Attached files
| file | filename |
|---|---|
| 8-K/A - FORM 8-K/A - ARC Group Worldwide, Inc. | v324528_8ka.htm |
| EX-99.1 - EXHIBIT 99.1 - ARC Group Worldwide, Inc. | v324528_ex99-1.htm |
EXHIBIT 99.2
ARC GROUP WORLDWIDE, INC.
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
INTRODUCTION TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
The Unaudited Pro Forma Consolidated Balance Sheet combines the historical consolidated balance sheet of ARC Group Worldwide, Inc. (ARC) as of June 30, 2012 and the historical consolidated balance sheet of Quadrant Metal Technologies LLC (QMT) as of June 30, 2012, and the historical combined balance sheet of Advanced Forming Technology (AFT) as of June 30, 2012, giving effect to the acquisition as if it had occurred July 1, 2011. The Unaudited Pro Forma Consolidated Statement of Operations for the year ended June 30, 2012 combines the historical consolidated statement of operations of ARC for the year ended June 30, 2012, QMT and AFT for the twelve months ended June 30, 2012 as if the merger had occurred on July 1, 2011. The unaudited pro forma consolidated statement of operations reflects adjustments to give effect to pro forma events that are (1) directly attributable to the acquisition, (2) factually supportable, and (3) expected to have a continuing impact on the combined results. No pro forma effects have been given to any operational or other synergies that may be realized from the acquisitions.
The share exchange is being accounted for as a “reverse acquisition,” even though the Board of Directors and Interim CEO after the exchange remain unchanged. QMT shareholders own the majority of the outstanding shares of the Company’s capital stock immediately following the transaction; therefore QMT is deemed to be the acquirer of ARC in the reverse acquisition.
The unaudited pro forma consolidated financial information is based on the estimates and assumptions described in the notes to the unaudited pro forma consolidated financial statements. The unaudited pro forma consolidated financial information has been prepared using the purchase method of accounting in which the total cost of the acquisitions are allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of the acquisitions. This allocation has been done on a preliminary basis and is subject to change pending final determination of fair values for the acquired assets and assumed liabilities and a final analysis of the total purchase price paid, including direct costs of the acquisitions. The adjustments included in the unaudited pro forma consolidated financial information represent the preliminary determination of such adjustments based upon currently available information. Accordingly, the actual fair value of the assets acquired, liabilities assumed and the related adjustments may differ from those reflected here. ARC expects to finalize the purchase price allocations within one year of the date of the acquisitions.
The unaudited pro forma consolidated financial information is presented for illustrative purposes only and is not necessarily indicative of the operating results or financial position that might have been achieved had the transaction occurred as of an earlier date, and they are not necessarily indicative of future operating results or financial position. These pro forma amounts do not, therefore, project ARC’s financial position or results of operations for any future date or period. The accompanying unaudited pro forma consolidated financial information should be read in conjunction with the historical financial statements and the related notes thereto of ARC, which are included in its Annual Report on Form 10-K, as well as other financial information filed with the Securities and Exchange Commission.
| P-1 |
ARC GROUP WORLDWIDE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 2012
(in thousands except share count and per share amounts)
| ARC Group Worldwide, Inc. | Quadrant Metals Technologies LLC | Advanced Forming Technology | Pro
Forma Adjustments | ARC Group Worldwide, Inc. Pro Forma | ||||||||||||||||||||
| (Historical) | (Historical) | (Historical) | ||||||||||||||||||||||
| ASSETS | ||||||||||||||||||||||||
| Current Assets: | ||||||||||||||||||||||||
| Cash and cash equivalents | $ | 10,877 | 1,448 | 1,641 | (11,409 | ) | A,B,C,D | $ | 2,557 | |||||||||||||||
| Accounts receivable, net | 915 | 3,705 | 7,087 | – | 11,707 | |||||||||||||||||||
| Inventories, net | 740 | 3,873 | 5,418 | – | 10,031 | |||||||||||||||||||
| Income tax receivable | – | – | 97 | (97 | ) | F | – | |||||||||||||||||
| Deferred income taxes | – | – | 183 | (183 | ) | F | – | |||||||||||||||||
| Due from related party | – | 205 | – | – | 205 | |||||||||||||||||||
| Prepaid and other current assets | 46 | 440 | 574 | – | 1,060 | |||||||||||||||||||
| Total current assets | 12,578 | 9,671 | 15,000 | (11,689 | ) | 25,560 | ||||||||||||||||||
| Property and Equipment, net | 283 | 4,514 | 19,554 | 1,800 | F | 26,151 | ||||||||||||||||||
| Long-Term Assets: | ||||||||||||||||||||||||
| Goodwill | – | 6,964 | 12,387 | (555 | ) | F | 18,796 | |||||||||||||||||
| Intangible assets | 110 | – | 12 | – | 122 | |||||||||||||||||||
| Due from related party | – | - | 25,855 | (25,855 | ) | F | - | |||||||||||||||||
| Other | 6 | 184 | – | – | 190 | |||||||||||||||||||
| Total long-term assets | 116 | 7,148 | 38,254 | (26,410 | ) | 19,108 | ||||||||||||||||||
| Total Assets | $ | 12,977 | 21,333 | 72,808 | (36,299 | ) | $ | 70,819 | ||||||||||||||||
See accompanying notes to these unaudited pro forma consolidated financial statements.
| P-2 |
ARC GROUP WORLDWIDE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET, continued
June 30, 2012
(in thousands except share count and per share amounts)
| ARC Group Worldwide, Inc. | Quadrant Metals Technologies LLC | Advanced Forming Technology | Pro
Forma Adjustments | ARC Group Worldwide, Inc. Pro Forma | ||||||||||||||||||
| (Historical) | (Historical) | (Historical) | ||||||||||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||||
| Current Liabilities: | ||||||||||||||||||||||
| Current portion of long-term debt | $ | – | 1,491 | – | (1,491 | ) | E | $ | – | |||||||||||||
| Accounts payable | 1,897 | 714 | 3,773 | – | 6,384 | |||||||||||||||||
| Accrued expenses | 202 | 956 | 1,145 | 870 | 3,173 | |||||||||||||||||
| Due to related party | – | 366 | – | – | 366 | |||||||||||||||||
| Deferred income | – | 132 | – | – | 132 | |||||||||||||||||
| Current portion of capital lease obligations | 15 | – | – | – | 15 | |||||||||||||||||
| Total current liabilities | 2,114 | 3,659 | 4,918 | (621 | ) | 10,070 | ||||||||||||||||
| Long-Term Liabilities: | ||||||||||||||||||||||
| Deferred taxes | – | – | 923 | (923 | ) | F | – | |||||||||||||||
| Long-term debt | – | 5,377 | – | 37,223 | B,C,E | 42,600 | ||||||||||||||||
| Due to related party | – | – | – | – | – | |||||||||||||||||
| Total long-term liabilities | – | 5,377 | 923 | 36,300 | 42,600 | |||||||||||||||||
| Total Liabilities | 2,114 | 9,036 | 5,841 | 35,679 | 52,670 | |||||||||||||||||
| Stockholders’ Equity: | ||||||||||||||||||||||
| Preferred stock, $0.001 par value, 2,000,000 authorized, none issued and outstanding | – | – | – | – | – | |||||||||||||||||
| Common stock, $0.0005 par value, 250,000,000 shares authorized, 3,091,000 shares issued and outstanding | 2 | – | – | 1 | A, I | 3 | ||||||||||||||||
| Additional paid-in capital | 20,798 | 11,756 | 22,494 | (34,595 | ) | A,E,F,J | 20,453 | |||||||||||||||
| Note Receivable from Member | - | (303 | ) | - | - | (303 | ) | |||||||||||||||
| Accumulated earning/deficit | (9,937 | ) | – | 42,845 | (35,756 | ) | K | (2,848 | ) | |||||||||||||
| Accumulated other comprehensive income | – | – | 1,628 | (1,628 | ) | F | – | |||||||||||||||
| Total Stockholders’ Equity | 10,863 | 11,453 | 66,967 | (71,978 | ) | 17,305 | ||||||||||||||||
| Non-Controlling Interest | – | 844 | – | – | 844 | |||||||||||||||||
| 10,863 | 12,297 | 66,967 | (71,978 | ) | 18,149 | |||||||||||||||||
| Total Liabilities and Stockholders’ Equity | $ | 12,977 | 21,333 | 72,808 | (36,299 | ) | $ | 70,819 | ||||||||||||||
| Shares Outstanding | 3,091,000 | – | – | 2,581,000 | A,I | 5,672,000 | ||||||||||||||||
See accompanying notes to these unaudited pro forma consolidated financial statements.
| P-3 |
ARC GROUP WORLDWIDE, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED JUNE 30, 2012
(in thousands except share count and per share amounts)
| ARC Group Worldwide, Inc. | Quadrant Metals Technologies LLC | Advanced Forming Technology | Pro Forma Adjustments | ARC Group Worldwide, Inc. Pro Forma | ||||||||||||||||||||
| (Historical) | (Historical) | (Historical) | ||||||||||||||||||||||
| Sales, net | $ | 3,879 | 31,095 | 36,130 | – | $ | 71,104 | |||||||||||||||||
| Cost of sales | 2,412 | 19,328 | 31,069 | – | 52,809 | |||||||||||||||||||
| Gross Profit | 1,467 | 11,767 | 5,061 | – | 18,295 | |||||||||||||||||||
| Operating Expense: | ||||||||||||||||||||||||
| Selling, general and administrative | 2,110 | 6,628 | 3,614 | 1,640 | G | 13,992 | ||||||||||||||||||
| Merger expenses | 519 | – | – | – | 519 | |||||||||||||||||||
| Income (Loss) from Operations | (1,162 | ) | 5,139 | 1,447 | (1,640 | ) | 3,784 | |||||||||||||||||
| Other Income (Expense): | ||||||||||||||||||||||||
| Other income (expense) | (10 | ) | 131 | – | 638 | E | 759 | |||||||||||||||||
| Interest expense, net | – | (453 | ) | (4 | ) | (800 | ) | H | (1,257 | ) | ||||||||||||||
| Total other income (expense) | (10 | ) | (322 | ) | (4 | ) | (162 | ) | (498 | ) | ||||||||||||||
| Income (Loss) before Income Taxes | (1,172 | ) | 4,817 | 1,443 | (1,802 | ) | 3,286 | |||||||||||||||||
| Current income tax expense | – | – | 16 | (886 | ) | (870 | ) | |||||||||||||||||
| Deferred income tax benefit | – | – | 160 | (160 | ) | F | – | |||||||||||||||||
| Net Income (Loss) | (1,172 | ) | 4,817 | 1,619 | (2,848 | ) | 2,416 | |||||||||||||||||
| Net Income (Loss) Attributable to Non-Controlling Interest | – | (299 | ) | – | – | (299 | ) | |||||||||||||||||
| Net Income (Loss) | $ | (1,172 | ) | 4,518 | 1,619 | (2,848 | ) | $ | 2,117 | |||||||||||||||
| Net Income (Loss) per Common Share from Continuing Operations: | ||||||||||||||||||||||||
| Basic and diluted | $ | (.38 | ) | $ | .37 | |||||||||||||||||||
| Diluted | $ | (.38 | ) | $ | .37 | |||||||||||||||||||
| Weighted Average Common Shares Outstanding: | ||||||||||||||||||||||||
| Basic and diluted | 3,091,000 | 2,581,000 | A,I | 5,672,000 | ||||||||||||||||||||
See accompanying notes to these unaudited pro forma consolidated financial statements
| P-4 |
ARC GROUP WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
| 1. | Basis of Presentation: |
On April 6, ARC Group Worldwide, Inc. (ARC) entered into separate, definitive purchase and sale agreements to acquire Quadrant Metal Technologies LLC (QMT) and Advanced Forming Technology (AFT). The QMT purchase price is to be paid through the issuance of ARC common stock. The AFT purchase price is approximately $43,000,000 and is to be paid in cash and issuance of convertible notes. The effective date of the acquisitions was August 8 2012.
The share exchange is being accounted for as a “reverse acquisition,” even though the Board of Directors and management team, after the exchange, are comprised of ARC’s management team. QMT shareholders own the majority of the outstanding shares of the Company’s capital stock immediately following the transaction; therefore QMT is deemed to be the acquirer of ARC in the reverse acquisition.
The Unaudited Pro Forma Consolidated Balance Sheet combines the historical consolidated balance sheets of ARC, QMT and AFT as of June 30, 2012, giving effect to the acquisition as if it had occurred July 1, 2011. The Unaudited Pro Forma Consolidated Statement of Operations for the year ended June 30, 2012 combines the historical consolidated statements of operations of ARC, QMT and AFT for the year ended June 30, 2012, as if the merger had occurred on July 1, 2011. Adjustments have been made to conform QMT and AFT’s balance sheet and statement of operations to ARC fiscal year end. No pro forma effects have been given to any operational or other synergies that may be realized from the acquisitions.
The unaudited pro forma consolidated financial information is based on the estimates and assumptions described in the notes to the unaudited pro forma consolidated financial statements. The unaudited pro forma consolidated financial information has been prepared using the purchase method of accounting in which the total cost of the acquisitions are allocated to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the date of the acquisitions. This allocation has been done on a preliminary basis and is subject to change pending final determination of fair values for the acquired assets and assumed liabilities and a final analysis of the total purchase price paid, including direct costs of the acquisitions. The adjustments included in the unaudited pro forma consolidated financial information represent the preliminary determination of such adjustments based upon currently available information. Accordingly, the actual fair value of the assets acquired, liabilities assumed and the related adjustments may differ from those reflected in this pro forma financial statement. ARC expects to finalize the purchase price allocations within one year of the date of the acquisitions.
| P-5 |
ARC GROUP WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
| 2. | Pro Forma Adjustments to the Consolidated Balance Sheet and Consolidated Statement of Operations: |
| A | Reflects the issuance of 4,029,700 (post reverse split) shares of ARC’s common stock for the net book value of QMT. Also, 57,505 (post reverse split) shares of ARC’s common stock issued for $7.80 per share for cash for total value of $448,540. The amounts noted give effect to a 1:1.95 reverse stock split. |
| B | Reflects the loan of $25,000,000 for the funding of the AFT Acquisition. |
| C | Reflects $17,600,000 in 5 year subordinated convertible notes. The notes can be converted (principle and interest value) based on a 30 day volume-weighted average trading price. The conversion may only occur if the portion of the notes converted (including amounts previously converted) convert into less than 10% of the outstanding common stock and the Company’s equity value is at least $176 million as disclosed in the most recent financial statements filed with the U.S. Securities and Exchange Commission. No discount on the notes has been recorded in these pro forma financial statements. |
| D | Cash paid for the acquisition of AFT; $25,400,000. Total change in cash consists of: |
| Cash paid for AFT | $ | (25,400 | ) | |
| Quadrant fees paid by ARC | (1,600 | ) | ||
| Cash borrowings under new debt agreement | 25,000 | |||
| Payoff of old debt of QMT | (6,868 | ) | ||
| Cash not received from QMT or AFT | (2,989 | ) | ||
| Stock issued for cash | 448 | |||
| Total estimated (uses) of cash | $ | (11,409 | ) |
| E | To record the assets and liabilities for the reverse merger of ARC by QMT: |
| Purchase price | $ | 10,225 | ||
| Less fair value of assets acquired: | ||||
| Cash and cash equivalents | 10,877 | |||
| Accounts receivable, net | 915 | |||
| Inventories, net | 740 | |||
| Prepaid and other current assets | 46 | |||
| Property and equipment, net | 283 | |||
| Intangible assets | 110 | |||
| Other | 6 | |||
| Fair value of liabilities assumed: | ||||
| Accounts payable | (1,897 | ) | ||
| Accrued expenses | (202 | ) | ||
| Due to related party, short-term | – | |||
| Deferred income | – | |||
| Current portion of capital lease | (15 | ) | ||
| Non-controlling interest | – | |||
| Fair value of net assets acquired | 10,863 | |||
| Negative goodwill resulting from the acquisition | $ | (638 | ) |
| P-6 |
ARC GROUP WORLDWIDE, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
F To record the assets and liabilities purchased in the acquisition of AFT:
| Purchase price | $ | 43,000 | ||
| Less fair value of assets acquired: | ||||
| Cash and cash equivalents | 1,641 | |||
| Accounts receivable, net | 7,087 | |||
| Inventories, net | 5,418 | |||
| Prepaid and other current assets | 574 | |||
| Property and equipment, net | 21,354 | |||
| Other | 12 | |||
| Fair value of liabilities assumed: | ||||
| Accounts payable | (3,773 | ) | ||
| Accrued expenses | (1,145 | ) | ||
| Fair value of net assets acquired | 31,168 | |||
| Goodwill resulting from the acquisition | $ | 11,832 |
| G | Professional and consulting fees of $1,640,000 incurred for the acquisitions. |
| H | Interest expense on the $25,000,000 loan and $17,600,000 convertible notes. |
| I | Effect of a 1:1.95 reverse stock split. |
| J | Changes in Additional paid in capital consists of the following: |
| Purchase allocation write-off of AFT balance | $ | (22,494 | ) | |
| Purchase allocation write-off of ARC balance | (20,798 | ) | ||
| Stock issued for cash | 448 | |||
| Stock issued for ARC acquisition | 10,225 | |||
| Distribution of QMT cash to shareholders | (1,448 | ) | ||
| Other | (528 | ) | ||
| Total change in Additional paid in capital | $ | (34,595 | ) |
K Changes in Accumulated earnings/deficit consist of the following:
| Purchase allocation write-off of AFT balance | $ | (42,845 | ) | |
| Purchase allocation write-off of ARC balance | 9,937 | |||
| Additional expenses per | ||||
| Pro Forma Income statement | (2,848 | ) | ||
| Total changes in Accumulated earnings/deficit | $ | (35,756 | ) |
| P-7 |