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| Renewable Energy Group, Inc. | | | | | | | | | |
| Unaudited Pro Forma Condensed Consolidated Statement of Operations | | | | |
| For the Year Ended December 31, 2014 | | | | | | | | |
| (In thousands, except share and per share amounts) | | | | | | |
| | | | | | | | | | |
| | Renewable Energy Group, Inc. | | Syntroleum Corporation | | Dynamic Fuels, LLC | | Adjustments/ Eliminations | | Total |
| | (a) | | | | | | | | |
| Revenues: | | | | | | | | | |
| Biodiesel | $ | 1,273,406 |
| | $ | — |
| | $ | 154 |
| | $ | — |
| | $ | 1,273,560 |
|
| Services | 425 |
| | 365 |
| | 3 |
| | — |
| | 793 |
|
| Total revenues | 1,273,831 |
| | 365 |
| | 157 |
| | — |
| | 1,274,353 |
|
| Cost of goods sold: | | | | | | | | | |
| Biodiesel | 1,113,052 |
| | — |
| | 10,368 |
| | (66 | ) | (b) | 1,123,354 |
|
| Services | 167 |
| | 732 |
| | — |
| | — |
| | 899 |
|
| Total cost of goods sold | 1,113,219 |
| | 732 |
| | 10,368 |
| | (66 | ) | | 1,124,253 |
|
| Gross profit (loss) | 160,612 |
| | (367 | ) | | (10,211 | ) | | 66 |
| | 150,100 |
|
| Selling, general and administrative | 62,681 |
| | 3,426 |
| | 410 |
| | 427 |
| (c) | 66,944 |
|
| Research and development expense | 12,424 |
| | — |
| | — |
| | — |
| | 12,424 |
|
| Income (loss) from operations | 85,507 |
| | (3,793 | ) | | (10,621 | ) | | (361 | ) | | 70,732 |
|
| Other income (expense), net: | | | | | | | | | |
| Other income | 7,293 |
| | (6,189 | ) | | 79 |
| | 5,539 |
| (d) | 6,722 |
|
| Interest expense | (6,690 | ) | | — |
| | (427 | ) | | — |
| | (7,117 | ) |
| | 603 |
| | (6,189 | ) | | (348 | ) | | 5,539 |
| | (395 | ) |
| Income (loss) before taxes | 86,110 |
| | (9,982 | ) | | (10,969 | ) | | 5,178 |
| | 70,337 |
|
| Income tax expense | (3,572 | ) | | — |
| | — |
| | — |
| | (3,572 | ) |
| Net income (loss) | 82,538 |
| | (9,982 | ) | | (10,969 | ) | | 5,178 |
| | 66,765 |
|
| Less - Net loss attributable to noncontrolling interest | (73 | ) | | — |
| | — |
| | — |
| | (73 | ) |
| Net income (loss) attributable to the Company | 82,611 |
| | (9,982 | ) | | (10,969 | ) | | 5,178 |
| | 66,838 |
|
Plus - Gain on redemption of preferred stock
| 378 |
| | — |
| | — |
| | — |
| | 378 |
|
| Less - Effect of changes to preferred stock | (40 | ) | | — |
| | — |
| | — |
| | (40 | ) |
| Less - Effect of participating preferred stock | (91 | ) | | — |
| | — |
| | 28 |
| (e) | (63 | ) |
Less - Effect of participating share-based awards
| (1,238 | ) | | — |
| | — |
| | 271 |
| (e) | (967 | ) |
Net income (loss) attributable to the company's common stockholders | $ | 81,620 |
| | $ | (9,982 | ) | | $ | (10,969 | ) | | $ | 5,477 |
| | $ | 66,146 |
|
| Net income (loss) per share attributable to common stockholders: | | | | | | | | | |
| Basic | $ | 2.00 |
| | | | | | | | $ | 1.57 |
|
| Diluted | $ | 1.99 |
| | | | | | | | $ | 1.56 |
|
| Weighted average shares used to compute net income (loss) per share attributable to common stockholders: | | | | | | | | | |
| Basic | 40,740,411 |
| | | | | | | | 42,024,857 |
|
| Diluted | 40,749,913 |
| | | | | | | | 42,214,359 |
|
See accompanying notes to the unaudited pro forma condensed consolidated statement of operations.
NOTES TO THE PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands)
(Unaudited)
The unaudited pro forma condensed consolidated statement of operations includes the year ended December 31, 2014 financial information for Renewable Energy Group, Inc. (the “Company”) and the six month period from January 1, 2014 to June 30, 2014 financial information for Syntroleum Corporation (“Syntroleum”) and Dynamic Fuels, LLC (“Dynamic Fuels”). An unaudited pro forma condensed consolidated balance sheet as of December 31, 2014 has not been presented given the Company’s reported balance sheet as of December 31, 2014 set forth on its 2014 Annual Report on Form 10-K includes the balance sheet results of the transaction. For information regarding the consideration transferred and purchase price allocation related to this transaction, see Note 5 of the Company's Form 10-K as of December 31, 2014.
The following adjustments are included in the Company’s unaudited pro forma condensed consolidated statement of operations:
(a)The unaudited pro forma condensed consolidated statements of operations were prepared with the Company treated as the acquiring corporation for purposes of applying the acquisition method of accounting.
(b)Adjusted to reflect the change in carrying value of the fixed assets based upon the acquisition of Syntroleum and Dynamic Fuels. The carrying value of the depreciable fixed assets decreased $2,620 with an estimated weighted average useful life of 20 years. The amount of depreciation expense decreased $66 for the year ended December 31, 2014.
(c)The Company acquired $8,300 in renewable diesel technology with an estimated useful life of 20 years. The Company also acquired $600 in trademarks with an estimated useful life of two years. The total amount of amortization for these intangibles taken for the pro forma for the year ended December 31, 2014 was $427.
(d)Adjusted to reflect the elimination of the equity earnings (loss) allocated from Dynamic Fuels to Syntroleum as amounts represent intercompany transactions as follows:
For the year ended December 31, 2014:
|
| | | | | | | | | |
| Syntroleum | | Dynamic Fuels | | Total |
| $ | 5,539 |
| | — |
| | $ | 5,539 |
|
(e)Adjusted to eliminate the effect of preferred stock and participating share based awards, respectively, on the Company's pro forma net income.
