Attached files
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8-K/A - FORM 8-K/A - Vangent, Inc. | c17389e8vkza.htm |
EX-99.3 - EXHIBIT 99.3 - Vangent, Inc. | c17389exv99w3.htm |
Exhibit 99.4
Vangent Inc.
Pro Forma Condensed Combined Interim Balance Sheet Financial Information (Unaudited)
Pro Forma Condensed Combined Interim Balance Sheet Financial Information (Unaudited)
The following unaudited pro forma condensed combined interim balance sheet data as of July 3, 2010,
are derived from the consolidated financial statements of Vangent and Buccaneer and give effect to
the Acquisition. The unaudited pro forma condensed combined interim balance sheet data are presented as if
the Acquisition had occurred as of July 3, 2010. The Acquisition has been accounted for under the
acquisition method of accounting, under which the total purchase consideration is allocated to
assets acquired and liabilities assumed based on their estimated fair values. The excess of the
purchase price over the amounts assigned to tangible or intangible assets acquired and liabilities
assumed is recognized as goodwill.
The unaudited pro forma condensed combined financial information has been prepared for
illustrative purposes only and does not include the effects of any operating efficiencies or cost
savings that may be achieved or acquisition and integration expenses.
The unaudited pro forma condensed combined financial information, including the notes thereto,
should be read in conjunction with (i) the consolidated financial statements of Vangent included in
its annual report on Form 10-K for the year ended December 31, 2009, and its quarterly report on
Form 10-Q for the three months ended July 3, 2010, and (ii) the consolidated financial statements
of Buccaneer included as Exhibit 99.1 to Vangents current report on Form 8-K/A filed November 16,
2010, and to Exhibit 99.3 to this current report on Form 8-K/A (amending the current report on Form
8-K filed by Vangent on September 21, 2010).
Vangent, Inc.
Pro Forma Condensed Combined Interim Balance Sheets Data (Unaudited)
July 3, 2010
(in thousands)
Pro Forma Condensed Combined Interim Balance Sheets Data (Unaudited)
July 3, 2010
(in thousands)
Pro Forma | ||||||||||||||||
Vangent, Inc. | Buccaneer | Adjustments | Combined | |||||||||||||
Assets |
||||||||||||||||
Current assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 37,533 | $ | 853 | $ | 16,000 | (a) | |||||||||
(64,635 | )(b) | $ | (10,249 | ) | ||||||||||||
Trade receivables, net |
140,212 | 25,998 | | 166,210 | ||||||||||||
Prepaid expenses and other assets |
11,850 | 185 | | 12,035 | ||||||||||||
Assets of discontinued operations |
6,718 | | | 6,718 | ||||||||||||
Total current assets |
196,313 | 27,036 | (48,635 | ) | 174,714 | |||||||||||
Property and equipment, net |
22,914 | 7,803 | (5,158 | )(c) | 25,559 | |||||||||||
Intangible assets, net |
140,948 | | 25,792 | (d) | 166,740 | |||||||||||
Goodwill |
267,401 | | 27,422 | (d) | 294,823 | |||||||||||
Deferred debt financing costs and other |
7,355 | 217 | | 7,572 | ||||||||||||
Total assets |
$ | 634,931 | $ | 35,056 | $ | (579 | ) | $ | 669,408 | |||||||
Liabilities and Stockholders Equity |
||||||||||||||||
Current liabilities: |
||||||||||||||||
Notes payable and short-term borrowing |
$ | | $ | 1,761 | $ | 16,000 | (a) | |||||||||
(1,761 | )(c) | $ | 16,000 | |||||||||||||
Accounts payable and accrued liabilities |
75,422 | 17,750 | | 93,172 | ||||||||||||
Accrued interest payable |
7,950 | | | 7,950 | ||||||||||||
Deferred tax liability |
4,412 | | | 4,412 | ||||||||||||
Deferred revenue |
4,288 | | | 4,288 | ||||||||||||
Liabilities of discontinued operations |
5,631 | | | 5,631 | ||||||||||||
Total current liabilities |
97,703 | 19,511 | 14,239 | 131,453 | ||||||||||||
Long-term debt, net of current portion |
406,754 | 632 | (632 | )(c) | 406,754 | |||||||||||
Other long-term liabilities |
5,009 | | | 5,009 | ||||||||||||
Deferred tax liability |
16,286 | | | 16,286 | ||||||||||||
Liabilities of discontinued operations |
199 | | | 199 | ||||||||||||
Total liabilities |
525,951 | 20,143 | 13,607 | 559,701 | ||||||||||||
Stockholders equity: |
||||||||||||||||
Common stock |
| 26 | (26 | ) | | |||||||||||
Additional paid-in capital |
207,875 | | | 207,875 | ||||||||||||
Accumulated other comprehensive loss |
(13,815 | ) | | | (13,815 | ) | ||||||||||
Retained earnings (accumulated deficit) |
(85,080 | ) | 14,805 | (14,805 | ) | (85,080 | ) | |||||||||
108,980 | 14,831 | (14,831 | ) | 108,980 | ||||||||||||
Noncontrolling interest |
| 82 | 645 | 727 | ||||||||||||
Total stockholders equity |
108,980 | 14,913 | (14,186 | ) | 109,707 | |||||||||||
Total liabilities and stockholders equity |
$ | 634,931 | $ | 35,056 | $ | (579 | ) | $ | 669,408 | |||||||
See notes to unaudited pro forma condensed combined financial information.
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Vangent Inc.
Notes to Pro Forma Condensed Combined Interim Financial Information (Unaudited)
Notes to Pro Forma Condensed Combined Interim Financial Information (Unaudited)
1. Acquisition of Buccaneer Computer Systems & Service, Inc.
On September 15, 2010, Vangent, Inc. (Vangent) completed the acquisition (Buccaneer
Acquisition) of Buccaneer Computer Systems & Service, Inc. (Buccaneer). Buccaneer is a leading
provider of IT services, infrastructure, secure data hosting and data analytics for the government
healthcare market.
Vangent acquired all outstanding shares of Buccaneer stock in exchange for total purchase
consideration of $64.6 million. The amount of the purchase consideration paid at closing was $60.0
million, of which $44.0 million was funded with available cash and $16.0 million was funded with a
variable-rate borrowing drawn on the senior secured revolving credit facility. Other cash
consideration paid amounted to $1.1 million.
A wholly-owned consolidated subsidiary of Buccaneer that owns and leases real property to
Buccaneer was not included in the Buccaneer Acquisition. The capital stock of the subsidiary was
spun off as a dividend prior to closing.
The Buccaneer Acquisition has been accounted for under the acquisition method of accounting
which requires the total purchase consideration to be allocated to the assets acquired and
liabilities assumed based on estimates of fair value. The excess of the purchase consideration over
the amounts assigned to tangible or intangible assets acquired and liabilities assumed is
recognized as goodwill.
The allocation of the purchase price is provisional pending, among other things, final
agreement of the adjustment to the purchase price based upon the level of net working capital
transferred at closing. A summary of the allocation of the purchase consideration based on
estimates of fair value for the assets acquired and the liabilities assumed follows (in thousands):
Allocation of Purchase Consideration |
||||
Cash |
$ | 897 | ||
Accounts receivable |
18,224 | |||
Property and equipment |
2,055 | |||
Intangible assets |
25,792 | |||
Goodwill |
30,457 | |||
Other assets |
2,009 | |||
Less: Liabilities assumed |
(14,072 | ) | ||
Net assets acquired |
65,362 | |||
Less: Noncontrolling interest |
(727 | ) | ||
$ | 64,635 | |||
Allocation of Intangible Assets Acquired |
||||
Customer relationships (eight-year life) |
$ | 23,809 | ||
Non-compete agreements (three-year life) |
1,983 | |||
$ | 25,792 | |||
The fair value of the definite-life intangible asset for customer relationships is based on
customer contracts and relationships with existing customers and is expected to have an eight-year
life. Amortization of the definite-life intangible asset for customer relationships is based on an
accelerated method, and amortization of the definite-life intangible asset for non-compete
agreements is based on the straight-line method. Amortization expense is included in cost of
revenue.
Goodwill represents the excess of purchase consideration over the amounts assigned to tangible
and intangible assets acquired and liabilities assumed. As a result of the election under Section
338(h) (10) of the Internal Revenue Code, the amount allocated to intangible assets and goodwill
for tax purposes is expected to be tax deductible.
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Buccaneer has a 70% ownership interest in Buccaneer Data Services, LLC, a joint venture that
provides computer technical and other consulting services to an agency of the U.S. government.
Buccaneer is entitled to a majority of the income and losses of the joint venture and has
determined that it is the primary beneficiary. The joint venture is fully consolidated in the
financial statements. Noncontrolling interest represents the remaining 30%.
2. Basis of Pro Forma Balance Sheet Presentation
The unaudited pro forma condensed combined interim balance sheet data are presented as if the
Acquisition had occurred as of July 3, 2010.
3. Pro Forma Balance Sheet Adjustments
The unaudited pro forma condensed combined financial information gives effect to fair value
adjustments attributed to the Buccaneer Acquisition and the related revolving credit borrowing of
$16.0 million by Vangent under its senior secured revolving credit facility. The purchase
consideration has been preliminarily allocated to the assets acquired and liabilities assumed based
on estimates of fair value.
The unaudited interim pro forma condensed combined financial information does not include the
effects of any operating efficiencies or cost savings that may be achieved or acquisition and
integration expenses.
The pro forma adjustments to the unaudited condensed combined pro forma balance sheet data as
of July 3, 2010, follow:
(a) | Revolving credit borrowing of $16.0 million under Vangents senior secured credit facility used to fund a portion of the total purchase consideration paid at closing. |
(b) | Record total purchase consideration of $64.6 million. |
(c) | Remove building fixed assets and related mortgage debt of a wholly-owned consolidated subsidiary of Buccaneer that owns and leases real property to Buccaneer. Pursuant to the terms of the Buccaneer Acquisition, the capital stock of the subsidiary was spun off as a dividend prior to closing. |
(d) | Record the fair value of intangible assets acquired for customer relationships of $23.8 million and non-compete agreements of $2.0 million, and record pro forma goodwill of $27.4 million as of July 3, 2010. |
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