Introduction to Unaudited Pro Forma Combined Financial Information

Exhibit 99.3

Introduction to Unaudited Pro Forma Combined Financial Information

On April 1, 2008, a newly-formed and indirect, wholly-owned Delaware subsidiary of the Company, LaJobi, Inc. (“LJ”), entered into an Asset Purchase Agreement (the “Asset Agreement”) with LaJobi Industries, Inc., a New Jersey corporation (“LaJobi”), and each of Xxxxxxxx Xxxxxx and Xxxxxx Xxxxxx, for the purchase of substantially all of the assets used in the business of LaJobi and specified obligations. The transactions contemplated by the Asset Agreement (the “Asset Purchase”) were consummated as of April 2, 2008.  Capitalized terms used but undefined herein shall have the meanings ascribed to them in the Asset Agreement, which is filed as Exhibit 2.3 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007, as amended (the “2007 10-K”).

The aggregate purchase price payable for the business of Seller was equal to: $47.0 million, reduced by the amount of assumed indebtedness (including capitalized lease obligations) as adjusted pursuant to a working capital adjustment, plus the earnout consideration described below. At Closing, LaJobi paid $44.5 million in cash to Seller, plus $3.2 million (the estimated amount of the working capital adjustment). As the final working capital adjustment was $3.0 million, the Seller subsequently refunded $0.2 million.  The remaining $2.5 million of the purchase price was deposited in escrow at Closing in respect of potential indemnification claims.

As additional consideration, if the following conditions have been satisfied, LJ will pay the amounts described below:

(a)     Subject to paragraph (b) below, provided that the EBITDA of LaJobi’s business (the “Business”) (determined as provided in the Asset Agreement) has grown at a compound annual growth rate (“CAGR”) of not less than 4% during the period from January 1, 2008 through December 31, 2010 (the “Measurement Date”), as compared to the specified EBITDA of the Business for calendar year 2007, LJ will pay to LaJobi a percentage of the Agreed Enterprise Value of LJ as of the Measurement Date or Early Measurement Date (as defined in paragraph (b) below), as the case may be. The amount of such payment will range from zero to a maximum amount of $15.0 million (the “LaJobi Earnout Consideration”). The “Agreed Enterprise Value” will be the product of (i) the Business’s EBITDA during the twelve (12) months ending on the Measurement Date or Early Measurement Date (or, in the event an Early Measurement Date selected by LaJobi as permitted by the Asset Agreement is a date prior to January 1, 2009, the annualized EBITDA of the Business for such period), as the case may be, multiplied by (ii) an applicable multiple (ranging from 5 to 9) depending on the specified levels of CAGR achieved, subject to the $15.0 million cap described above.

(b)     In the event LJ, prior to the Measurement Date, relocates the principal location of the Business beyond an agreed distance, the calculation of the LaJobi Earnout Consideration may be accelerated upon election of LaJobi. For purposes of determining the LaJobi Earnout Consideration, the CAGR shall be based on the period from January 1, 2008 through the last day of the month (the “Early Measurement Date”) immediately preceding the date of the relocation. In such event, any LaJobi Earnout Consideration payable will be discounted, at the Agreed Rate, from the scheduled payment date to, and including, such early payment date.

Any LaJobi Earnout Consideration will be recorded as additional goodwill when and if paid.

Under the Asset Agreement, LaJobi is entitled to indemnification from Seller and the Stockholders for various matters, including, but not limited to, breaches of representations, warranties or covenants, and specified excluded obligations, subject, in the case of specified matters, to certain minimum thresholds and a maximum aggregate indemnification limit of $10.0 million. The right to indemnification (other than with respect to certain specified exceptions) terminates 18 months after the Closing Date.

In accordance with the Asset Agreement, XxXxxx entered into (i) a transitional services agreement with a Thailand affiliate of Seller, and (ii) a three year employment agreement with Xxxxxxxx Xxxxxx as President of LaJobi. Xx. Xxxxxx was formerly the President of Seller.

In connection with the Asset Agreement, the Company paid a finder’s fee to a financial institution in the amount of $1.5 million at the closing of the transaction, and has agreed to pay to such financial institution 1% of the Agreed Enterprise Value of LaJobi, payable in the same manner and at the same time as the LaJobi Earnout Consideration is paid to Seller.  Including the finder’s fee paid at closing, the Company incurred aggregate transaction expenses of approximately $2.0 million in connection with the LaJobi acquisition.

In connection with, among other things, the Asset Purchase, the credit agreement (and related documentation) pertaining to the Company’s infant and juvenile segment with LaSalle Bank National Association was amended and restated as of April 2, 2008, to, inter alia, increase the facilities available thereunder and permit the Asset Purchase.

The following sets forth certain unaudited pro forma combined financial information of Xxxx Xxxxxx and Company, Inc. and subsidiaries (the “Company”) as of March 31, 2008 and for the year ended December 31, 2007 and the three months ended March 31, 2008.  The unaudited pro forma combined balance sheet at March 31, 2008 combines the historical balance sheet of Xxxx Xxxxxx and Company, Inc. at March 31, 2008 with the historical consolidated balance sheet of LaJobi at March 31, 2008 and gives effect to the Asset Purchase and related financing as if such transactions occurred on March 31, 2008.  The unaudited pro forma combined statements of operations for the year ended December 31, 2007 and the three months ended March 31, 2008 combine the historical statements of operations of Xxxx Xxxxxx and Company Inc., for the respective periods with the historical consolidated statements of income LaJobi for the year ended December 31, 2007 and the three months ended March 31, 2008, respectively, and gives effect to the Asset Purchase and related financing as if such transactions occurred on January 1, 2007.

The unaudited pro forma combined financial information set forth below reflects pro forma adjustments that are based upon available information and certain assumptions that the Company believes are reasonable and which have been made solely for the purposes of developing such pro forma information.  The historical financial information of LaJobi has been derived from the financial statements of LaJobi included in this Current Report on Form 8-K/A.  Pro forma adjustments reflect only those adjustments which are factually determinable and do not include the impact of contingencies.  Pro forma adjustments reflect the recording of the fair value of the assets acquired and the liabilities to be assumed of LaJobi.  The unaudited pro forma combined financial information is presented for informational purposes only and does not purport to represent the Company’s results of operations or financial position that would have resulted had the Asset Purchase been consummated as of the dates or for the periods indicated.  Additionally, the pro forma combined statements of operations should not be considered indicative of expected future results.  The Asset Purchase has been accounted for herein by the purchase method of accounting.  The pro forma information reflects preliminary estimates of the allocation of the amounts paid at closing which may be adjusted.

The unaudited pro forma combined financial statements and accompanying notes should be read in conjunction with the historical consolidated financial statements of the Company included in the Company’s 2007 Form 10-K, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2008, and the financial statements of LaJobi included in this Current Report on Form 8-K/A.

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Xxxx Xxxxxx and Company Inc.

Unaudited Pro Forma Combined Balance Sheet

March 31, 2008

(in thousands)

		Historical Xxxx Xxxxxx & Co. Inc.			Historical LaJobi			Pro Forma Adjustments			Pro Forma Combined
Current Assets:
Cash and cash equivalents		$	17,330		$	21		$	(21	)(a)	$	17,330
Accounts receivable, net		60,209			9,137			—			69,346
Related party receivable		—			41						41
Inventory, net		54,028			5,063			—			59,091
Prepaid expenses and other current assets		2,845			315			—			3,160
Income tax receivable		761			—			—			761
Deferred income taxes		1,611			—			—			1,611
Total Current Assets		136,784			14,577			(21		)	151,340
Property, plant and equipment, net		12,596			243			—			12,839
Goodwill		120,773			—			9,425		(b)	130,198
Intangible assets		51,168			—			34,284		(b)	85,452
Restricted cash		944			—			—			944
Deferred income taxes		861			—			—			861
Other assets		5,533			61			645		(c)	6,239
Total assets		$	328,659		$	14,881		$	44,333		$	387,873
Current Liabilities:
Current portion of long-term debt		$	12,000		$	—		$	14,400	(d)	$	26,400
Short-term debt		26,813			2,791			(2,791		)(a)	26,813
Leases Payable		—			115			(83		)(a)	32
Accounts payable		10,150			2,688			(267		)(a)	12,571
Accrued expenses		23,654			1,866			281		(a)	25,801
Loan guarantee payable		—			930			(930		)(a)	—
Income taxes payable		2,678			—			—			2,678
Total current liabilities		75,295			8,390			10,610			94,295
Income taxes payable long-term		9,406			—			—			9,406
Deferred income taxes		3,736			—			—			3,736
Long-term debt net of current portion		29,000			—			38,260		(d)	67,260
Other long-term liabilities		4,049			—			1,954		(a)	6,003
Total liabilities		121,486			8,390			50,824			180,700
Stockholders’ Equity:
Common stock		2,674			1			(1		)(e)	2,674
Additional paid in capital		91,289			60			(60		)(e)	91,289
Retained earnings		202,228			6,430			(6,430		)(e)	202,228
Accumulated other comprehensive income		17,065			—			—			17,065
Treasury stock, at cost		(106,083		)	—			—			(106,083		)
Total stockholders’ equity		207,173			6,491			(6,491		)	207,173
Total liabilities and equity		$	328,659		$	14,881		$	44,333		$	387,873

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Xxxx Xxxxxx and Company Inc.

Unaudited Pro Forma Combined Statement of Income

Year End December 31, 2007

(in thousands, except per share data)

		Historical Xxxx Xxxxxx & Co. Inc.			Historical LaJobi			Pro Forma Adjustments			Pro Forma Combined
Net sales		$	331,173		$	54,249		$	—		$	385,422
Cost of goods sold		205,792			37,512			2,185		(j)	245,489
Gross profit		125,381			16,737			(2,185		)	139,933
Selling, general and administrative expenses		110,152			9,164			(650		)(i)	118,666
Operating income		15,229			7,573			(1,535		)	21,267
Other (expense) income:
Interest expense, including amortization of deferred financing costs		(4,947		)	(537		)	(4,358		)(f)(g)	(9,842		)
Interest and investment income		607			29			—			636
Other, net		963			—			—			963
		(3,377		)	(508		)	(4,358		)	(8,243		)
Income before provision for income taxes		11,852			7,065			(5,893		)	13,024
Provision for income taxes		2,944			2			467		(h)	3,413
Net income		$	8,908		$	7,063		$	(6,360	)	$	9,611
Net income per share
Basic		$	0.42								$	0.45
Diluted		$	0.42								$	0.45
Weighted average shares:
Basic		21,130,000									21,130,000
Diluted		21,215,000									21,215,000

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Xxxx Xxxxxx and Company Inc.

Unaudited Pro Forma Combined Statement of Operations

Three Months Ended March 31, 2008

(in thousands, except per share data)

		Historical Xxxx Xxxxxx & Co. Inc,			Historical LaJobi, Inc.			Pro Forma Adjustments			Pro Forma Combined
Net sales		$	75,924		$	16,955		$	—		$	92,879
Cost of goods sold		45,366			11,516			596		(j)	57,478
Gross profit		30,558			5,439			(596		)	35,401
Selling, general and administrative expenses		26,984			2,764			—			29,748
Operating income		3,574			2, 675			(596		)	5,653
Other (expense) income:
Interest expense, including amortization of deferred financing costs		(1,192		)	(115		)	(892		)(f)(g)	(2,199		)
Interest and investment income		165			6			—			171
Other, net		428			—			—			428
		(599		)	(109		)	(892		)	(1,600		)
Income before provision for income taxes		2,975			2,566			(1,488		)	4,053
Provision for income taxes		975			—			431		(h)	1,406
Net income		$	2,000		$	2,566		$	(1,919	)	$	2,647
Net per share
Basic		$	0.09								$	0.13
Diluted		$	0.09								$	0.12
Weighted average Shares
Basic		21,300,000									21,300,000
Diluted		21,325,000									21,325,000

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Xxxx Xxxxxx and Company Inc.

Notes to the Unaudited Pro Forma

Combined Financial Statements

(in thousands)

Basis of Presentation

Estimated Purchase Price Allocation

The purchase price has been allocated to the net assets acquired based on information currently available with regard to the value of such assets. The estimated fair values contained herein are preliminary in nature, and may not be indicative of the final purchase price allocation accordingly, the final determination of such fair value could result in an increase or decrease in amortization expense in future periods from the amounts  currently estimated.

The purchase price and related allocation to the estimated fair values of the assets acquired and liabilities assumed, is as follows:

		($ in Thousands)
Cash paid at closing to LaJobi shareholders		$	44,500
Estimated working capital adjustment paid at closing		3,000
Amount paid in escrow		2,500
Estimated acquisition costs		2,015
Total purchase price		52,015
Assets acquired and liabilities assumed:
Accounts receivable		9,137
Related party receivable		41
Inventory		5,063
Prepaid expense and other current assets		315
Property and equipment		243
Other assets		60
Customer relationships		12,700
Trademarks		18,700
Royalty agreements		2,284
Backlog		600
Accounts payable		(2,420		)
Lease payable		(32		)
Other liabilities		(4,101		)
Net assets acquired		42,590
Excess of purchase price over fair value of net assets acquired		$	9,425

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Xxxx Xxxxxx and Company Inc.

Notes to the Unaudited Pro Forma

Combined Financial Statements

(in thousands)

The unaudited pro forma combined financial statements have been adjusted for the items set forth below.

(a)		Reflects the elimination of assets and liabilities not purchased.
		Cash		$	(21	)
		Short-term debt		(2,791		)
		Lease payable		(83		)
		Accounts payable		(267		)
		Accrued expenses		281
		Loan guarantee payable		(930		)
		Long-term Liabilities		1,954
(b)		Reflects the allocation of purchase price to the estimated fair value of assets.
		Purchase price including transaction costs		$	52,015
		Net book value of assets acquired		(42,590		)
		Excess of cost over fair value of net assets acquired (goodwill)		$	9,425
(c)		Reflects $804 of deferred financing charges incurred in connection with the $47.0 million financing agreement, which will be amortized over the term of the loan, five years.
		Deferred financing charges		$	645
(d)		Reflects the borrowing to finance the LaJobi acquisition. The loan amortizes quarterly at $3.6 million over five years at which time the remaining balance of the loan must be repaid.
		Short term portion of long term debt		$	(14,400	)
		Long term debt net of current portion		(38,260		)
		Total debt		$	(52,660	)
(e)		Reflects the elimination of LaJobi historical Equity.
		Common stock		$	(1	)
		Additional paid in capital		(60		)
		Retained earnings		(6,430		)
				$	(6,491	)

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				Year ended December 31, 2007			Three Months Ended March 31, 2008
(f)		To reflect interest expense on the loan of 47.0 million at LIBOR plus 2.75%. The average libor rate during 2007 and the first three months of 2008 were 5.24% and 3.76% respectively. An increase in the interest rate of 1% would create additional interest expense of $531 and $133 for the year ended December 31, 2008 and the three months ended March 31, 2008, respectively.
		Interest expense		$	4,229		$	860
(g)		To reflect amortization of financing cost incurred on debt over the term of the loan five years.
		Interest expense		$	129		$	32
(h)		To reflect a tax provision using a 40% effective rate on both the historical LaJobi earnings, to convert from an S Corporation to a C corporation and to tax effect the other pro forma adjustments.
		Tax provision		$	1,081		$	670
(i)		To eliminate transactions associated with the Blackstone Manufacturing, L.L.C which was not part of the acquisition
		Selling, general and administrative expenses		$	(650	)	$	—
(j)		To reflect amortization of intangibles, Customer relationships, $12.7 million, has a life of 20 years, Royalties, $2.3 million, has a 5 year life and Customer Backlog, $0.6 million, has a 9 month life.
		Cost of Goods Sold		$	2,185		$	596

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