|
Company |
Glass
|
Pro
Forma Adjustments |
Note |
Pro
Forma
Consolidated |
||||||||||||
|
Assets |
||||||||||||||||
|
Current
assets: |
||||||||||||||||
|
Cash
and cash equivalents |
$ |
16,572 |
$ |
2,533 |
$ |
(10,000 |
) |
1 |
$ |
9,105 |
||||||
|
Receivables
from clients, net |
41,848 |
543 |
¾ |
42,391 |
||||||||||||
|
Unbilled
services, net |
22,627 |
498 |
¾ |
23,125 |
||||||||||||
|
Income
tax receivable |
3,637 |
¾ |
¾ |
3,637 |
||||||||||||
|
Deferred
income taxes |
15,290 |
¾ |
¾ |
15,290 |
||||||||||||
|
Other
current assets |
6,435 |
243 |
¾ |
6,678 |
||||||||||||
|
Total
current assets |
106,409 |
3,817 |
(10,000 |
) |
100,226 |
|||||||||||
|
Property
and equipment, net |
27,742 |
215 |
¾ |
27,957 |
||||||||||||
|
Deferred
income taxes |
5,433 |
¾ |
¾ |
5,433 |
||||||||||||
|
Deposits
and other assets |
2,294 |
23 |
(364 |
) |
1 |
1,953 |
||||||||||
|
Intangible
assets, net |
4,238 |
¾ |
5,000 |
2 |
9,238 |
|||||||||||
|
Goodwill |
53,328 |
4,721 |
(4,721 |
) |
3 |
81,928 |
||||||||||
|
28,600 |
2 |
|||||||||||||||
|
Total
assets |
$ |
199,444 |
$ |
8,776 |
$ |
18,515 |
|
$ |
226,735 |
|||||||
|
Liabilities
and Stockholders’ Equity |
||||||||||||||||
|
Current
liabilities: |
||||||||||||||||
|
Accounts
payable |
$ |
2,684 |
$ |
561 |
$ |
¾ |
$ |
3,245 |
||||||||
|
Accrued
expenses |
12,712 |
155 |
677 |
1 |
16,994 |
|||||||||||
|
3,200 |
1 |
|||||||||||||||
|
250 |
1 |
|||||||||||||||
|
Accrued
payroll and related benefits |
41,649 |
1,746 |
¾ |
43,395 |
||||||||||||
|
Deferred
revenues / client retainers |
4,035 |
651 |
¾ |
4,686 |
||||||||||||
|
Current
portion of bank borrowings |
8,000 |
1,000 |
(1,000 |
) |
3 |
8,000 |
||||||||||
|
Current
portion of notes payable and capital
lease obligations |
1,282 |
2,637 |
(2,637 |
) |
3 |
1,282 |
||||||||||
|
Total
current liabilities |
70,362 |
6,750 |
490 |
77,602 |
||||||||||||
|
Non-current
liabilities: |
||||||||||||||||
|
Deferred
compensation and other liabilities |
1,169 |
¾ |
¾ |
1,169 |
||||||||||||
|
Notes
payable and capital lease obligations, net
of current portion |
1,000 |
618 |
(618 |
) |
3 |
1,000 |
||||||||||
|
Bank
borrowings, net of current portion |
¾ |
¾ |
20,000 |
1 |
20,000 |
|||||||||||
|
Deferred
lease incentives |
10,333 |
51 |
¾ |
10,384 |
||||||||||||
|
Total
non-current liabilities |
12,502 |
669 |
19,382 |
32,553 |
||||||||||||
|
Stockholders’
equity |
116,580 |
1,357 |
(1,357 |
) |
3 |
116,580 |
||||||||||
|
Total
liabilities and stockholders’ equity |
$ |
199,444 |
$ |
8,776 |
$ |
18,515 |
$ |
226,735 |
||||||||
|
Company |
Glass
|
Pro
Forma Adjustments |
Note |
Pro
Forma Consolidated |
||||||||||||
|
Revenues
and reimbursable expenses: |
||||||||||||||||
|
Revenues |
$ |
288,588 |
$ |
24,331 |
$ |
¾ |
$ |
312,919 |
||||||||
|
Reimbursable
expenses |
33,330 |
2,067 |
¾ |
35,397 |
||||||||||||
|
Total
revenues and reimbursable expenses |
321,918 |
26,398 |
¾ |
348,316 |
||||||||||||
|
Direct
costs and reimbursable expenses (exclusive
of depreciation and
amortization
shown
in operating expenses): |
||||||||||||||||
|
Direct
costs |
163,569 |
19,584 |
(2,235 |
) |
4 |
178,143 |
||||||||||
|
(2,775 |
) |
5 |
||||||||||||||
|
Intangible
assets amortization |
2,207 |
¾ |
1,300 |
6 |
3,507 |
|||||||||||
|
Reimbursable
expenses |
33,506 |
2,067 |
¾ |
35,573 |
||||||||||||
|
Total
direct costs and reimbursable expenses |
199,282 |
21,651 |
(3,710 |
) |
217,223 |
|||||||||||
|
Operating
expenses: |
||||||||||||||||
|
Selling,
general and administrative |
65,926 |
4,444 |
(33 |
) |
5 |
69,837 |
||||||||||
|
(500 |
) |
7 |
||||||||||||||
|
Depreciation
and amortization |
9,201 |
86 |
1,190 |
6 |
10,477 |
|||||||||||
|
Total
operating expenses |
75,127 |
4,530 |
657 |
80,314 |
||||||||||||
|
Operating
income |
47,509 |
217 |
3,053 |
50,779 |
||||||||||||
|
Other
expense |
(687 |
) |
(131 |
) |
(1,180 |
) |
8 |
(1,998 |
) | |||||||
|
Income
before provision for income taxes |
46,822 |
86 |
1,873 |
48,781 |
||||||||||||
|
Provision
benefit for income taxes |
20,133 |
¾ |
801 |
9 |
20,934 |
|||||||||||
|
Net
income |
$ |
26,689 |
$ |
86 |
$ |
1,072 |
$ |
27,847 |
||||||||
|
Earnings
per share: |
||||||||||||||||
|
Basic |
$ |
1.63 |
$ |
1.70 |
||||||||||||
|
Diluted |
$ |
1.54 |
$ |
1.61 |
||||||||||||
|
Weighted
average shares used in calculating earnings per share: |
||||||||||||||||
|
Basic |
16,359 |
16,359 |
||||||||||||||
|
Diluted |
17,320 |
17,320 |
||||||||||||||
| (1) |
This
adjustment is to record the funding and costs of the acquisition, which
consisted of the following (in thousands): |
|
Cash
paid at closing |
$ |
10,000 |
||
|
Borrowings |
20,000 |
|||
|
Working
capital adjustment accrual |
677 |
|||
|
IRS
Section 338(h)(10) election |
3,200 |
|||
|
Transaction
costs |
364 |
|||
|
Finders
fee |
250 |
|||
|
Total
purchase price |
$ |
34,491 |
| (2) |
The
purchase price was allocated, based on a preliminary valuation, as follows
(in thousands): |
|
Net
assets purchased |
$ |
3,404 |
||
|
Liabilities
assumed |
(2,513 |
) | ||
|
Customer
contracts |
1,300 |
|||
|
Customer
relationships |
1,500 |
|||
|
Non-competition
agreements |
2,200 |
|||
|
Goodwill |
28,600 |
|||
|
Total
purchase price |
$ |
34,491 |
| (3) |
This
adjustment is to eliminate Glass’ debt, which the Company did not assume,
and to eliminate Glass’ historical goodwill and equity as part of purchase
accounting. |
| (4) |
This
adjustment is to record contractual obligations pursuant to employment
agreements entered into between the Company and certain Glass employees in
connection with the acquisition and to reverse their
respective salaries recorded on Glass’ financial statements.
|
| (5) |
This
adjustment is to reverse bonuses paid by Glass to its employees relating
to the acquisition. |
| (6) |
This
adjustment is to record estimated amortization expense for identifiable
intangible assets, calculated as follows (in
thousands): |
|
Intangible
Asset |
Value |
Estimated
Useful
Life |
2006
Amortization |
|||||||
|
Customer
contracts |
$ |
1,300 |
6
months |
$ |
1,300 |
|||||
|
Customer
relationships |
$ |
1,500 |
24
months |
$ |
750 |
|||||
|
Non-competition
agreements |
$ |
2,200 |
60
months |
440 |
||||||
$ |
1,190 |
|||||||||
| (7) |
This
adjustment is to reverse legal fees incurred by Glass relating to the
acquisition. |
| (8) |
This
adjustment is to record interest expense relating to borrowings of
$20.0 million on the acquisition date, calculated as follows (in
thousands): |
|
Borrowings |
$ |
20,000 |
||
|
Interest
rate (on acquisition date) |
5.9 |
% | ||
|
Interest
expense |
$ |
1,180 |
| (9) |
This
adjustment is to record the income tax effect of the afore-mentioned pro
forma adjustments and also to record an income tax provision as if Glass
had filed its income tax returns on a consolidated basis with the Company,
calculated as follows (in thousands): |
|
Salaries
adjustment (see note 4 above) |
$ |
(2,235 |
) | |
|
Bonus
adjustment (see note 5 above) |
(2,808 |
) | ||
|
Intangible
assets amortization expense (see note 6 above) |
2,490 |
|||
|
Legal
fees reversal (see note 7 above) |
(500 |
) | ||
|
Interest
expense (see note 8 above) |
1,180 |
|||
|
Income
before taxes, before pro forma adjustments |
(86 |
) | ||
|
Subtotal
(income) / expense |
(1,959 |
) | ||
|
Tax
rate |
40.9 |
% | ||
|
Provision
for taxes |
$ |
801 |