Exhibit 99.2
Berliner Communications, Inc.
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Table of Contents
Page | ||||
Unaudited Pro Forma Condensed Combined Balance Sheet as of March 31, 2007 | 2 | |||
Unaudited Pro Forma Condensed Combined Statement of Operations for the year ended June 30, 2006 | 4 | |||
Unaudited Pro Forma Condensed Combined Statement of Operations for the nine months ended March 31, 2007 | 5 | |||
Notes to Unaudited Pro Forma Condensed Combined Financial Statements | 6 |
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The following unaudited pro forma condensed combined financial statements are based on the historical financial statements of Berliner Communications, Inc. (“BCI,” “we,” “us,” or “our”) and Radian Communication Services, Inc. (“Radian”) after giving effect to our Asset Purchase Agreement and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial statements. We acquired certain assets and operations and assumed certain liabilities of Radian on April 16, 2007.
The pro forma data is for informational purposes only and may not necessarily reflect future results of operations or financial position or what the results of operations or financial position would have been had BCI and Radian been operating as combined entities for the periods presented. The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical financial statements, including the notes thereto, of BCI included in our Form 10-K for the year ended June 30, 2006, and in our Form 10-Q for the quarter ended March 31, 2007 and the historical financial statements included elsewhere in this Form 8-K/A.
The unaudited pro forma condensed combined balance sheet as of March 31, 2007 assumes that the combination took place at March 31, 2007. The unaudited pro forma condensed combined statements of operations for the year ended June 30, 2006 and for the nine month period ended March 31, 2007 assume that the combination took place at July 1, 2005.
The unaudited pro forma condensed consolidated financial statements do not take into consideration any benefits or additional expenses which may or may not result from the combination.
BERLINER COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
March 31, 2007
(Amounts in thousands)
Historical | Pro forma | |||||||||||||||
Berliner | Radian | Adjustments | Combined | |||||||||||||
ASSETS | ||||||||||||||||
CURRENT ASSETS | ||||||||||||||||
Cash and cash equivalents | $ | 2,214 | $ | 120 | $ | 100 | 1,2 | $ | 2,434 | |||||||
Accounts receiveble, net | 15,282 | 7,767 | - | 23,049 | ||||||||||||
Work in process | - | 1,060 | - | 1,060 | ||||||||||||
Inventory | 758 | - | 200 | 3 | 958 | |||||||||||
Prepaid expenses and other current assets | 458 | 19 | - | 477 | ||||||||||||
18,712 | 8,966 | 300 | 27,978 | |||||||||||||
LONG-TERM ASSETS | ||||||||||||||||
Property and equipment, net | 1,486 | 369 | 622 | 3 | 2,477 | |||||||||||
Debt issuance costs | 722 | - | - | 722 | ||||||||||||
Goodwill | 2,907 | - | - | 2,907 | ||||||||||||
Other assets | 124 | - | - | 124 | ||||||||||||
TOTAL ASSETS | $ | 23,951 | $ | 9,335 | $ | 922 | $ | 34,208 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||||||||
CURRENT LIABILITIES | ||||||||||||||||
Line of credit | $ | - | $ | - | $ | 4,000 | 1 | $ | 4,000 | |||||||
Due to Radian | - | - | 2,000 | 2 | 2,000 | |||||||||||
Current portion of long-term debt | 57 | - | - | 57 | ||||||||||||
Current portion of capital lease obligations | 24 | - | - | 24 | ||||||||||||
Accounts payable and accrued expenses | 10,632 | 3,682 | - | 14,314 | ||||||||||||
Deferred revenue | - | 71 | - | 71 | ||||||||||||
Accrued income taxes | 356 | - | - | 356 | ||||||||||||
11,069 | 3,753 | 6,000 | 20,822 | |||||||||||||
LONG-TERM LIABILITIES | ||||||||||||||||
Long-term debt, net of current portion | 6,214 | - | - | 6,214 | ||||||||||||
Long-term capital lease obligations, net of | - | |||||||||||||||
current portion | 22 | - | - | 22 | ||||||||||||
TOTAL LIABILITIES | 17,305 | 3,753 | 6,000 | 27,058 | ||||||||||||
STOCKHOLDERS' EQUITY | 6,646 | 5,582 | (5,078 | ) | 2,3 | 7,150 | ||||||||||
$ | 23,951 | $ | 9,335 | $ | 922 | $ | 34,208 |
Refer to Notes to the unaudited condensed combined financial statements.
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BERLINER COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the year ended June 30, 2006
(Amounts in thousands except per share data)
Historical | Pro Forma | Historiical | Pro Forma | |||||||||||||||||||||||||
Berliner | Digitcom | Adjustments | Combined | Radian | Adjustments | Combined | ||||||||||||||||||||||
Revenues | $ | 39,325 | $ | 6,546 | $ | (1,423 | ) | a | $ | 44,448 | $ | 21,834 | $ | - | $ | 66,282 | ||||||||||||
Costs of revenues | 28,202 | 3,049 | (1,423 | ) | a | 29,828 | 18,196 | - | 48,024 | |||||||||||||||||||
Gross margin | 11,123 | 3,497 | - | 14,620 | 3,638 | - | 18,258 | |||||||||||||||||||||
Sellijng, general and administrative expenses | 9,448 | 1,543 | - | 10,991 | 2,898 | - | 13,889 | |||||||||||||||||||||
Depreciation and amortization | 247 | 36 | 48 | b | 331 | 137 | 330 | (4) | 798 | |||||||||||||||||||
Gain on sale of fixed assets | (7 | ) | - | - | (7 | ) | - | - | (7 | ) | ||||||||||||||||||
Earnings (loss) from operations | 1,435 | 1,918 | (48 | ) | 3,305 | 603 | (330 | ) | 3,578 | |||||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||
Interest expense | (74 | ) | - | (144 | ) | c | (218 | ) | (4 | ) | (497 | ) | (5) | (719 | ) | |||||||||||||
Interest income (expense) | 14 | 2 | (80 | ) | c | (64 | ) | - | - | (64 | ) | |||||||||||||||||
Gain on equity investments | 98 | - | - | 98 | - | - | 98 | |||||||||||||||||||||
Other expense | (85 | ) | - | - | (85 | ) | - | - | (85 | ) | ||||||||||||||||||
Income (loss) before income taxes | 1,388 | 1,920 | (272 | ) | 3,036 | 599 | (827 | ) | 2,808 | |||||||||||||||||||
Income tax expense | 133 | - | - | 133 | - | - | 133 | |||||||||||||||||||||
Net income (loss) | 1,255 | 1,920 | (272 | ) | 2,903 | 599 | (827 | ) | 2,675 | |||||||||||||||||||
Deemed Series B and D preferred dividends | 19,936 | - | - | 19,936 | - | - | 19,936 | |||||||||||||||||||||
Net income (loss) applicable to common shareholders | $ | (18,681 | ) | $ | 1,920 | $ | (272 | ) | $ | (17,033 | ) | $ | 599 | $ | (827 | ) | $ | (17,261 | ) | |||||||||
Net loss per share - basic and diluted | $ | (1.27 | ) | |||||||||||||||||||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||||||||||
basic and diluted | 13,582 |
Refer to Notes to the unaudited condensed combined financial statements.
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BERLINER COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
For the nine months ended March 31, 2007
(Amounts in thousands except per share data)
Historical | Pro Forma | Historiical | Pro Forma | |||||||||||||||||||||||||
Berliner | Digitcom | Adjustments | Combined | Radian | Adjustments | Combined | ||||||||||||||||||||||
Revenues | $ | 36,315 | $ | 3,888 | $ | (176 | ) | a | $ | 40,027 | $ | 19,154 | $ | - | $ | 59,181 | ||||||||||||
Costs of revenues | 25,246 | 2,517 | (176 | ) | a | 27,587 | 17,320 | - | 44,907 | |||||||||||||||||||
Gross margin | 11,069 | 1,371 | - | 12,440 | 1,834 | - | 14,274 | |||||||||||||||||||||
Sellijng, general and administrative expenses | 8,694 | 2,020 | - | 10,714 | 2,491 | - | 13,205 | |||||||||||||||||||||
Depreciation and amortization | 186 | 21 | 36 | b | 243 | 83 | 248 | (4) | 574 | |||||||||||||||||||
Gain on sale of fixed assets | (5 | ) | - | - | (5 | ) | - | - | (5 | ) | ||||||||||||||||||
Earnings (loss) from operations | 2,194 | (670 | ) | (36 | ) | 1,488 | (740 | ) | (248 | ) | 500 | |||||||||||||||||
Other income (expense) | ||||||||||||||||||||||||||||
Interest expense | (454 | ) | - | (108 | ) | c | (562 | ) | (8 | ) | (373 | ) | (5) | (943 | ) | |||||||||||||
Interest income (expense) | 28 | 4 | (60 | ) | c | (28 | ) | - | - | (28 | ) | |||||||||||||||||
Gain on equity investments | 4 | - | - | 4 | - | - | 4 | |||||||||||||||||||||
Other income | 28 | - | - | 28 | - | - | 28 | |||||||||||||||||||||
Income (loss) before income taxes | 1,800 | (666 | ) | (204 | ) | 930 | (748 | ) | (621 | ) | (439 | ) | ||||||||||||||||
Income tax expense | 920 | - | - | 920 | - | - | 920 | |||||||||||||||||||||
Net income (loss) applicable to common shareholders | $ | 880 | $ | (666 | ) | $ | (204 | ) | $ | 10 | $ | (748 | ) | $ | (621 | ) | $ | (1,359 | ) | |||||||||
Net loss per share - basic and diluted | $ | (0.08 | ) | |||||||||||||||||||||||||
Weighted average number of shares outstanding: | ||||||||||||||||||||||||||||
basic and diluted | 17,035 |
Refer to Notes to the unaudited condensed combined financial statements.
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NOTES TO THE UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited pro forma condensed combined balance sheet is derived from the historical balance sheets of Radian Communication Services, Inc., a Delaware corporation (“Radian”) and Berliner Communications, Inc. at March 31, 2007. The unaudited pro forma condensed combined balance sheet reflects our purchase of the operations and assets and liabilities of Radian’s operations located in Los Angeles, California, Seattle, Washington, and Las Vegas, Nevada by our wholly owned subsidiary, BCI Communications, Inc. (“BCI”) as if it had occurred on March 31, 2007.
The accompanying unaudited pro forma condensed combined statements of operations for the year ended June 30, 2006 and for the nine month period ended March 31, 2007 assume that the combination took place at July 1, 2005.
In accordance with the rules and regulations of the SEC, unaudited financial statements may omit or condense information and disclosures normally required for a complete set of financial statements prepared in accordance with generally accepted accounting principles. However, management believes that the notes to the financial statements as presented contain disclosures adequate to make the information presented useful and not misleading.
The adjustments necessary to fairly present the unaudited pro forma condensed combined financial statements have been made based on available information and, in the opinion of management, are reasonable. Assumptions underlying the pro forma adjustments are described below in the accompanying notes, which should be read in conjunction with these unaudited pro forma condensed combined financial statements.
The unaudited pro forma condensed combined financial data is for comparative purposes only and does not purport to represent what our financial position or results of operations would actually have been had the events noted above in fact occurred on the assumed dates or to project the financial position or results of operations for any future date or future period. The unaudited pro forma condensed combined financial data should be read in conjunction with the notes hereto.
Radian’s independent registered public accounting firm has not examined, reviewed, compiled or applied agreed upon procedures to the unaudited pro forma condensed combined financial statements and, accordingly, assume no responsibility for them.
2. Radian Acquisition
On April 16, 2007, our wholly-owned subsidiary BCI Communications, Inc. (“BCI”) entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Radian Communication Services, Inc., for the purchase of certain of the U.S. assets and operations, and assumption of certain liabilities of Radian.
The transaction was recorded as a purchase of a business that included accounts receivable, work in process, vehicles and equipment, and inventory. The purchase price, after post-closing adjustments, was $9,073,000, $3,900,000 of which was paid in cash, $3,300,000 to the seller and $600,000 into an escrow account pending final settlement. An additional $2,000,000 will be paid to the seller as receivables are collected. BCI also assumed, after post-closing adjustments, $3,173,000 in accounts payable and accrued liabilities.
The allocation of the purchase price is a preliminary allocation to identifiable net assets acquired. BCI intends to conduct an appraisal of these assets and will consider a potential adjustment to the purchase price allocation based upon the results of this appraisal and a review of the value of the customer relationships acquired from Radian. BCI does not believe these amounts will be material.
3. Pro Forma Allocation of Purchase Price: | Assets Acquired | ||||||
Cash and cash equivalents | $ | 120 | |||||
Accounts receivable | 7,767 | ||||||
Work in progress | 1,060 | ||||||
Property and equipment | 991 | ||||||
Inventory and other current assets | 219 | ||||||
10,137 | |||||||
Liabilities assumed | (3,753 | ) | |||||
Stockholders’ Equity | (504 | ) | |||||
Total cash paid or to be paid | $ | 5,900 |
4. Pro Forma Adjustments
The following pro forma adjustments are included in the unaudited pro forma condensed combined financial statements:
(1) | Records borrowings under Berliner’s line of credit to fund the purchase price. |
(2) | Records the total cash payments to Radian. |
(3) | Records the allocation of the purchase price of Radian by BCI Communications, Inc. |
(4) | Records additional depreciation attributable to Berliner’s acquisition of Radian. |
(5) | Records interest expense that is calculated on the cash paid to sellers at closing at 12.75% per year. |
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5. Digitcom Acquisition
On February 28, 2007, our wholly-owned subsidiary BCI entered into an Asset Purchase Agreement (the “Digitcom Asset Purchase Agreement”) with Digital Communication Services, Inc., a Texas corporation (“Digitcom”), J&J Leasing Partnership, a Texas general partnership (“J&J”), and the shareholders of Digitcom for the purchase of certain assets, excluding cash and receivables, of Digitcom and property of J&J, and assumption of certain liabilities of Digitcom.
Accordingly, the unaudited pro forma condensed combined statements of operations for the year ended June 30, 2006 and for the nine months ended March 31, 2007 have been adjusted to reflect the pro forma effect of the purchase of Digitcom as if the acquisition had taken place on July 1, 2005.
The following pro forma adjustments are included in the unaudited condensed combined statements of operations:
(a) | Records the elimination of sales and purchases between Digitcom and us for the year ended June 30, 2006 and the nine months ended March 31, 2007. |
(b) | Records additional depreciation and amortization attributable to Berliner’s acquisition of Digitcom. |
(c) | Interest income is reduced by the amount of interest that would have been earned on the $2.0 million cash paid to the sellers at closing, and interest expense is calculated on the Note due to J&J Leasing at 8.25% per year. |
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