Exhibit 99.2

SYMMETRY MEDICAL INC.

Index to Financial Statements

Unaudited pro forma consolidated financial statements:

 

Introduction			2
Unaudited pro forma condensed consolidated balance sheet as of October 1, 2011			3
Unaudited pro forma condensed consolidated statements of operations for the year ended January 1, 2011 and the nine months ended October 1, 2011			4
Notes to unaudited pro forma condensed consolidated financial statements			6

 

SYMMETRY MEDICAL INC.

 

INTRODUCTION

 

Following are the unaudited pro forma consolidated financial statements of Symmetry Medical Inc. (“Symmetry”) as of October 1, 2011, for the year ended January 1, 2011 and for the nine months ended October 1, 2011. The unaudited pro forma consolidated financial statements give effect to (i) Symmetry’s acquisition of the surgical instruments product portfolio and associated assets of Codman & Shurtleff, Inc. (“Codman Surgical Instruments” or “Codman”) completed on December 29, 2011, (ii) Symmetry’s acquisition of Olsen Medical (“Olsen”) completed on August 15, 2011, (iii) the issuance of $65.0 million of senior subordinated term notes and (iv) the issuance of a $50.0 million bank term loan and modifications to the revolving line of credit under Symmetry’s amended credit agreement (collectively, the “Transactions”). The unaudited pro forma condensed consolidated balance sheet assumes that the Transactions occurred as of October 1, 2011. The unaudited pro forma condensed consolidated statements of operations for the year ended January 1, 2011 and for the nine months ended October 1, 2011 assume that the Transactions occurred on January 3, 2010. Adjustments related to the Transactions are described in the accompanying notes to the unaudited pro forma condensed consolidated financial statements.

The unaudited pro forma condensed consolidated financial statements and accompanying notes should be read together with Symmetry’s related historical consolidated financial statements and notes thereto included on Form 10-K for the year ended January 1, 2011 and the Quarterly Report on Form 10-Q for the period ended October 1, 2011, as filed with the Securities and Exchange Commission, and the Codman Surgical Instruments special purpose combined historical financial statements and notes thereto, as filed with the Securities and Exchange Commission and included within this Form 8-K/A. The unaudited pro forma condensed consolidated balance sheet and the unaudited pro forma condensed consolidated statements of operations were derived by adjusting the historical consolidated financial statements of Symmetry and Codman Surgical Instruments. These adjustments are based on currently available information and certain estimates and assumptions and, therefore, the actual effects of the Transactions may differ from the effects reflected in the unaudited pro forma consolidated financial statements. However, management believes that the assumptions provide a reasonable basis for presenting the significant effects of the Transactions as contemplated and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited condensed consolidated pro forma financial statements.

The unaudited pro forma consolidated financial statements are not necessarily indicative of the consolidated financial condition or results of operations of Symmetry had the Transactions actually been completed at the beginning of the period or as of the date specified. Moreover, the unaudited pro forma consolidated financial statements do not project consolidated financial position or results of operations of Symmetry for any future period or at any future date.

 

SYMMETRY MEDICAL INC.

 

Unaudited Pro Forma Condensed Consolidated Balance Sheet

 

 

		October 1, 2011
(in thousands)		Symmetry Historical				Codman Historical				Adjustments				Pro Forma
Assets:
Current Assets:
Cash and cash equivalents		$	20,559							$	48,037	(a)		$	20,559
											62,268	(b)
											56,667	(c)
											(166,972	)(d)
Accounts receivable, net			48,313												48,313
Inventories			80,633			$	10,024				340	(e)			90,997
Refundable income taxes			4,804												4,804
Deferred income taxes			5,506												5,506
Other current assets			3,514												3,514
Total current assets			163,329				10,024				340				173,693
Property and equipment, net			105,140				131				-				105,271
Goodwill			157,530								73,053	(g)			230,583
Intangible assets, net of accumulated amortization			42,324								81,930	(f)			124,254
Other assets			3,607				13				(13) (i)				9,189
											1,963	(a)
											2,732	(b)
											887	(c)
Total Assets			471,930				10,168				160,892				642,990
Liabilities and Shareholders' Equity:
Current Liabilities:
Accounts payable			22,724												22,724
Accrued wages and benefits			8,954												8,954
Other accrued expenses			5,516												5,516
Accrued income taxes			875												875
Deferred income taxes			41												41
Revolving line of credit			5,853												5,853
Current portion of capital lease obligations			490												490
Current portion of long-term debt			701								2,778	(a)			3,479
Total current liabilities			45,154				-				2,778				47,932
Deferred income taxes			18,167												18,167
Accrued income taxes			6,664												6,664
Other long-term liabilities			-								478	(h)			478
Capital lease obligations, less current portion			2,046												2,046
Long-term debt, less current portion			94,500								47,222	(a)			264,276
											65,000	(b)
											57,554	(c)
Total Liabilities			166,531				-				173,032				339,563
Shareholders' Equity:
Common Stock, $.0001 par value; 75,000 shares authorized; shares issued October 1, 2011			4												4
Additional paid-in capital			281,860												281,860
Retained earnings			20,312								(1,972	)(d)			18,340
Accumulated other comprehensive income			3,223												3,223
Total Shareholders' Equity			305,399				-				(1,972	)			303,427
Total Liabilities and Shareholders' Equity		$	471,930				-			$	171,060			$	642,990

 

See accompanying notes to financial statements.

 

SYMMETRY MEDICAL INC.

 

Unaudited Pro Forma Consolidated Statements of Operations

 

		Twelve months ended January 1, 2011
(in thousands, except per share data)		Symmetry Historical				Codman Historical (o) (j)				Olsen Historical				Adjustments				Pro Forma
Revenue		$	360,830			$	69,286			$	7,564			$	(1,829	)(m)		$	435,851
Cost of revenue			281,132				27,849				3,839				(860	)(m)			311,960
Gross profit			79,698				41,437				3,725				(969	)			123,891
Selling, general and administrative expenses			50,529				19,325				2,823				5,440	(l)			78,117
Facility closure and severance costs			961				-				-				-				961
Operating income			28,208				22,112				902				(6,409	)			44,813
Other (income)/expense:
Interest expense			5,698				-				20				18,335	(k)			24,053
Loss on debt extinguishment			828				-				-				-				828
Derivatives valuation gain			(1,328	)			-				-				-				(1,328	)
Other (income)/expense			1,111				(182	)			(2	)			-				927
Income before income taxes			21,899				22,294				884				(24,744	)			20,333
Income tax expense			7,928				-				363				(1,872	)(n)			6,419
Net income		$	13,971			$	22,294			$	521			$	(22,872	)		$	13,914
Net income per share:
Basic			0.39																0.39
Diluted			0.39																0.39
Weighted average common shares and equivalent shares outstanding:
Basic			35,451																35,451
Diluted			35,810																35,810

 

See accompanying notes to financial statements.

 

SYMMETRY MEDICAL INC.

 

Unaudited Pro Forma Condensed Consolidated Statements of Operations

 

		Nine months ended October 1, 2011
(in thousands, except per share data)		Symmetry Historical				Codman Historical (o) (j)				Olsen Historical				Adjustments				Pro Forma
Revenue		$	274,538			$	50,425			$	5,061				$(1,303)	(m)		$	328,721
Cost of revenue			217,233				20,789				2,397				(665)	(m)			239,754
Gross profit			57,305				29,636				2,664				(638	)			88,967
Selling, general and administrative expenses			42,469				13,719				1,714				4,063	(l)			61,965
Facility closure and severance costs			2,526																2,526
Operating income			12,310				15,917				950				(4,701	)			24,476
Other expense:
Interest expense			2,754								40				13,135	(k)			15,929
Other (income)/expense			591				(997	)			(22	)							(428	)
Income before income taxes			8,965				16,914				932				(17,836	)			8,975
Income tax expense			2,901								389				(1,046)	(n)			2,244
Net income		$	6,064			$	16,914			$	543			$	(16,790	)		$	6,731
Net income per share:
Basic		$	0.17															$	0.19
Diluted		$	0.17															$	0.19
Weighted average common shares and equivalent shares outstanding:
Basic			35,537																35,537
Diluted			36,000																36,000

 

 

See accompanying notes to financial statements.

SYMMETRY MEDICAL INC.

 

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

  

Note 1. Basis of Presentation and Other Transactions (in millions)

The historical financial information as of October 1, 2011 is derived from the historical consolidated financial statements of Symmetry and the special purpose combined financial statements of Codman Surgical Instruments (“Codman”). The pro forma adjustments have been prepared as if the transactions described in these footnotes had taken place on October 1, 2011 in the case of the pro forma balance sheet or as of January 3, 2010, in the case of the pro forma statements of operations for the year ended January 1, 2011 and the nine months ended October 1, 2011.

The unaudited pro forma condensed consolidated balance sheet reflects the following transactions:

•

the acquisition of Codman for a total cash purchase price of $165.0 million;

•

the issuance of $65.0 million of senior subordinated term notes;

•

the issuance of a $50.0 million bank term loan issued under Symmetry’s amended credit agreement;

•

the revolving line of credit borrowings under Symmetry’s amended credit agreement; and,

•

the payment of estimated underwriting commissions, financing origination fees and acquisition related expenses.

 

The unaudited pro forma consolidated statement of operations reflects the following transactions:

•

the acquisition of Codman for a total cash purchase price of $165.0 million;

•

the acquisition of Olsen for a total cash purchase price of $11.0 million;

•

the issuance of $65.0 million of senior subordinated term notes;

•

the issuance of a $50.0 million bank term loan issued under Symmetry’s amended credit agreement; and

•

the revolving line of credit borrowings under Symmetry’s amended credit agreement, including the additional borrowings related to the acquisition of Codman and Olsen.

 

The Codman purchase price allocation is preliminary.

Note 2. Impact of a Transitional Service Agreement on Codman Historical Results (in millions)

The pro forma statements of operations for 2011 and 2010 included within this Form 8-K/A reflect Codman’s revenues from the sale of products to third parties.  As part of a transitional services agreement (“TSA”) between Symmetry and Codman & Shurtleff, Inc, international affiliates of Codman will act as Symmetry’s distributors on sales outside of the United States for an agreed upon period. Under the TSA, Symmetry will sell to Codman & Shurtleff, Inc. at approximately a 38% discount off of country specific average external selling prices, resulting in a reduction to Symmetry revenues outside of the United States in future periods as compared to those presented in the pro forma statements of operations.  In 2010, total sales were approximately $69 million with sales outside of the United States comprised of approximately $24 million of Codman external customer sales.  Had the TSA been in effect in 2010, we estimate the impact of the reduction to Codman’s revenue to be approximately $9 million, resulting in net revenue outside of the United States of approximately $15 million and total year revenue of approximately $60 million. Further, the pro forma statements of operations include allocated selling, general and administrative costs related to these Codman affiliates outside the United States.  We estimate that these costs will not continue going forward under the TSA and selling, general and administrative costs would therefore have been lower in 2010 by approximately $8 million had the TSA been in effect.   Thus, an estimated net impact in 2010 of operating under the TSA would result in a reduction of Codman operating income of approximately $1 million.  The estimated impact of the TSA on 2011 nine month historical results would be a reduction in revenue of approximately $7 million, a reduction of operating expenses of  approximately $6 million and a net reduction in operating income of $1 million. Symmetry is considering alternatives for international sales upon completion of the TSA including restoration of direct sales as well as country specific independent distributors.

SYMMETRY MEDICAL INC.

Notes to Unaudited Pro Forma Consolidated Financial Statements

 

Note 3. Pro Forma Adjustments and Assumptions (in millions)

(a)

Asset adjustment reflects the net proceeds to Symmetry of $48.0 million from the issuance of a $50.0 million bank term loan due 2016 after paying related issuance costs of approximately $2.0 million. Liability adjustment reflects issuance of the term loan.

(b)

Asset adjustment reflects the net proceeds to Symmetry of $62.3 million from the issuance and sale of $65.0 million of new senior subordinated term notes due 2017 after paying related issuance costs totaling approximately $2.7 million. Liability adjustment reflects the issuance and sale of the notes.

(c)

Asset adjustment reflects the net proceeds to Symmetry of $56.7 million from additional borrowings under the revolving line of credit related to the acquisition of Codman after paying related issuance costs totaling approximately $0.9 million. Liability adjustment reflects the additional borrowings under the revolving line of credit.

(d)

Asset adjustment reflects the estimated aggregate cash paid for the acquisition of Codman of $167.0 million including acquisition costs of $2.0 million. Equity adjustment reflects acquisition costs.

(e)

Reflects an adjustment to record Codman’s inventory at fair value. The estimated fair value of Codman’s inventory was $10.3 million at October 1, 2011 compared to a carrying value of $10.0 million resulting in a total increase to inventory of $0.3 million.

(f)

Reflects an adjustment to record $81.9 million of intangible assets acquired in the acquisition of Codman.

(g)

Reflects an adjustment to record the excess purchase price of $73.1 million related to the acquisition of Codman to goodwill.

(h)

Reflects an adjustment to record Codman’s pension benefits and other postretirement employee benefits’ plan assets and obligations at estimated fair values. The estimated fair value of Codman’s plan obligation was a $0.5 million obligation at October 1, 2011.

(i)

Reflects elimination of Codman assets which were not acquired.

(j)

Codman’s historical cost of revenue, selling, general and administrative expenses and other expenses (income) include $3.3 million, $7.5 million and ($0.7) million, respectively, in 2011 and $4.7 million, $10.3 million and $0.1 million, respectively, in 2010 related to allocations and estimates of cost of sales, distribution, selling and marketing, general and administrative, research and development and other expense (income) attributable to operations of Codman pushed down from the parent.

(k)

Reflects net change in interest expense as a result of the issuance of a $50.0 million bank term loan, the issuance of $65.0 million of senior subordinated term notes and modifications to the interest rate and additional borrowings under the amended revolving credit facility to fund a portion of the Codman acquisition. The individual components of the net change in interest expense are as follows (in millions):

		Year Ended January 1, 2011				Nine Months Ended October 1, 2011
Interest expense as reported by Symmetry		$	5.7			$	2.8
Interest expense as reported by Codman and Olsen			–				–
Total interest expense			5.7				2.8
Pro forma interest expense associated with the bank term loan			3.4				2.1
Pro forma interest expense associated with the senior subordinated term notes			10.4				7.8
Pro forma interest expense associated with the incremental borrowings on the amended revolving line of credit			6.4				4.8
Removal of prior interest expense associated with the bank revolving line of credit			(1.9	)			(1.6	)
Pro forma interest expense			24.0				15.9
Net adjustment		$	18.3			$	13.1

 

 

(l)

Reflects the adjustments to amortization expense resulting from recording Codman’s and Olsen’s intangible assets at their estimated fair value.

(m)

Reflects the adjustments to eliminate revenue and related cost of revenue on historical sales from Olsen to Symmetry.

(n)

Reflects the adjustments to record income tax expense for Codman’s income before income taxes at an assumed rate of 36% and to record the impact to income tax expense for the remaining pro forma adjustments which impacted income before income taxes at an assumed rate of 40%.

 

(o)

Certain reclassifications have been made in the historical Codman financial statements to conform to Symmetry’s financial statement presentation. These reclassifications have no impact on net income or stockholders’ equity.

		Twelve months ended January 1, 2011
(in thousands)		As Reported				Reclassifications				Codman Historical
Revenue		$	69,286							$	69,286
Direct expenses
Cost of sales			24,286			$	(24,286	)			-
Distribution			4,215				(4,215	)			-
Selling and marketing			13,712				(13,712	)			-
General and administrative			3,845				(3,845	)			-
Research and development			1,116				(1,116	)			-
Other expense (income), net			(182	)			182				-
Total direct expenses			46,992				(46,992	)			-
Revenue in excess of direct expenses			22,294				-				-
Cost of revenue			-				27,849				27,849
Gross profit			-				-				41,437
Selling, general and administrative expenses			-				19,325				19,325
Facility closure and severance costs			-				-				-
Operating Income			-				-				22,112
Other expense:			-				-				-
Interest expense			-				-				-
Loss on debt extinguishment			-				-				-
Derivatives valuation (gain)/loss			-				-				-
Other (income)/expense			-				(182	)			(182	)
Income before income taxes			-				-				22,294
Income tax expense			-				-				-
Net income (loss)			-				-			$	22,294

 

SYMMETRY MEDICAL INC.

 

Notes to Unaudited Pro Forma Consolidated Financial Statements

 

(o)     continued

		Nine months ended October 1, 2011
(in thousands)		As Reported				Reclassifications				Codman Historical
Revenue		$	50,425				-			$	50,425
Direct expenses
Cost of sales			18,831			$	(18,831	)			-
Distribution			2,359				(2,359	)			-
Selling and marketing			10,112				(10,112	)			-
General and administrative			2,472				(2,472	)			-
Research and development			734				(734	)			-
Other expense (income), net			(997	)			997				-
Total direct expenses			33,511				(33,511	)			-
Revenue in excess of direct expenses			16,914				33,511				-
Cost of revenue			-				20,789				20,789
Gross profit			-				-				29,636
Selling, general and administrative expenses			-				13,719				13,719
Facility closure and severance costs			-				-				-
Operating Income			-				-				15,917
Other expense:			-				-				-
Interest expense			-				-				-
Loss on debt extinguishment			-				-				-
Derivatives valuation (gain)/loss			-				-				-
Other (income)/expense			-				(997	)			(997	)
Income before income taxes			-				-				16,914
Income tax expense			-				-				-
Net income (loss)			-				-			$	16,914