EXHIBIT 99.2
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Balance Sheet of Answerthink
Consulting Group, Inc. (the "Company") at July 2, 1999 has been prepared to give
effect to the July 6, 1999 acquisition of CFT Consulting, Inc., as if it had
occurred on July 2, 1999.
The following Unaudited Pro Forma Consolidated Statement of Operations of the
Company for the year ended January 1, 1999, gives effect to (i) the acquisition
of Legacy Technology, Inc. ("Legacy") on May 20, 1998 (ii) the acquisition of
Infinity Consulting Group, Inc. ("Infinity") on September 30, 1998, (iii) the
acquisition of CFT Consulting, Inc. ("CFT") on July 6, 1999, (iv) the Conversion
(the "Conversion") into a total of 7,160,104 shares of Common Stock of all of
the Company's outstanding shares of Class A Convertible Preferred Stock and
Class B Convertible Preferred Stock concurrent with the Company's initial public
offering and (v) the sale of 3,324,500 shares of Common Stock by the Company's
initial public offering and the application of the net proceeds therefrom, as if
such transactions had occurred as of January 3, 1998. The following Unaudited
Pro Forma Consolidated Statement of Operations of the Company for the six months
ended July 2, 1999, gives effect to the CFT acquisition, as if such transaction
had occurred as of January 3, 1998.
Under the terms of certain earn-out provisions contained in their respective
purchase agreements, the sellers of Infinity Consulting Group, Inc. and CFT
Consulting, Inc. may be entitled to additional consideration. The maximum amount
that can be earned by the sellers of Infinity Consulting Group, Inc. and CFT
Consulting, Inc. which has not already been recorded in the Company's financial
statements, is $1.6 million and $10.2 million, respectively. The additional
goodwill recorded by the Company in connection with the maximum amount of
additional goodwill which could be recorded by the Company in connection with
the acquisition of Infinity Consulting Group, Inc. and CFT Consulting, Inc.
would increase the Company's annual amortization expense by approximately
$787,000.
The Unaudited Pro Forma Consolidated Financial Information is intended for
informational purposes only and is not necessarily indicative of the results
that would have occurred if the transactions had occurred on the dates indicated
or which may be realized in the future. The Unaudited Pro Forma Consolidated
Financial Information should be read in conjunction with the historical
financial statements of the companies acquired and the Consolidated Financial
Statements included in the Company's Form 8-K, filed on August 12, 1999, which
present the retroactive effect of the February 26, 1999 business combination of
AnswerThink Consulting Group, Inc. and triSpan, Inc., which was accounted for
under the pooling-of-interests method of accounting.
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ANSWERTHINK CONSULTING GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JULY 2, 1999
HISTORICAL
------------------------- CFT
THE CFT ACQUISITION
COMPANY ACQUISITION ADJUSTMENTS
(A) (B) (C) PRO FORMA
------------ ----------- ------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 12,034,567 $ 514,311 $ (6,056,072) $ 6,492,806
Short-term investments 500,000 670 -- 500,670
Accounts receivable and unbilled revenue, net 45,782,096 3,467,115 -- 49,249,211
Prepaid expenses and other current assets 1,443,124 134,392 -- 1,577,516
------------ ----------- ------------ ------------
Total current assets 59,759,787 4,116,488 (6,056,072) 57,820,203
Property and equipment, net 4,306,956 473,226 -- 4,780,182
Other assets 3,380,732 77,651 -- 3,458,383
Goodwill, net 31,497,468 -- 14,156,860 45,654,328
------------ ----------- ------------ ------------
Total assets $ 98,944,943 $ 4,667,365 $ 8,100,788 $111,713,096
------------ ----------- ------------ ------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,632,212 $ 757,003 $ -- $ 3,389,215
Accrued expenses and other liabilities 14,676,676 1,825,504 -- 16,502,180
Income taxes payable 2,916,050 -- -- 2,916,050
Current portion of notes payable 1,896,000 1,206,072 (1,206,072) 1,896,000
------------ ------------ ------------ ------------
Total current liabilities 22,120,938 3,788,579 (1,206,072) 24,703,445
------------ ------------ ------------ ------------
Total liabilities 22,120,938 3,788,579 (1,206,072) 24,703,445
------------ ------------ ------------ ------------
Shareholders' equity
Common stock 34,746 2,215 (1,816) 35,145
Additional paid-in capital 118,392,594 953,077 9,232,170 128,577,841
Unearned compensation (1,129,935) -- -- (1,129,935)
Retained earnings (accumulated deficit) (40,473,400) (76,506) 76,506 (40,473,400)
------------ ------------ ------------ ------------
Total shareholders' equity 76,824,005 878,786 9,306,860 87,009,651
------------ ------------ ------------ ------------
Total liabilities and shareholders' equity $ 98,944,943 $ 4,667,365 $ 8,100,788 $111,713,096
============ ============ ============ ============
See accompanying notes to Unaudited Pro Forma Consolidated Balance Sheet
2
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
A. Represents the historical consolidated balance sheet of the Company as of
July 2, 1999.
B. Represents the historical balance sheet of CFT Consulting, Inc. as of June
30, 1999. Certain amounts have been reclassified to conform with the
Company's presentation.
C. Represents the adjustments to record the purchase price of the CFT
Acquisition. The purchase price consisted primarily of $4.8 million in cash,
the repayment of $1.2 million of outstanding notes payable and the issuance
of 398,920 shares of the Company's common stock, valued at approximately
$8.8 million. In addition, the Company recorded an adjustment of $1.4
million to equity for the conversion of CFT's stock options to AnswerThink's
stock options.
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ANSWERTHINK CONSULTING GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JANUARY 1, 1999
HISTORICAL
------------------------------
PREVIOUSLY PREVIOUSLY
THE REPORTED CFT REPORTED
COMPANY ACQUISITIONS ACQUISITION ACQUISITIONS
(A) (B) (C) ADJUSTMENTS
------------- ------------- ------------- -------------
Net revenues $ 118,155,676 $ 8,653,768 $ 9,248,029 $ --
Costs and expenses:
Project personnel 71,889,880 5,904,208 4,682,517 --
and expenses
Selling, general and 38,515,933 912,967 4,977,203 588,955(D)
administrative
Compensation
related to vesting
of restricted 40,843,400 -- -- --
shares
------------- ------------- ------------- -------------
Total costs and
operating
expenses 151,249,213 6,817,175 9,659,720 588,955
------------- ------------- ------------- -------------
Income (loss) from (33,093,537) 1,836,593 (411,691) (588,955)
operations
Other income
(expense):
Litigation settlement 2,500,000 -- -- --
Interest income
(expense), net (739,003) 17,018 (74,467) (71,567)(F)
------------- ------------- ------------- -------------
Income (loss) before
income taxes (31,332,540) 1,853,611 (486,158) (660,522)
Income tax benefit
(expense) (324,820) -- 64,839 (741,444)(I)
------------- ------------- ------------- -------------
Net income (loss) $ (31,657,360) $ 1,853,611 $ (421,319) $ (1,401,966)
Net loss per common
share-basic and $ (1.62)
diluted
Weighted average
common shares 19,602,520
outstanding
CFT
ACQUISITION OFFERING PRO FORMA
ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------------- ------------- ------------- -------------
Net revenues $ -- $ 136,057,473 $ -- $ 136,057,473
Costs and expenses:
Project personnel -- 82,476,605 -- 82,476,605
and expenses
Selling, general and 943,791(E) 45,938,849 -- 45,938,849
administrative
Compensation
related to vesting
of restricted -- 40,843,400 -- 40,843,400
shares
------------- ------------- ------------- -------------
Total costs and
operating
expenses 943,791 169,258,854 -- 169,258,854
------------- ------------- ------------- -------------
Income (loss) from (943,791) (33,201,381) -- (33,201,381)
operations
Other income
(expense):
Litigation settlement -- 2,500,000 -- 2,500,000
Interest income
(expense), net (259,561)(G) (1,127,580) 672,239(H) (455,341)
------------- ------------- ------------- -------------
Income (loss) before
income taxes (1,203,352) (31,828,961) 672,239 (31,156,722)
Income tax benefit
(expense) -- (1,001,425) -- (1,001,425)
------------- ------------- ------------- -------------
Net income (loss) $ (1,203,352) $ (32,830,386) $ 672,239 $ (32,158,147)
Net loss per common
share-basic and $ (1.42) $ (1.36)
diluted
Weighted average
common shares 23,113,874 23,583,595(J)
outstanding
See accompanying notes to Unaudited Pro Forma Consolidated Statement of
Operations
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NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
A. Represents the historical consolidated statement of operations of the
Company for the year ended January 1, 1999.
B. Represents the historical statement of operations of Previously Reported
Acquisitions (Legacy Technology, Inc. ("Legacy") from January 1, 1998
through May 20, 1998 and Infinity Consulting Group, Inc. ("Infinity") from
January 1, 1998 through September 30, 1998).
C. Represents the historical statement of operations of CFT Consulting, Inc.
for the year ended December 31, 1998. Certain amounts have been reclassified
to conform with the Company's presentation.
D. Adjusts goodwill amortization expense, totaling $315,622, to reflect the
allocation of the purchase prices for the Previously Reported Acquisitions
using 15-year lives. In addition, includes adjustments to goodwill
amortization expense to reflect contingent consideration earned by Delphi
Partners, Inc., totaling $2.8 million paid in April 1999, and Legacy
Technology, Inc., totaling $1.3 million paid in June 1999.
E. Adjusts goodwill amortization expense to reflect the allocation of the
purchase price for the CFT Acquisition for the year ended January 1, 1999,
using a 15-year life. On July 6, 1999, the Company acquired CFT Consulting,
Inc. for $4.8 million in cash, 398,920 shares of the Company's common stock
valued at $8.8 million and contingent consideration up to $8.6 million upon
the achievement of certain revenue targets related to the performance of CFT
through the period ending December 31, 1999 and $1.6 million upon the
achievement of other revenue targets related to the performance of CFT
during the 12-month period ended July 6, 2000. This acquisition resulted in
total goodwill (excluding contingent consideration) of approximately $14.2
million.
F. Adjustment to interest expense as if debt incurred in connection with the
Legacy Acquisition was outstanding from January 1, 1998 through May 20,
1998.
G. Adjustment to net interest expense assuming the cash payment in connection
with the CFT Acquisition would have increased outstanding debt, thus
increasing interest expense for the period from January 1, 1998 through June
2, 1998 and would have decreased cash balances, thus decreasing interest
income for the period from June 3, 1998 through January 1, 1999. The
interest rates assumed for purposes of the pro forma adjustment was 8.5% for
debt and 3.25% on cash balances.
H. Upon the closing of the Offering, the Company retired all outstanding debt
except certain notes payable to shareholders totaling $4.1 million. Interest
expense has been adjusted to reflect the use of a portion of the Offering
proceeds to retire the debt.
I. Adjustment to provide for income tax expense for the Previously Reported
Acquisitions at a tax rate of 40%.
J. Pro forma loss per share has been calculated based upon 23,583,595 shares
outstanding. This represents the sum of the total shares outstanding on a
pro forma basis prior to the Offering (23,113,874 shares) and the weighted
average effect of the number of shares required to be sold in the Offering
(626,295 shares) to repay debt and amounts due to shareholders ($14.7
million).
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ANSWERTHINK CONSULTING GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JULY 2, 1999
HISTORICAL
------------------------ PREVIOUSLY
THE CFT CFT REPORTED
COMPANY ACQUISITION ACQUISITION ACQUISITIONS
(A) (B) ADJUSTMENTS ADJUSTMENTS PRO FORMA
------------ ----------- ----------- ----------- ------------
Net revenues $ 94,313,595 $ 8,791,929 $ -- $ -- $103,105,524
Costs and expenses:
Project personnel and expenses 55,999,110 5,138,504 -- -- 61,137,614
Selling, general and 26,119,027 2,617,516 463,562(C) 82,778(D) 29,282,883
administrative
Merger related expenses 2,500,000 -- -- -- 2,500,000
------------ ----------- ----------- ----------- ------------
Total costs and operating expenses 84,618,137 7,756,020 463,562 82,778 92,920,497
------------ ----------- ----------- ----------- ------------
Income (loss) from operations 9,695,458 1,035,909 (463,562) (82,778) 10,185,027
Other income (expense):
Interest income (expense), net (62,643) (47,727) (78,000)(E) -- (188,370)
------------ ----------- ----------- ----------- ------------
Income (loss) before income taxes 9,632,815 988,182 (541,562) (82,778) 9,996,657
Income tax expense (4,917,279) (438,571) -- -- (5,355,850)
------------ ----------- ----------- ----------- ------------
Income (loss) before extraordinary 4,715,536 549,611 (541,562) (82,778) 4,640,807
item
Extraordinary loss on early 2,112,591 -- -- -- 2,112,591
extinguishment of debt ------------ ----------- ----------- ------------ -----------
Net income (loss) $ 2,602,945 $ 549,611 $ (541,562) $ (82,778) $ 2,528,216
============ =========== ============ ============= ===========
Basic net income (loss) per common share:
Income before extraordinary
item $ 0.18 $ 0.17
Extraordinary loss on early
extinguishment of debt $ (0.08) $ (0.08)
Net income per common share $ 0.10 $ 0.09
Weighted average common shares
outstanding 26,757,194 27,156,114(F)
Diluted net income (loss) per common share:
Income before extraordinary
item $ 0.13 $ 0.13
Extraordinary loss on early
extinguishment of debt $ (0.06) $ (0.06)
Net income per common share $ 0.07 $ 0.07
Weighted average common and common
equivalent shares outstanding 35,668,695 36,067,615(F)
See accompanying notes to Unaudited Pro Forma Consolidated Statement of
Operations
6
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
A. Represents the historical consolidated statement of operations of the
Company for the six months ended July 2, 1999.
B. Represents the historical statement of operations of CFT Consulting, Inc.
for the six months ended June 30, 1999. Certain amounts have been
reclassified to conform with the Company's presentation.
C. Adjusts goodwill amortization expense to reflect the allocation of the
purchase price for the CFT Acquisition for the six months ended July 2,
1999, using a 15-year life.
D. Adjusts goodwill amortization expense to reflect contingent consideration
earned by Delphi Partners, Inc., totaling $2.8 million paid in April 1999,
and Legacy Technology, Inc., totaling $1.3 million paid in June 1999.
E. Adjustment to net interest expense assuming the cash payment in connection
with the CFT Acquisition would have decreased cash balances, thus decreasing
interest income for the period from January 2, 1999 through July 2, 1999.
The interest rate assumed for purposes of the pro forma adjustment was
3.25%.
F. Pro forma basic and diluted income per share has been calculated based upon
27,156,114 and 36,067,615 shares, respectively, outstanding. This represents
the sum of the total shares outstanding on a pro forma basis.
7