and interest income resulting
from the use of $1,625 of cash as consideration for the acquisition of
Safe Passage, at an annualized interest rate of 6.3%.
(4) Provision for state income taxes relating to the operations of Safe
Passage, after recognition that the amortization of goodwill is not
deductible for tax reporting purposes. Any federal income tax obligations
would be sheltered by the net operating loss carryforwards of the
Registrant.
(5) Minority interest, as defined, resulting from the 20% ownership retained
by the prior owners of Safe Passage.
30
<PAGE>
PRO FORMA BALANCE SHEET
AS OF JUNE 30, 2000
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Pro Forma
ASSETS Historical Adjustments Pro Forma
---------- ----------- ---------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents ............... $ 4,951 $ (1,571)(1) $ 3,380
Marketable securities, at market value .. 1,806 -- 1,806
Accounts receivable ..................... 465 23(2) 488
Inventories, net ........................ 928 -- 928
Other current assets .................... 251 33(3) 284
-------- -------- --------
Total current assets ............ 8,401 (1,515) 6,886
Property, plant and equipment, net ............ 1,365 176(2) 1,541
-------- -------- --------
Other assets:
Goodwill, net ........................... 5,428 2,115(6) 7,543
Other noncurrent assets ................. 17 16(4) 33
-------- -------- --------
Total other assets .............. 5,445 2,131 7,576
-------- -------- --------
$ 15,211 $ 792 $ 16,003
======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes payable and current maturities of
long-term debt ........................ $ 253 $ 115(2) 368
Accounts payable ........................ 127 92(2) 219
Accrued expenses ........................ 492 389(7) 881
Deferred income ......................... -- 176(5) 176
Accrued tax reserves .................... 720 -- 720
-------- -------- --------
Total current liabilities ..................... 1,592 772 2,364
-------- -------- --------
Long-term debt, less current maturities ....... 1,672 12(2) 1,684
-------- -------- --------
Minority interest in Subsidiary's common stock -- 8(8) 8
-------- -------- --------
Stockholders' equity .......................... 11,947 -- 11,947
-------- -------- --------
$ 15,211 $ 792 $ 16,003
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
pro forma financial statements.
31
<PAGE>
FOOTNOTES TO PRO FORMA BALANCE SHEET
(dollars in thousands)
(unaudited)
(1) Use of $1,625 as consideration for the acquisition of Safe Passage, offset
by $54 of cash acquired.
(2) Historical assets, liabilities, and debt of Safe Passage as of June 30,
2000, at cost which approximates fair value.
(3) Historical other current assets of Safe Passage as of June 30, 2000, at
cost which approximates fair value. Of the total $187 of other current
assets of Safe Passage as of June 30, 2000, $37 related to prepaid
acquisition costs which were not assumed by Aristotle and $117 related to
current deferred tax assets which were fully reserved for by Aristotle at
date of Acquisition. If such deferred tax assets are subsequently
realized, the benefit will be recognized as an adjustment to goodwill.
(4) Historical other assets of Safe Passage as of June 30, 2000, at cost which
approximates fair value. Of the total $114 of other assets of Safe Passage
as of June 30, 2000, $38 related to intellectual property which is
reflected as a component of goodwill and $60 related to long-term deferred
tax assets which were fully reserved for by Aristotle at date of
Acquisition. If such deferred tax assets are subsequently realized, the
benefit will be recognized as an adjustment to goodwill.
(5) Fair value of Safe Passage deferred revenue as of June 30, 2000, after
consideration of the fair value of the associated selling efforts prior to
the Acquisition.
(6) Excess of purchase price over the fair market value of assets and
liabilities assumed in the acquisition of Safe Passage:
Purchase price to Seller $ 1,625
Transaction and other related costs incurred 318
-------
Total purchase price 1,943
Fair market value of assets and liabilities assumed 172
-------
Excess of purchase price over the fair market value
of assets and liabilities assumed $ 2,115
=======
As of the September 14, 2000 Acquisition date, the opening balance
sheet goodwill resulting from the Acquisition was approximately $1,803.
The decrease in goodwill from the pro forma amount noted above is a result
of the operating results of Safe Passage from June 30, 2000 through
September 13, 2000.
(7) Historical accrued expenses of Safe Passage of $71 obtained in the
acquisition of Safe Passage and $318 accrued transaction and other related
costs incurred in connection with the acquisition of Safe Passage.
(8) Minority interest, as defined, resulting from the 20% ownership retained
by the prior owners of Safe Passage.
32
