EX-99.2 3 ex99_2.htm EXHIBIT 99.2
Exhibit 99.2
 

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

On April 11, 2018, Wright Investors’ Service Holdings, Inc., a Delaware corporation (the “Company”), Khandwala Capital Management, Inc., a Connecticut corporation (“Purchaser”), and Amit S. Khandwala (“ASK”) entered into a Stock Purchase Agreement (the “Agreement”).  Pursuant to the Agreement, upon the terms and subject to the satisfaction or waiver of the conditions therein, the Company agreed to sell, and Purchaser agreed to purchase for cash (the “Sale”), all of the issued and outstanding stock of the Company’s wholly-owned subsidiary, The Winthrop Corporation (“Winthrop”).  The purchase price (the “Purchase Price”) for the Stock is $6.0 million. The Sale was subject to the approval of the stockholders of the Company, which was received on July 16, 2018 at the annual meeting of stockholders of the Company.  On July 17, 2018 the Company completed the Sale of Winthrop.

The following unaudited pro forma financial information should be read in conjunction with the related notes and with the Company’s historical consolidated financial statements for the years ended December 31, 2017 and December 31, 2016, and for the three months ended March 31, 2018 and 2017, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.

The unaudited pro forma financial information is derived from the Company’s historical financial statements, adjusted to reflect the Sale as if it had occurred at the end of the most recent period for which the balance sheet is presented, March 31, 2018, and includes adjustments which give effect to (i) events that are directly attributable to the Sale and factually supportable, regardless of whether they have a continuing impact or are nonrecurring. The pro forma statements of income are prepared based on the Company’s historical statements and adjusted as if the Sale occurred on the first day of each period presented and include adjustments which give effect to the events that are (i) directly attributable to the Sale, (ii) expected to have a continuing impact on the Company, and (iii) factually supportable.

The unaudited pro forma financial information is presented for informational purposes only, is based upon estimates by the Company’s management and is not intended to be indicative of actual results of operations or financial position that would have been achieved had the transaction been consummated as of the beginning of each period indicated above or as of March 31, 2018, nor does it purport to indicate results which may be attained in the future.
 
 
WRIGHT INVESTORS' SERVICE HOLDINGS INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 2018
(unaudited)
(in thousands, except per share amounts)
 
        
Winthrop
    
Pro Forma
    
Pro Forma
  
 
  
Historical
    
adjustment
    
adjustment
    
Statement
  
 
  
Consolidated
    
inc / (dec)
    
inc / (dec)
    
of Operations
  
Revenues
                        
Investment management services
  
$
570
    
$
(570
)
  
$
-
    
$
-
  
Other investment advisory services
    
603
      
(603
)
    
-
      
-
  
Financial research and related data
    
216
      
(216
)
    
-
      
-
  
 
    
1,389
      
(1,389
)
    
-
      
-
  
Expenses
                                
Compensation and benefits
    
859
      
(681
)
            
178
  
Other operating
    
782
      
(487
)
    
44
 (i)
    
339
  
Transaction costs
    
132
      
-
      
-
      
132
  
 
    
1,773
      
(1,168
)
    
44
      
649
  
 
                                
Operating loss
    
(384
)
    
(221
)
    
(44
)
    
(649
)
Interest expense and other loss,  net
    
(20
)
    
23
              
3
  
Loss before income taxes
    
(404
)
    
(198
)
    
(44
)
    
(646
)
Income tax expense
    
(13
)
    
-
      
-
      
(13
)
Net loss
  
$
(417
)
  
$
(198
)
          
$
(659
)
Basic and diluted net loss per share
  
$
(0.02
)
                  
$
(0.03
)
 
                                
Weighted average common shares outstanding:
                                
 
                                
Basic and diluted
    
19,378
                      
19,378
  
 
Pro forma adjustments include:
 
(i)          Add back to Other operating expenses for the portion of rent and facility costs currently incurred by Winthrop
 
2
 
WRIGHT INVESTORS' SERVICE HOLDINGS INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended March 31, 2017
(unaudited)
(in thousands, except per share amounts)
 
        
Winthrop
    
Pro Forma
    
Pro Forma
  
 
  
Historical
    
adjustment
    
adjustment
    
Statement
  
 
  
Consolidated
    
inc / (dec)
    
inc / (dec)
    
of Operations
  
Revenues
                        
Investment management services
  
$
492
    
$
(492
)
  
$
-
    
$
-
  
Other investment advisory services
    
669
      
(669
)
    
-
      
-
  
Financial research and related data
    
183
      
(183
)
    
-
      
-
  
 
    
1,344
      
(1,344
)
    
-
      
-
  
Expenses
                                
Compensation and benefits
    
917
      
(802
)
    
-
      
115
  
Other operating
    
791
      
(472
)
    
44
 (i)
    
363
  
 
    
1,708
      
(1,274
)
    
44
      
478
  
 
                                
Operating loss
    
(364
)
    
(70
)
    
(44
)
    
(478
)
Interest expense and other income (loss),  net
    
(26
)
    
27
      
-
      
1
  
Loss before income taxes
    
(390
)
    
(43
)
    
(44
)
    
(477
)
Income tax expense
    
(12
)
    
-
      
-
      
(12
)
Net loss
  
$
(402
)
  
$
(43
)
          
$
(489
)
Basic and diluted net loss per share
  
$
(0.02
)
                  
$
(0.03
)
 
                                
Weighted average common shares outstanding:
                                
 
                                
Basic and diluted
    
19,137
                      
19,137
  
 
Pro forma adjustments include:
 
(i)          Add back to Other operating expenses for the portion of rent and facility costs currently incurred by Winthrop
 
3
 
WRIGHT INVESTORS' SERVICE HOLDINGS INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2017
(unaudited)
(in thousands, except per share amounts)
 
        
Winthrop
    
Pro Forma
    
Pro Forma
  
 
  
Historical
    
adjustment
    
adjustment
    
Statement
  
 
  
Consolidated
    
inc / (dec)
    
inc / (dec)
    
of Operations
  
Revenues
                        
Investment management services
  
$
2,213
    
$
(2,213
)
  
$
-
    
$
-
  
Other investment advisory services
    
2,387
      
(2,387
)
    
-
      
-
  
Financial research and related data
    
812
      
(812
)
    
-
      
-
  
 
    
5,412
      
(5,412
)
    
-
      
-
  
Expenses
                                
Compensation and benefits
    
3,364
      
(2,896
)
    
-
      
468
  
Other operating
    
3,338
      
(2,032
)
    
177
 (i)
    
1,483
  
 
    
6,702
      
(4,928
)
    
177
      
1,951
  
 
                                
Operating income
    
(1,290
)
    
(484
)
    
(177
)
    
(1,951
)
Interest expense and other income (loss),  net
    
(96
)
    
105
      
-
      
9
  
Loss before income taxes
    
(1,386
)
    
(379
)
    
(177
)
    
(1,942
)
Income tax benefit
    
96
      
-
      
-
      
96
  
Net loss
  
$
(1,290
)
  
$
(379
)
          
$
(1,846
)
Basic and diluted net loss per share
  
$
(0.07
)
                  
$
(0.10
)
 
                                
Weighted average common shares outstanding:
                                
 
                                
Basic and diluted
    
19,216
                      
19,216
  
 
Pro forma adjustments include:
 
(i)          Add back to Other operating expenses for the portion of rent and facility costs currently incurred by Winthrop
 
4
 
WRIGHT INVESTORS' SERVICE HOLDINGS INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2016
(unaudited)
(in thousands, except per share amounts)
 
 
        
Winthrop
    
Pro Forma
    
Pro Forma
  
 
  
Historical
    
adjustment
    
adjustment
    
Statement
  
 
  
Consolidated
    
inc / (dec)
    
inc / (dec)
    
of Operations
  
Revenues
                        
Investment management services
  
$
2,240
    
$
(2,240
)
  
$
-
    
$
-
  
Other investment advisory services
    
2,765
      
(2,765
)
    
-
      
-
  
Financial research and related data
    
706
      
(706
)
    
-
      
-
  
 
    
5,711
      
(5,711
)
    
-
      
-
  
Expenses
                                
Compensation and benefits
    
3,745
      
(3,322
)
    
-
      
423
  
Other operating
    
3,650
      
(2,341
)
    
177
 (i)
    
1,486
  
 
    
7,395
      
(5,663
)
    
177
      
1,909
  
 
                                
Operating income
    
(1,684
)
    
(48
)
    
(177
)
    
(1,909
)
Share of loss from Investment in LLC
    
(294
)
                    
(294
)
Interest expense and other income (loss),  net
    
(100
)
    
81
      
-
      
(19
)
Income (loss) before income taxes
    
(2,078
)
    
33
      
(177
)
    
(2,222
)
Income tax expense
    
(54
)
    
-
      
-
      
(54
)
Net income (loss)
  
$
(2,132
)
  
$
33
            
$
(2,276
)
Basic and diluted net loss per share
  
$
(0.11
)
                  
$
(0.12
)
 
                                
Weighted average common shares outstanding:
                                
 
                                
Basic and diluted
    
19,085
                      
19,085
  
 
Pro forma adjustments include:
 
(i)          Add back to Other operating expenses for the portion of rent and facility costs currently incurred by Winthrop
 
5
 
WRIGHT INVESTORS' SERVICE HOLDINGS INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
For the three months ended March 31, 2018
(unaudited)
(in thousands)

 
        
Winthrop
    
Pro Forma
    
Pro Forma
  
 
  
Historical
    
adjustment
    
adjustment
    
Balance
  
 
  
Consolidated
    
inc / (dec)
    
inc / (dec)
    
Sheet
  
Assets
                        
Current assets
                        
Cash and cash equivalents
  
$
5,681
    
$
(638
)
  
$
6,000
 (i)
  
$
11,184
  
 
                    
141
 (ii)
        
Accounts receivable
    
161
      
(161
)
    
-
      
-
  
Income tax receivable
    
148
      
-
      
-
      
148
  
Prepaid expenses and other current assets
    
363
      
(287
)
    
-
      
76
  
Total current assets
    
6,353
      
(1,086
)
    
6,141
      
11,408
  
Property and equipment, net
    
87
      
(87
)
    
-
      
-
  
Intangible assets, net
    
1,519
      
(1,519
)
    
-
      
-
  
Goodwill
    
3,364
      
(3,364
)
    
-
      
-
  
Investment in undeveloped land
    
355
      
-
      
-
      
355
  
Other assets
    
108
      
(50
)
    
-
      
58
  
Total assets
  
$
11,786
    
$
(6,106
)
  
$
6,141
    
$
11,821
  
 
                                
Liabilities and stockholders’ equity
                                
Current liabilities
                                
Accounts payable and accrued expenses
  
$
628
    
$
(493
)
  
$
-
    
$
135
  
Deferred revenue
    
10
      
(10
)
    
-
      
-
  
Income taxes payable
    
43
      
(12
)
    
-
      
31
  
Due to parent
    
-
      
(141
)
    
141
 (ii)
    
-
  
Current portion of officers retirement bonus liability
    
165
      
(165
)
    
-
      
-
  
Total current liabilities
    
846
      
(821
)
    
141
      
166
  
 
                                
Officers retirement bonus liability, net of current portion
    
447
      
(447
)
    
-
      
-
  
Total liabilities
    
1,293
      
(1,268
)
    
141
      
166
  
 
                                
Stockholders’ equity
    
10,493
      
(4,838
)
    
6,000
 (iii)
    
11,655
  
 
                                
Total liabilities and stockholders’ equity
  
$
11,786
    
$
(6,106
)
  
$
6,141
    
$
11,821
  
 
Pro forma adjustments include:
 
(i)
Stock purchase price of $6 million
(ii)
Estimated amount owed by Winthrop to the Company, required to paid at closing
(iii)
Represents the increase in equity as a result of the sale of Winthrop
 
 
6