Pacer Technology (PTCH) 8-K Acquisition or disposition of assets

Exhibit 99.1

PACER TECHNOLOGY
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

(In Thousands, Except Per Share Amounts)

     On September 28, 2001, Pacer Technology consummated the sale of the inventory and certain fixed and intangible assets of the Cook Bates product line to The W.E. Bassett Company for a price of $5.3 million in cash and, concurrently with the completion of that sale, used a portion of the sales proceeds to reduce its outstanding bank indebtedness. The following Unaudited Pro Forma Consolidated Financial Information consists of (i) a Pro Forma Consolidated Balance Sheet at June 30, 2001 which gives pro forma effect to that sale and to the concurrent use of the sales proceeds to reduce outstanding bank indebtedness, as if both of those transactions had occurred on June 30, 2001, rather than on September 28, 2001, and (ii) a Pro Forma Consolidated Statement of Operations for the fiscal year ended June 30, 2001 that gives pro forma effect to that sale as if it had occurred on June 30, 2000, the day preceding the commencement of fiscal 2001.

     The pro forma adjustments set forth in the Unaudited Pro Forma Consolidated Financial Information reflect Pacer Technology’s determination of all adjustments it believes are necessary to fairly present Pacer Technology’s pro forma balance sheet at, and its pro forma statement of operations for the fiscal year ended, June 30, 2001. The adjustments are based on available information and assumptions that Pacer Technology considers reasonable under the circumstances. The Unaudited Pro Forma Consolidated Financial Information is provided for informational purposes and is not necessarily indicative of Pacer’s balance sheet had the sale occurred on June 30, 2001 or of its results of operations had the sale occurred on June 30, 2000. In addition, such information is not intended to be and is not necessarily indicative of Pacer Technology’s results of operations in future periods.

     The Unaudited Pro Forma Consolidated Financial Information should be read in conjunction with Pacer Technology’s historical consolidated financial statements and the notes thereto which are contained in its Annual Report on Form 10-K for the fiscal year ended June 30, 2001 which has been filed with the Securities and Exchange Commission.

99.1-1

PACER TECHNOLOGY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED BALANCE SHEET
At June 30, 2001

						Adjustments
						for			Pro Forma
				Historical		Cook Bates			Consolidated
				(Audited)					(Unaudited)
				(In thousands, except share amounts)
Assets
Current assets:
	Cash			$	471		—		$	471
	Trade receivables, less allowance for doubtful accounts of $343				8,292		—			8,292
	Other receivables				966		—			966
	Inventories, net				7,950		3,992	(a)		3,958
	Prepaid expenses				292		—			292
	Deferred income taxes				1,860		—			1,860
		Total current assets			19,831		3,992			15,839
Equipment and leasehold improvements, net					1,634		93			1,541
Costs in excess of net assets of businesses acquired, net					1,385		—			1,385
Other assets					21		19			2
				$	22,871	$	4,104		$	18,767
Liabilities and Shareholders’ Equity
Current liabilities:
	Accounts payable			$	2,391		—		$	2,391
	Accrued expenses				1,506		—			1,506
	Revolving bank line of credit				4,648		1,162	(b)		3,486
	Current installments of long-term debt				3,042		2,942	(b)		100
		Total current liabilities			11,587		4,104			7,483
Deferred income tax liability					44		—			44
Long-term debt, excluding current installments					166		—			166
		Total liabilities			11,797		4,104			7,693
Commitments and contingencies
Shareholders’ equity:
	Common stock, no par value. Authorized: 50,000,000 shares; issued and outstanding: 3,091,905				7,888		—			7,888
	Retained earnings				3,186		—			3,186
			Total shareholders’ equity		11,074		—			11,074
				$	22,871	$	4,104		$	18,767

(a)	Cook Bates inventory adjustment is based on inventories on hand at June 30, 2001, rather than the actual quantities sold to The W.E. Bassett Company on September 28, 2001.
(b)	Gives pro forma effect to the use of a portion of the proceeds of the Cook Bates sale to reduce outstanding bank indebtedness, which occurred concurrently with the completion of that sale.

99.1-2

PACER TECHNOLOGY AND SUBSIDIARIES
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2001

							Adjustments
							for			Pro Forma
				Historical			Cook Bates			Consolidated
				(Audited)						(Unaudited)
				(In thousands, except per share amounts)
Net sales				$	43,961		$	13,042	(c)	$	30,919
Cost of sales					30,573			9,267	(c)		21,306
		Gross profit			13,388			3,775	(c)		9,613
Selling, general & administrative expenses					12,914			4,576	(d)		8,338
Goodwill impairment on California Chemical sale					1,042			—			1,042
		Operating income (loss)			(568	)		(801	)		233
Other (income) expense:
	Interest income				(2	)		—			(2	)
	Interest expense				852			371	(e)		481
	Other, net				(9	)		(29	)(e)		20
					841			342			499
Income (loss) before income taxes					(1,409	)		(1,143	)		(266	)
Income tax expense (benefit)					(393	)		(313	)(f)		(80	)
			Net income (loss)	$	(1,016	)	$	(830	)(g)	$	(186	)
Weighted average shares — basic					3,260			3,260			3,260
		Basic earnings (loss) per share		$	(.31	)	$	(.25	)	$	(.06	)
Weighted average shares — diluted					3,260			3,260			3,260
		Diluted earnings (loss) per share		$	(.31	)	$	(.25	)	$	(.06	)

(c)	To eliminate all sales, cost of sales and gross profit related to the Cook Bates product line for the year ended June 30, 2001.
(d)	To eliminate actual selling expenses associated with the Cook Bates product line. General and administrative expenses were allocated to the Cook Bates product line based on the percentage of total Company sales attributable to that product line.
(e)	To eliminate related interest expense and other income associated with the Cook Bates product line. Interest expense and other income were allocated based upon the working capital of that product line.
(f)	Reflects the adjustment necessary to state the pro forma income taxes at an assumed income tax rate of 34%.
(g)	Does not include the gain on sale of assets.

99.1-3