EXHIBIT 99.1
ARC GROUP WORLDWIDE, INC.
PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
INTRODUCTION TO UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL STATEMENTS
On September 30, 2016, ARC Group Worldwide, Inc. (“ARC” or the “Company”) completed the sale of its majority-owned subsidiary, Tekna Seal LLC. The unaudited pro forma condensed consolidated financial data presented herein is derived from the historical condensed consolidated financial statements of the Company and the historical financial statements of Tekna Seal LLC.
The accompanying unaudited pro forma condensed combined financial information should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and the financial statements and related notes contained in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended June 30, 2016, as well as other financial information filed with the Securities and Exchange Commission.
The unaudited pro forma condensed combined 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.
ARC GROUP WORLDWIDE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 2016
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| | ARC Group Worldwide, Inc. | | | Pro Forma Adjustments | | | Notes | | | | ARC Group Worldwide, Inc. Pro Forma |
| | (Historical) | | | | | | | | | | | |
Sales | | $ | 103,840 | | | | $ | 4,959 | | | | (a) | | | | $ | 98,881 | |
Cost of Sales | | 83,677 | | | | 2,935 | | | | (a) | | | | 80,742 | |
Gross Profit | | 20,163 | | | | 2,024 | | | | | | | | 18,139 | |
Selling, General and Administrative | | 18,008 | | | | 843 | | | | (a) | | | | 17,165 | |
Income from Operations | | 2,155 | | | | 1,181 | | | | | | | | 974 | |
Other Income, Net | | 171 | | | | — | | | | | | | | 171 | |
Interest Expense, Net | | (4,451 | ) | | | (2 | ) | | | (a) | | | | (4,449 | ) |
(Loss) Income before Income Taxes | | (2,125 | ) | | | 1,179 | | | | | | | | (3,304 | ) |
Income Tax Expense | | (81 | ) | | | — | | | | | | | | (81 | ) |
Net (Loss) Income | | (2,206 | ) | | | 1,179 | | | | | | | | (3,385 | ) |
Net Income Attributable to Non-Controlling Interest | | (108 | ) | | | (50 | ) | | | (e) | | | | (58 | ) |
Net (Loss) Income Attributable to ARC Group Worldwide, Inc. | | $ | (2,314 | ) | | | $ | 1,129 | | | | | | | | $ | (3,443 | ) |
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See accompanying notes to these unaudited pro forma condensed combined financial statements
ARC GROUP WORLDWIDE, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2016
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| | ARC Group Worldwide, Inc. | | | Pro Forma
Adjustments | | Notes | | | | ARC Group Worldwide, Inc. Pro Forma |
| | (Historical) | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | | | |
Current Assets: | | | | | | | | | | | | | | |
Cash | | $ | 3,620 | | | | $ | 10,500 | | | (b) | | | | $ | 14,120 | |
Accounts Receivable, Net | | 14,913 | | | | (727 | ) | | (c) | | | | 14,186 | |
Inventories, Net | | 17,613 | | | | (1,028 | ) | | (c) | | | | 16,585 | |
Prepaid and Other Current Assets | | 4,856 | | | | (64) | | | (c) | | | | 4,792 | |
Total Current Assets | | 41,002 | | | | 8,681 | | | | | | | 49,683 | |
Property and Equipment, net | | 41,981 | | | | (153 | ) | | (c) | | | | 41,828 | |
Goodwill | | 14,801 | | | | (3,373 | ) | | (c) | | | | 11,428 | |
Intangible Assets | | 23,066 | | | | — | | | | | | | 23,066 | |
Other | | 948 | | | | — | | | | | | | 948 | |
Total Assets | | $ | 121,798 | | | | $ | 5,155 | | | | | | | $ | 126,953 | |
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LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | | | | |
Current Liabilities: | | | | | | | | | | | | | | | | |
Accounts Payable | | $ | 9,286 | | | | | $ | (685 | ) | | (c) | | | | | $ | 8,601 | |
Accrued Expenses and Other Current Liabilities | | 4,078 | | | | | (30 | ) | | (c) | | | | | 4,048 | |
Bank Borrowings, Current Portion of Long-Term Debt | | 15,909 | | | | | — | | | | | | | | 15,909 | |
Capital Lease Obligations, Current Portion | | 846 | | | | | (9 | ) | | (c) | | | | | 837 | |
Accrued Escrow Obligations, Current Portion | | 2,842 | | | | | — | | | | | | | | 2,842 | |
Total Current Liabilities | | 32,961 | | | | | (724 | ) | | | | | | | 32,237 | |
Long-Term Debt, Net of Current Portion | | 37,857 | | | | | — | | | | | | | | 37,857 | |
Capital Lease Obligations, Net of Current Portion | | 1,949 | | | | | (19 | ) | | (c) | | | | | 1,930 | |
Accrued Escrow Obligations, Net of Current Portion | | 966 | | | | | — | | | | | | | | 966 | |
Other Long-Term Liabilities | | 3,522 | | | | | — | | | | | | | | 3,522 | |
Total Liabilities | | 77,255 | | | | | (743 | ) | | | | | | | 76,512 | |
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Stockholders’ Equity: | | | | | | | | | | | | | | | | |
Common Stock | | 10 | | | | | — | | | | | | | | 10 | |
Treasury Stock | | (94 | ) | | | | — | | | | | | | | (94 | ) |
Additional Paid In Capital | | 29,702 | | | | | — | | | | | | | | 29,702 | |
Retained Earnings | | 13,771 | | | | | 6,287 | | | (d) | | | | | 20,058 | |
Accumulated Other Comprehensive Loss | | (6 | ) | | | | — | | | | | | | | (6 | ) |
Total ARC Group Worldwide, Inc. Stockholders’ Equity | | 43,383 | | | | | 6,287 | | | | | | | | 49,670 | |
Non-Controlling Interests | | 1,160 | | | | | (389 | ) | | (e) | | | | | 771 | |
Total Equity | | 44,543 | | | | | 5,898 | | | | | | | | 50,441 | |
Total Liabilities and Stockholders’ Equity | | $ | 121,798 | | | | | $ | 5,155 | | | | | | | | $ | 126,953 | |
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See accompanying notes to these unaudited pro forma condensed combined financial statements
ARC GROUP WORLDWIDE, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
NOTE 1 - Basis of Presentation
The unaudited pro forma condensed combined financial statements are based on ARC’s historical consolidated financial statements as adjusted to give effect to the disposition of Tekna Seal LLC. The unaudited pro forma combined statements of operations for the year ended June 30, 2016 give effect to the Tekna Seal LLC disposition as if it had occurred on July 1, 2015. The unaudited pro forma combined balance sheet as of June 30, 2016 gives effect to the Tekna Seal LLC disposition as if it had occurred on June 30, 2016.
NOTE 2 - Pro Forma Adjustments
The pro forma adjustments are based on our preliminary estimates and assumptions that are subject to change. The following adjustments have been reflected in the pro forma condenses combined financial information:
Adjustments to the pro forma condensed combined statements of operations
| (a) | | Reflects the elimination of revenues, costs of goods sold and expenses associated with activities of Tekna Seal LLC. |
Adjustments to the pro forma condensed combined balance sheet
| (b) | | Represents the cash consideration at the closing of the transaction. |
| (c) | | Reflects the elimination of assets and liabilities attributable to Tekna Seal LLC and not retained by ARC Group Worldwide, Inc. |
| (d) | | Reflects the gain of approximately $5.6 million arising from the transaction. This estimated gain has not been reflected in the pro forma consolidated statement of operations as it is considered nonrecurring in nature. No adjustment has been made to the sale proceeds to give effect to any potential post-closing adjustments under the terms of the membership interests purchase agreement. |
| (e) | | Adjustment to remove non-controlling interests of Tekna Seal LLC. |
