EX-99.1 6 aljj-ex991_59.htm EX-99.1 aljj-ex991_59.htm

Exhibit 99.1

 

 

ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES

INDEX TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

 

Page Number

 

 

 

 

Introduction to Unaudited Pro Forma Condensed Consolidated Financial Statements

P-2

 

 

Unaudited Pro Forma Condensed Consolidated Balance Sheet

P-3

 

 

Unaudited Pro Forma Condensed Consolidated Statement of Operations

P-4

 

 

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

P-7

 

 

 

 

 

 

 


 

INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

 

The accompanying unaudited pro forma condensed consolidated financial statements of ALJ Regional Holdings, Inc. (“ALJ,” the “Company” or “we”) and subsidiaries were derived from the Company’s historical consolidated financial statements. They are presented to give effect to the dispositions of Phoenix Color Corp. and subsidiaries (“Phoenix”) and certain business contracts of Faneuil Inc. and subsidiaries (“Faneuil Contracts”) by ALJ.  The unaudited pro forma condensed consolidated balance sheet as of September 30, 2021 is presented as if the dispositions had occurred on that date. The statements of operations for the three months ended December 31, 2021, and the years ended September 30, 2021 and 2020, are presented as if (i) the Phoenix disposition occurred on October 1, 2019, the beginning of the earliest pro forma period presented for Phoenix, and (ii) the Faneuil Contracts disposition occurred on October 1, 2020, the beginning of the earliest pro forma period presented for Faneuil.    

 

The pro forma information has been prepared for illustrative purposes only and is not intended to represent or be indicative of the consolidated results of operations that actually would have been achieved had the dispositions of Phoenix and Faneuil Contracts been completed prior to the periods presented. Further, these financial statements are not necessarily indicative of the Company’s future financial position and future results of operations.  The pro forma information should be read in conjunction with the historical financial statements of the Company included in its Annual Report on Form 10‑K for the year ended September 30, 2021, filed with the Securities and Exchange Commission (“SEC”) on December 20, 2021, and the Company’s Quarterly Report on Form 10-Q for the three months ended December 31, 2021 filed with the SEC on February 11, 2022.

 

 

 


P-2

 

 

 

ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)

(in thousands, except par value)

 

 

 

 

On September 30, 2021

 

 

 

As Reported

 

 

Phoenix

 

 

Faneuil Contracts

 

 

Pro Forma Adjustments

 

 

Pro Forma

 

ASSETS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

2,276

 

 

$

(656

)

 

$

—

 

 

$

136,128

 

(a) (b) (c)

(d) (e)

$

137,748

 

Accounts receivable, net of allowance for doubtful

   accounts of $83

 

 

68,572

 

 

 

(10,912

)

 

 

—

 

 

 

—

 

 

 

57,660

 

Inventories, net

 

 

7,654

 

 

 

(7,654

)

 

 

—

 

 

 

—

 

 

 

—

 

Prepaid expenses and other current assets

 

 

10,894

 

 

 

(2,042

)

 

 

(189

)

 

 

—

 

 

 

8,663

 

Total current assets

 

 

89,396

 

 

 

(21,264

)

 

 

(189

)

 

 

136,128

 

 

 

204,071

 

Property and equipment, net

 

 

63,930

 

 

 

(41,066

)

 

 

(7,295

)

 

 

—

 

 

 

15,569

 

Operating lease right-of-use assets

 

 

29,048

 

 

 

—

 

 

 

(8,252

)

 

 

—

 

 

 

20,796

 

Intangible assets, net

 

 

30,611

 

 

 

(18,705

)

 

 

—

 

 

 

—

 

 

 

11,906

 

Collateral deposits

 

 

487

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

487

 

Other assets

 

 

1,181

 

 

 

(389

)

 

 

—

 

 

 

—

 

 

 

792

 

Total assets

 

$

214,653

 

 

$

(81,424

)

 

$

(15,736

)

 

$

136,128

 

 

$

253,621

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

15,241

 

 

$

(3,986

)

 

$

—

 

 

$

—

 

 

$

11,255

 

Accrued expenses

 

 

26,211

 

 

 

(5,396

)

 

 

(1,340

)

 

 

—

 

 

 

19,475

 

Income taxes payable

 

 

181

 

 

 

—

 

 

 

—

 

 

 

10

 

(e)

 

191

 

Deferred revenue and customer deposits

 

 

4,053

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,053

 

Term loans, net of deferred loan costs - current installments

 

 

2,692

 

 

 

—

 

 

 

—

 

 

 

(2,692

)

(c)

 

—

 

Finance lease obligations - current installments

 

 

765

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

765

 

Operating lease obligations - current installments

 

 

4,722

 

 

 

—

 

 

 

(2,003

)

 

 

—

 

 

 

2,719

 

Current portion of workers' compensation reserve

 

 

710

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

710

 

Other current liabilities

 

 

4,353

 

 

 

(667

)

 

 

—

 

 

 

—

 

 

 

3,686

 

Total current liabilities

 

 

58,928

 

 

 

(10,049

)

 

 

(3,343

)

 

 

(2,682

)

 

 

42,854

 

Line of credit, net of deferred loan costs

 

 

5,490

 

 

 

—

 

 

 

—

 

 

 

(5,490

)

(c)

 

—

 

Term loans, less current portion, net of deferred loan costs

 

 

93,484

 

 

 

—

 

 

 

—

 

 

 

(93,484

)

(c)

 

—

 

Deferred revenue, less current portion

 

 

369

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

369

 

Workers' compensation reserve, less current portion

 

 

1,749

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

1,749

 

Finance lease obligations, less current installments

 

 

332

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

332

 

Operating lease obligations, less current installments

 

 

32,767

 

 

 

—

 

 

 

(10,489

)

 

 

—

 

 

 

22,278

 

Deferred tax liabilities, net

 

 

852

 

 

 

—

 

 

 

—

 

 

 

(852

)

(e)

 

—

 

Other non-current liabilities

 

 

8,106

 

 

 

(1,841

)

 

 

—

 

 

 

—

 

 

 

6,265

 

Total liabilities

 

 

202,077

 

 

 

(11,890

)

 

 

(13,832

)

 

 

(102,508

)

 

 

73,847

 

Stockholders’ equity:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock, $0.01 par value; authorized – 100,000

   shares; 42,406 issued and outstanding on

   September 30, 2021

 

 

424

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

424

 

Additional paid-in capital

 

 

288,355

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

288,355

 

Accumulated deficit

 

 

(276,203

)

 

 

(69,534

)

 

 

(1,904

)

 

 

238,636

 

(a) (b) (c)

(d) (e)

 

(109,005

)

Total stockholders’ equity

 

 

12,576

 

 

 

(69,534

)

 

 

(1,904

)

 

 

238,636

 

 

 

179,774

 

Total liabilities and stockholders’ equity

 

$

214,653

 

 

$

(81,424

)

 

$

(15,736

)

 

$

136,128

 

 

$

253,621

 

 

See notes to unaudited pro forma condensed consolidated financial statements.

P-3

 

ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

 

 

 

Three Months Ended December 31, 2021

 

 

 

As Reported

 

 

Phoenix

 

 

Faneuil Contracts

 

 

Pro Forma Adjustments

 

 

Pro Forma

 

Net revenue

 

$

103,082

 

 

$

(28,303

)

 

$

(42,738

)

 

$

447

 

(d)

$

32,488

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

89,164

 

 

 

(21,640

)

 

 

(38,917

)

 

 

(331

)

(d)

 

28,276

 

Selling, general, and administrative expense

 

 

20,183

 

 

 

(3,588

)

 

 

(5,204

)

 

 

(2,099

)

(d)

 

9,292

 

Loss on disposal of assets, net

 

 

26

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

26

 

Total operating expenses

 

 

109,373

 

 

 

(25,228

)

 

 

(44,121

)

 

 

(2,430

)

 

 

37,594

 

Operating loss

 

 

(6,291

)

 

 

(3,075

)

 

 

1,383

 

 

 

2,877

 

 

 

(5,106

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(2,705

)

 

 

1,436

 

 

 

1,254

 

 

 

—

 

 

 

(15

)

Total other expense, net

 

 

(2,705

)

 

 

1,436

 

 

 

1,254

 

 

 

—

 

 

 

(15

)

Loss from continuing operations before income taxes

 

 

(8,996

)

 

 

(1,639

)

 

 

2,637

 

 

 

2,877

 

 

 

(5,121

)

(Provision for) benefit from income taxes

 

 

(396

)

 

 

497

 

 

 

12

 

 

 

(129

)

(e)

 

(16

)

Net loss

 

$

(9,392

)

 

$

(1,142

)

 

$

2,649

 

 

$

2,748

 

 

$

(5,137

)

Loss per share of common stock–basic and diluted

 

$

(0.22

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.12

)

Weighted average shares of common stock outstanding–

   basic and diluted

 

 

42,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42,407

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to unaudited pro forma condensed consolidated financial statements.


P-4

 

ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

 

 

 

Year Ended September 30, 2021

 

 

 

As Reported

 

 

Phoenix

 

 

Faneuil Contracts

 

 

Pro Forma Adjustments

 

 

Pro Forma

 

Net revenue

 

$

440,853

 

 

$

(115,627

)

 

$

(154,812

)

 

$

2,951

 

(d)

$

173,365

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

355,245

 

 

 

(87,903

)

 

 

(119,549

)

 

 

(27

)

(d)

 

147,766

 

Selling, general, and administrative expense

 

 

76,688

 

 

 

(15,115

)

 

 

(20,047

)

 

 

(7,381

)

(d)

 

34,145

 

Gain on disposal of assets, net

 

 

(191

)

 

 

192

 

 

 

—

 

 

 

(114,693

)

(b)

 

(114,692

)

Total operating expenses

 

 

431,742

 

 

 

(102,826

)

 

 

(139,596

)

 

 

(122,101

)

 

 

67,219

 

Operating income

 

 

9,111

 

 

 

(12,801

)

 

 

(15,216

)

 

 

125,052

 

 

 

106,146

 

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(10,190

)

 

 

4,922

 

 

 

5,209

 

 

 

—

 

 

 

(59

)

Loss on debt extinguishment

 

 

(2,072

)

 

 

—

 

 

 

—

 

 

 

2,072

 

(c)

 

—

 

Total other expense, net

 

 

(12,262

)

 

 

4,922

 

 

 

5,209

 

 

 

2,072

 

 

 

(59

)

(Loss) income from continuing operations before income taxes

 

 

(3,151

)

 

 

(7,879

)

 

 

(10,007

)

 

 

127,124

 

 

 

106,087

 

Provision for income taxes

 

 

(429

)

 

 

422

 

 

 

57

 

 

 

(10,901

)

(e)

 

(10,851

)

(Loss) income from continuing operations

 

 

(3,580

)

 

 

(7,457

)

 

 

(9,950

)

 

 

116,223

 

 

 

95,236

 

Net loss from discontinued operations, net of taxes

 

 

(1,063

)

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,063

)

Net (loss) income

 

$

(4,643

)

 

$

(7,457

)

 

$

(9,950

)

 

$

116,223

 

 

$

94,173

 

(Loss) income per share of common stock–basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2.25

 

Discontinued operations

 

$

(0.03

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.03

)

Net (loss) income per share (1)

 

$

(0.11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

2.22

 

(Loss) income per share of common stock–diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1.75

 

Discontinued operations

 

$

(0.03

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(0.02

)

Net (loss) income per share (1)

 

$

(0.11

)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

1.73

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

42,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

42,329

 

Diluted

 

 

42,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

54,417

 

 

 

(1)

Amounts may not add due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to unaudited pro forma condensed consolidated financial statements.

P-5

 

 

 

ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in thousands, except per share amounts)

 

 

 

 

Year Ended September 30, 2020

 

 

 

As Reported

 

 

Phoenix

 

 

Pro Forma Adjustments

 

 

Pro Forma

 

Net revenue

 

$

350,053

 

 

$

(103,021

)

 

$

—

 

 

$

247,032

 

Costs and expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue

 

 

282,488

 

 

 

(79,079

)

 

 

—

 

 

 

203,409

 

Selling, general, and administrative expense

 

 

67,284

 

 

 

(14,873

)

 

 

—

 

 

 

52,411

 

Impairment of goodwill

 

 

56,492

 

 

 

(32,542

)

 

 

—

 

 

 

23,950

 

Gain on disposal of assets, net

 

 

(324

)

 

 

324

 

 

 

—

 

 

 

—

 

Total operating expenses

 

 

405,940

 

 

 

(126,170

)

 

 

—

 

 

 

279,770

 

Operating loss

 

 

(55,887

)

 

 

23,149

 

 

 

—

 

 

 

(32,738

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net

 

 

(10,528

)

 

 

5,640

 

 

 

4,728

 

(c)

 

(160

)

Interest from legal settlement

 

 

200

 

 

 

—

 

 

 

—

 

 

 

200

 

Loss on debt extinguishment

 

 

—

 

 

 

—

 

 

 

(3,694

)

(c)

 

(3,694

)

Total other expense, net

 

 

(10,328

)

 

 

5,640

 

 

 

1,034

 

 

 

(3,654

)

Loss from continuing operations before income taxes

 

 

(66,215

)

 

 

28,789

 

 

 

1,034

 

 

 

(36,392

)

Benefit from income taxes

 

 

2,043

 

 

 

284

 

 

 

604

 

(e)

 

2,931

 

Loss from continuing operations

 

 

(64,172

)

 

 

29,073

 

 

 

1,638

 

 

 

(33,461

)

Net (loss) gain from discontinued operations, net of taxes

 

 

(3,502

)

 

 

—

 

 

 

49,337

 

(a) (e)

 

45,835

 

Net (loss) income

 

$

(67,674

)

 

$

29,073

 

 

$

50,975

 

 

$

12,374

 

(Loss) income per share of common stock–basic:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(1.52

)

 

 

 

 

 

 

 

 

 

$

(0.79

)

Discontinued operations

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

$

1.09

 

Net (loss) income per share (1)

 

$

(1.60

)

 

 

 

 

 

 

 

 

 

$

0.29

 

(Loss) income per share of common stock–diluted:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

(1.52

)

 

 

 

 

 

 

 

 

 

$

(0.63

)

Discontinued operations

 

$

(0.08

)

 

 

 

 

 

 

 

 

 

$

0.86

 

Net (loss) income per share (1)

 

$

(1.60

)

 

 

 

 

 

 

 

 

 

$

0.23

 

Weighted average shares of common stock outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

42,186

 

 

 

 

 

 

 

 

 

 

 

42,186

 

Diluted

 

 

42,186

 

 

 

 

 

 

 

 

 

 

 

53,360

 

 

 

(1)

Amounts may not add due to rounding.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

See notes to unaudited pro forma condensed consolidated financial statements.

 

 

P-6

 

ALJ REGIONAL HOLDINGS, INC. AND SUBSIDIARIES

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 

 

Note 1.  Basis of Presentation

The unaudited pro forma condensed consolidated balance sheet as of September 30, 2021 was prepared as if the dispositions of Phoenix and Faneuil Contracts had occurred on that date. The statements of operations for the three months ended December 31, 2021, and the years ended September 30, 2021 and 2020, are presented as if (i) the Phoenix disposition occurred on October 1, 2019, the beginning of the earliest pro forma period presented for Phoenix, and (ii) the Faneuil Contracts disposition occurred on October 1, 2020, the beginning of the earliest pro forma period presented for Faneuil.

 

Note 2. Pro Forma Adjustments

 

The unaudited pro forma condensed consolidated financial statements are based on the Company’s historical consolidated financial statements as adjusted to give effect to the dispositions Phoenix and Faneuil Contracts. The pro forma adjustments give effect to events that are (1) directly attributable to the dispositions, (2) expected to have a continuing impact on the registrant, and (3) factually supportable, and are based on assumptions that management believes are reasonable given the best information currently available.

 

Explanations that follow correspond to note references identified in the unaudited pro forma condensed financial statements provided on pages P-3 through P-6 of this exhibit:

 

 

(a)

To book proceeds and the related gains from the sale of Phoenix, net of related transaction expenses.

 

 

(b)

To book proceeds and the related gains from the sale of Faneuil Contracts, net of related transaction expenses.

 

 

(c)

To book payoff of certain debt, book the requisite prepayment penalty, and remove related interest expense using proceeds from the sale of Phoenix.

 

 

(d)

To eliminate redundant expenses and add license revenue related to the sale of Faneuil Contracts.

 

 

(e)

To record the tax impact of adjustments (a) through (d) above.  

 

 

 

 

 

P-7