Exhibit 99.2
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
June 30, 2007
(Dollars in Thousands)
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| Ballantyne of |
| Marcel |
| Pro Forma |
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| Pro Forma |
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| �� |
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Assets: |
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Current assets: |
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Cash and cash equivalents |
| $ | 19,884 |
| $ | 1,725 |
| $ | (5,396 | ) | (a) (f) | $ | 16,213 |
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Restricted Cash |
| 616 |
| — |
| 939 |
| (b) | 1,555 |
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Accounts Receivable |
| 6,815 |
| 506 |
| — |
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| 7,321 |
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Inventories |
| 11,234 |
| 754 |
| — |
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| 11,988 |
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Other Current Assets |
| 2,575 |
| 116 |
| — |
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| 2,691 |
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Total current assets |
| 41,124 |
| 3,101 |
| (4,457 | ) |
| 39,768 |
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Investment in Joint Venture |
| 2,747 |
| — |
| — |
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| 2,747 |
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Property, plant and equipment, net |
| 4,584 |
| 1,796 |
| (1,610 | ) | (a) | 4,770 |
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Goodwill, net |
| 1,170 |
| — |
| 687 |
| (e) | 1,857 |
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Other Intangibles, net |
| 607 |
| — |
| 807 |
| (g) | 1,414 |
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Other long-term assets |
| 1,018 |
| 27 |
| (27 | ) | (a) | 1,018 |
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Total assets |
| $ | 51,249 |
| $ | 4,924 |
| $ | (4,600 | ) |
| $ | 51,574 |
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Liabilities and Stockholders’ Equity: |
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Current liabilities: |
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Accounts payable |
| $ | 4,199 |
| $ | 95 |
| $ | — |
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| $ | 4,294 |
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Other current liabilities |
| 3,427 |
| 230 |
| — |
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| 3,657 |
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total current liabilities |
| 7,626 |
| 325 |
| — |
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| 7,951 |
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Other accrued expenses, net of current portion |
| 635 |
| 2,924 |
| (2,925 | ) | (a) | 635 |
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Total liabilities |
| 8,261 |
| 3,249 |
| (2,925 | ) |
| 8,586 |
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Stockholders’ Equity: |
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Common Stock |
| 159 |
| — |
| — |
| (d) | 159 |
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Preferred Stock |
| — |
| — |
| — |
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| — |
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Additional Paid-In-Capital |
| 34,438 |
| — |
| — |
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| 34,438 |
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Accumulated other comprehensive income |
| 15 |
| — |
| — |
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| 15 |
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Retained earnings |
| 23,691 |
| 1,675 |
| (1,675 | ) | (d) | 23,691 |
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Treasury stock |
| (15,315 | ) | — |
| — |
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| (15,315 | ) | ||||
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EQUITY |
| 42,988 |
| — |
| (1,675 | ) |
| 42,988 |
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TOTAL LIABILITIES AND EQUITY |
| $ | 51,249 |
| $ | 4,924 |
| $ | (4,600 | ) |
| $ | 51,574 |
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(1) | The historical amounts for Marcel Desrochers, Inc. are presented in United States dollar (US$) and have been converted from Canadian dollars using an exchange rate of 0.876476 as agreed upon in the Asset Purchase Agreement included at Exhibit 2.1. |
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(a) | To eliminate assets and liabilities not purchased by Company as part of the acquisition of Marcel Desrochers, Inc. |
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(b) | Represents portion of total purchase price placed in an escrow fund by Company to be paid in future periods to Seller. |
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(d) | Reflects the elimination of historical Marcel Desrochers, Inc.’s stockholders’ equity. |
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(e) | Represents the addition of goodwill calculated as the excess of the purchase price over the carrying value of the net assets acquired. |
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(f) | Reflects the use of the Company’s cash to finance the acquisition of Marchel Desrochers, Inc. |
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(g) | Represents a preliminary estimate of the fair value of identifiable intangible assets acquired. The Company has engaged an independent third-party valuation firm to assist in determining the estimated fair values of the identifiable intangible assets acquired. The Company believes the preliminary fair values assigned are based on reasonable assumptions. |
BALLANTYNE OF OMAHA, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the six months ended June 30, 2007
(Dollars in Thousands, except per share data)
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| Ballantyne of Omaha, Inc. |
| Marcel Desrochers, Inc. |
| Pro Forma |
| Pro Forma |
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| Historical |
| Historical (1)(2) |
| Adjustments |
| Combined |
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Net revenues |
| $ | 25,591 |
| $ | 2,250 |
| $ | — |
| $ | 27,841 |
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Cost of revenues |
| 20,387 |
| 1,005 |
| (67 | )(d) | 21,325 |
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Gross margin |
| 5,204 |
| 1,245 |
| 67 |
| 6,516 |
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Selling and administrative expenses: |
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Selling |
| 1,493 |
| 17 |
| — |
| 1,510 |
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Administrative |
| 3,027 |
| 242 |
| 64 | (a)(f) | 3,333 |
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Goodwill Impairment |
| 639 |
| — |
| — |
| 639 |
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Total selling and administrative expenses |
| 5,159 |
| 259 |
| 64 |
| 5,482 |
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Gain on the transfer of assets |
| 235 |
| - |
| — |
| 235 |
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Gain (loss) on disposal of fixed assets, net |
| (11 | ) | (4 | ) | — |
| (15 | ) | ||||
Income (loss) from operations |
| 269 |
| 982 |
| 3 |
| 1,254 |
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Net interest income |
| 406 |
| (22 | ) | (47 | )(b)(e) | 337 |
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Equity in loss of joint venture |
| (73 | ) | — |
| — |
| (73 | ) | ||||
Other Income |
| — |
| 18 |
| — |
| 18 |
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Other Expense |
| (73 | ) | (87 | ) | — |
| (160 | ) | ||||
Income before income taxes |
| 529 |
| 891 |
| (44 | ) | 1,376 |
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Income tax expense |
| (153 | ) | (303 | ) | 15 | (g) | (441 | ) | ||||
Net income |
| $ | 376 |
| $ | 588 |
| $ | (29 | ) | $ | 935 |
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Earnings per share |
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Basic |
| $ | 0.03 |
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| $ | 0.07 |
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Diluted |
| $ | 0.03 |
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| $ | 0.07 |
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Weighted average shares outstanding |
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Basic |
| 13,789,603 |
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| 13,789,603 |
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Diluted |
| 14,081,439 |
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| 14,081,439 |
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(1) The financial statements of Marcel Desrochers, Inc. were derived by removing the activity for one month ended December 31, 2007 from seven months ended June 30, 2007. |
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| (2) The historical amounts for Marcel Desrochers, Inc. are presented in United States dollar (US$) and have been converted from the Canadian dollar using an exchange rate of 0.876476 as agreed upon in the Asset Purchase Agreement included at Exhibit 2.1. |
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(a) Reflects an estimation of amortization of approximately $82,000 for identified intangible assets based on esimated fair values assigned to these assets and the date of acquisition and the estimated useful lives of five years. |
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(b) Represents the reversal of interest expense incurred of approximately $26,000 on long-term debt not acquired by the Company. |
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(d) Represents the elimination of depreciation on property and equipment not acquired by the Company. |
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(e) Reflects lower interest income of approximately $73,000 due to the use of $3.8 million of the Company's cash and equivalents to finance the acquisition of Marcel Desrochers, Inc. and associated transaction costs. The calculation assumes an interest rate based on the Company's average interest rate earned on cash of 1.7% for the six months ended June 30, 2007. |
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(f) Represents the elimination of compensation and related expenses of approximately $48,000 related to Marcel Desrochers, Inc.'s owner and other members of the management team not employed by the Company and the addition of compensation and related expenses of approximately $31,000 for new members of management since acquisiton. |
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(g) Represents the income tax effect of the unaudited pro forma consolidated statement of operations adjustments and the expense related to the income from continuing operations of Marcel Desrochers, Inc. using an estimated Canadian effective tax rate of 33.98%. |
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BALLANTYNE OF OMHA, INC. AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS (Unaudited)
(in thousands, except per share data)
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| Historical |
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| Ballantyne of Omaha, Inc. |
| Marcel Desrochers, Inc. |
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| Twelve months ended 12/31/06 |
| Twelve months ended 11/30/06 (1) |
| Pro Forma Adjustments |
| Pro Forma Combined |
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Net revenues |
| $ | 49,732 |
| $ | 3,206 |
| $ | — |
| $ | 52,938 |
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Cost of revenues |
| 38,906 |
| 1,751 |
| (81 | )(d) | 40,576 |
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Gross margin |
| 10,826 |
| 1,455 |
| 81 |
| 12,362 |
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Selling and administrative expenses: |
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Selling |
| 2,983 |
| 36 |
| — |
| 3,019 |
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Administrative |
| 5,121 |
| 468 |
| 128 | (a)(f) | 5,717 |
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Goodwill Impairment |
| 1,251 |
| — |
| — |
| 1,251 |
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Total selling and administrative expenses |
| 9,355 |
| 504 |
| 128 |
| 9,987 |
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Gain (loss) on disposal of fixed assets, net |
| 38 |
| (2 | ) | — |
| 36 |
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Income (loss) from operations |
| 1,509 |
| 949 |
| (47 | ) | 2,411 |
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Net interest income (expense) |
| 750 |
| (45 | ) | (94 | )(b)(e) | 611 |
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Other Income |
| 40 |
| 45 |
| — |
| 85 |
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Other Expense |
| — |
| (125 | ) | 114 | (g) | (11 | ) | ||||
Income before income taxes |
| 2,299 |
| 824 |
| (27 | ) | 3,096 |
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Income tax expense |
| (731 | ) | (280 | ) | 48 | (h) | (963 | ) | ||||
Net income |
| $ | 1,568 |
| $ | 544 |
| $ | 21 |
| $ | 2,133 |
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Earnings per share |
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Basic |
| $ | 0.12 |
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| $ | 0.16 |
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Diluted |
| $ | 0.11 |
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| $ | 0.15 |
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Weighted average shares outstanding |
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Basic |
| 13,586,252 |
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| 13,586,252 |
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Diluted |
| 14,018,682 |
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| 14,018,682 |
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(1) The historical amounts for Marcel Desrochers, Inc. are presented in United States dollar (US$) and have been converted from the Canadian dollar using an exchange rate of 0.876476 as agreed upon in the Asset Purchase Agreement included at Exhibit 2.1.
(a) Reflects an estimation of amortization of approximately $164,000 for identified intangible assets based on esimated fair values assigned to these assets and the date of acquisition and the estimated useful lives of five years.
(b) Represents the reversal of interest expense incurred of approximately $46,000 on long-term debt not acquired by the Company.
(d) Represents the elimination of depreciation on property and equipment not acquired by the Company.
(e) Reflects lower interest income of approximately $139,000 due to the use of $3.8 million of the Company's cash and equivalents to finance the acquisition of Marcel Desrochers, Inc. and associated transaction costs. The calculation assumes an interest rate based on the Company's average interest rate earned on cash of 3.71% for the twelve months ended December 31, 2006.
(f) Represents the elimination of compensation and related expenses of approximately $96,000 related to Marcel Desrochers, Inc.'s owner and other members of the management team not employed by the Company and the addition of compensation and related expenses of approximately $61,000 for new members of management since acquisition.
(g) Reflects an adjustment to eliminate the expense recorded for dividends declared to report net income in accordance with U.S GAAP.
(h) Represents the income tax effect of the unaudited pro forma consolidated statement of operations adjustments and the expense related to the income from continuing operations of Marcel Desrochers, Inc. using an estimated Canadian effective tax rate of 33.98%.