Exhibit 99.1
PRO FORMA FINANCIAL INFORMATION
Overview
On March 23, 2017 (the “Effective Date”), The Pictsweet Company, a Delaware corporation (“Buyer”), acquired certain of the assets, properties and rights of Fresh Frozen Foods, Inc. (“Fresh Frozen”), a wholly owned subsidiary of Inventure Foods, Inc. (the “Company” or “Inventure Foods”), pursuant to an Asset Purchase Agreement, dated as of March 23, 2017, by and among the Company, Fresh Frozen and Buyer (the “Purchase Agreement”).
In accordance with the Purchase Agreement, Buyer acquired Fresh Frozen’s assets, properties and rights, including its inventory, frozen food processing equipment assets, certain real property and associated plants located in Jefferson, Georgia and Thomasville, Georgia, and other intellectual property (the “Transaction”). The Fresh Frozen facilities processed and packaged IQF vegetables and fruits sold primarily under the Fresh FrozenTM brand. As consideration for the acquisition, Buyer paid the Company $23.7 million in cash.
Basis of Presentation
The following unaudited pro forma consolidated condensed financial statements of the Company were derived from its historical consolidated financial statements and are being presented to give effect to the sale of the Fresh Frozen business. The unaudited pro forma consolidated condensed statements of operations for the three years ended December 31, 2016 reflect the Company’s results as if the Transaction had occurred on December 29, 2013, the first day of fiscal 2014. The unaudited pro forma consolidated condensed balance sheet as of December 31, 2016 gives effect to the Transaction as if it occurred on such date.
The Inventure Foods columns in the unaudited pro forma consolidated condensed financial statements reflect the Company’s historical financial statements for the periods presented and do not reflect any adjustments related to the Transaction and related events.
The Fresh Frozen Foods columns in the unaudited pro forma consolidated condensed financial statements reflect the historical direct financial statement balances of Fresh Frozen for the periods presented and do not reflect any adjustments related to the Transaction and related events.
The pro forma adjustments columns are the adjustments to Inventure Foods consolidated financial statements amounts to reflect adjustments necessary as if the Transaction had occurred on December 29, 2013, the first day of fiscal 2014, for the statement of operations and as of December 31, 2016 for the balance sheet in the Company’s pro forma financial statements. The Transaction adjustments represent the Company’s current best estimates and may differ from those that will be calculated to report Fresh Frozen Foods as discontinued operations in Inventure Food’s future filings.
The unaudited pro forma consolidated condensed financial statements are subject to the assumptions and adjustments described in the accompanying notes. Management believes that these assumptions and adjustments are reasonable under the circumstances and given the information available at this time. The unaudited pro forma consolidated condensed financial statements are not intended to be a complete presentation of the Company’s financial position or results of operations had the Transaction occurred as of and for the periods indicated. In addition, the unaudited pro forma consolidated condensed financial statements are provided for illustrative and informational purposes only, and are not necessarily indicative of the Company’s historical or future results of operations or financial condition had the Transaction been completed on the dates assumed.
The unaudited pro forma consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements, the accompanying notes and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, which was filed with the Securities and Exchange Commission on March 31, 2017 and is available at the Company’s web site at www.inventurefoods.com
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INVENTURE FOODS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF DECEMBER 31, 2016
(in thousands)
| | | | (A) | | | | | |
| | Inventure Foods,
Inc. | | Fresh Frozen
Foods | | Pro Forma
Adjustments | | Pro Forma
Combined | |
ASSETS | | | | | | | | | |
Current assets: | | | | | | | | | |
Cash and cash equivalents | | $ | 776 | | $ | — | | $ | — | | $ | | 776 | |
Accounts receivable, net | | 16,334 | | (2,407 | ) | 2,407 | (B) | 16,334 | |
Inventories | | 72,188 | | (16,791 | ) | — | | 55,397 | |
Other current assets | | 3,216 | | (116 | ) | — | | 3,100 | |
Total current assets | | 92,514 | | (19,314 | ) | 2,407 | | 75,607 | |
| | | | | | | | | |
Property and equipment, net | | 65,484 | | (11,703 | ) | 1,122 | (B) | 54,903 | |
Goodwill | | 14,985 | | — | | — | | 14,985 | |
Trademarks and other intangibles, net | | 7,243 | | (2,330 | ) | — | | 4,913 | |
Other assets | | 1,254 | | — | | — | | 1,254 | |
Total assets | | $ | 181,480 | | $ | (33,347 | ) | $ | 3,529 | | $ | | 151,662 | |
| | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | |
Current liabilities: | | | | | | | | | |
Accounts payable | | $ | 29,462 | | $ | (3,158 | ) | $ | 3,158 | (B) | $ | | 29,462 | |
Accrued liabilities | | 9,533 | | (846 | ) | 846 | (B) | 9,533 | |
Line of Credit | | 32,761 | | — | | (5,771 | )(C) | 26,990 | |
Current portion of long-term debt | | 82,380 | | — | | (13,679 | )(C) | 68,701 | |
Total current liabilities | | 154,136 | | (4,004 | ) | (15,446 | ) | 134,686 | |
| | | | | | | | | |
Long-term debt, less current portion | | — | | — | | — | | — | |
Line of credit | | — | | — | | — | | — | |
Deferred income tax liability | | 1,376 | | 1,909 | | — | | 3,285 | |
Other liabilities | | 2,279 | | — | | — | | 2,279 | |
Total liabilities | | 157,791 | | (2,095 | ) | (15,446 | ) | 140,250 | |
| | | | | | | | | |
Stockholders’ equity: | | | | | | | | | |
Common stock | | 200 | | — | | — | | 200 | |
Additional paid-in capital | | 35,721 | | — | | — | | 35,721 | |
Retained earnings | | (11,761 | ) | (31,252 | ) | 18,975 | (D) | (24,038 | ) |
| | 24,160 | | (31,252 | ) | 18,975 | | 11,883 | |
Less: treasury stock | | (471 | ) | — | | — | | (471 | ) |
Total stockholders’ equity | | 23,689 | | (31,252 | ) | 18,975 | | 11,412 | |
Total liabilities and stockholders’ equity | | $ | 181,480 | | $ | (33,347 | ) | $ | 3,529 | | $ | 151,662 | |
See accompanying notes to unaudited pro forma consolidated condensed financial statements.
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INVENTURE FOODS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2016
(in thousands, except per share data)
| | | | (A) | | | | Pro Forma | |
| | Inventure
Foods, Inc. | | Fresh Frozen
Foods | | Pro Forma
Adjustments | | Inventure
Foods | |
Net revenues | | $ | 269,012 | | $ | (48,132 | ) | $ | — | | $ | 220,880 | |
Cost of revenues | | 236,253 | | (46,377 | ) | — | | 189,876 | |
Gross profit | | 32,759 | | (1,755 | ) | — | | 31,004 | |
Operating expenses: | | | | | | | | | |
Selling, general and administrative expenses | | 34,994 | | (3,314 | ) | (24 | )(E) | 31,656 | |
Impairment of goodwill and intangible asset | | 15,446 | | (15,446 | ) | — | | — | |
Operating income (loss) | | (17,681 | ) | 17,005 | | 24 | | (652 | ) |
Non-operating (income) expense: | | | | | | | | | |
Interest expense, net | | 9,874 | | — | | (1,415 | )(F) | 8,459 | |
Income (loss) before income tax expense | | (27,555 | ) | 17,005 | | 1,439 | | (9,111 | ) |
Income tax expense | | 2,694 | | — | | 6,824 | (G) | 9,518 | (H) |
Net income (loss) | | $ | (30,249 | ) | $ | 17,005 | | $ | (5,385 | ) | $ | (18,629 | ) |
| | | | | | | | | |
Earnings (loss) per common share: | | | | | | | | | |
Basic | | $ | (1.54 | ) | $ | 0.87 | | $ | (0.27 | ) | $ | (0.95 | ) |
Diluted | | $ | (1.54 | ) | $ | 0.87 | | $ | (0.27 | ) | $ | (0.95 | ) |
| | | | | | | | | |
Weighted average number of common shares: | | | | | | | | | |
Basic | | 19,644 | | 19,644 | | 19,644 | | 19,644 | |
Diluted | | 19,644 | | 19,644 | | 19,644 | | 19,644 | |
See accompanying notes to unaudited pro forma consolidated condensed financial statements.
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INVENTURE FOODS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 26, 2015
(in thousands, except per share data)
| | | | (A) | | | | Pro Forma | |
| | Inventure
Foods, Inc. | | Fresh Frozen
Foods | | Pro Forma
Adjustments | | Inventure
Foods | |
Net revenues | | $ | 282,558 | | $ | (45,534 | ) | $ | — | | $ | 237,024 | |
Cost of revenues | | 262,221 | | (60,253 | ) | — | | 201,968 | |
Gross profit | | 20,337 | | 14,719 | | — | | 35,056 | |
Operating expenses: | | | | | | | | | |
Selling, general and administrative expenses | | 37,559 | | (7,164 | ) | (17 | )(E) | 30,378 | |
Impairment of goodwill and intangible asset | | 9,277 | | (9,277 | ) | — | | — | |
Operating income (loss) | | (26,499 | ) | 31,160 | | 17 | | 4,678 | |
Non-operating (income) expense: | | | | | | | | | |
Interest expense, net | | 6,330 | | — | | (1,310 | )(F) | 5,020 | |
Income (loss) before income tax expense | | (32,829 | ) | 31,160 | | 1,327 | | (342 | ) |
Income tax expense | | (12,046 | ) | — | | 12,020 | (G) | (26 | ) |
Net income (loss) | | $ | (20,783 | ) | $ | 31,160 | | $ | (10,693 | ) | $ | (316 | ) |
| | | | | | | | | |
Earnings (loss) per common share: | | | | | | | | | |
Basic | | $ | (1.06 | ) | $ | 1.59 | | $ | (0.55 | ) | $ | (0.02 | ) |
Diluted | | $ | (1.06 | ) | $ | 1.59 | | $ | (0.55 | ) | $ | (0.02 | ) |
| | | | | | | | | |
Weighted average number of common shares: | | | | | | | | | |
Basic | | 19,588 | | 19,588 | | 19,588 | | 19,588 | |
Diluted | | 19,588 | | 19,588 | | 19,588 | | 19,588 | |
See accompanying notes to unaudited pro forma consolidated condensed financial statements.
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INVENTURE FOODS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 27, 2014
(in thousands, except per share data)
| | | | (A) | | | | Pro Forma | |
| | Inventure
Foods, Inc. | | Fresh Frozen
Foods | | Pro Forma
Adjustments | | Inventure
Foods | |
Net revenues | | $ | 285,663 | | $ | (61,044 | ) | $ | — | | $ | 224,619 | |
Cost of revenues | | 232,542 | | (51,868 | ) | — | | 180,674 | |
Gross profit | | 53,121 | | (9,176 | ) | — | | 43,945 | |
Operating expenses: | | | | | | | | | |
Selling, general and administrative expenses | | 34,188 | | (3,633 | ) | (12 | )(E) | 30,543 | |
Impairment of goodwill and intangible asset | | — | | — | | — | | — | |
Operating income (loss) | | 18,933 | | (5,543 | ) | 12 | | 13,402 | |
Non-operating (income) expense: | | | | | | | | | |
Interest expense, net | | 2,604 | | — | | (405 | )(F) | 2,199 | |
Income (loss) before income tax expense | | 16,329 | | (5,543 | ) | 417 | | 11,203 | |
Income tax expense | | 5,768 | | — | | (1,897 | )(G) | 3,871 | |
Net income (loss) | | $ | 10,561 | | $ | (5,543 | ) | $ | 2,314 | | $ | 7,332 | |
| | | | | | | | | |
Earnings (loss) per common share: | | | | | | | | | |
Basic | | $ | 0.54 | | $ | (0.28 | ) | $ | 0.12 | | $ | 0.38 | |
Diluted | | $ | 0.53 | | $ | (0.28 | ) | $ | 0.12 | | $ | 0.37 | |
| | | | | | | | | |
Weighted average number of common shares: | | | | | | | | | |
Basic | | 19,500 | | 19,500 | | 19,500 | | 19,500 | |
Diluted | | 19,990 | | 19,990 | | 19,990 | | 19,990 | |
See accompanying notes to unaudited pro forma consolidated condensed financial statements.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The unaudited pro forma consolidated condensed statements of operations for the three fiscal years ended December 31, 2016 reflect the Company’s results as if the Transaction had occurred on December 29, 2013, the first day of fiscal 2014. The unaudited pro forma consolidated condensed balance sheet as of December 31, 2016 gives effect to the Transaction as if it occurred on such date.
(A) | | Reflects the pro forma separation adjustment for the operations, assets, liabilities and equity of Fresh Frozen, which was derived from the historical consolidated financial statements |
Unaudited Pro Forma Consolidated Condensed Balance Sheet
(B) | | Reflects adjustments for assets not purchased or liabilities not assumed by Buyer. Buyer did not purchase accounts receivables and certain software and manufacturing equipment, including equipment for Jamba At Home Smoothies which was moved to other facilities owned by the Company for continued use. Buyer did not assume accounts payable and other accrued liabilities incurred prior to the Effective Date. |
| | |
(C) | | Reflects total net proceeds from the sale that were used to pay down the Company’s Wells Fargo Line of Credit and Benefit Street Partners Term Loan. |
| | | | | | |
| | | Total proceeds | | | | |
| | | Cash consideration | | $ | 23,736 | | |
| | | Transaction costs | | (4,286 | ) | |
| | | | | $ | 19,450 | | |
| | |
(D) | | Reflects the net adjustments on the statement of operations for the effects of the sale of Fresh Frozen and the necessary pro forma adjustments as if the transaction occurred on December 31, 2016. |
Unaudited Pro Forma Consolidated Condensed Statement of Operations
(E) | | Reflects equity compensation related to the Fresh Frozen employees recorded at the parent Company. |
| | |
(F) | | Reflects the interest expense eliminated as a result of the pay down of debt from the net proceeds of the sale of Fresh Frozen Foods discussed above in footnote (C). |
| | |
(G) | | Represents the tax implications of removing Fresh Frozen direct income and expense as well as the adjustments needed to reflect pro forma adjustments. The Company used the applicable statutory rate of 37%. |
| | |
(H) | | The pro forma consolidated income tax expense for fiscal 2016 includes a $12.6 million valuation allowance recorded against the Company’s net deferred tax assets. The deferred tax assets include net operating losses from the Fresh Frozen business that will remain with the Company after the sale. |
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