Attached files
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8-K/A - FORM 8-K/A - NCI, Inc. | c18570e8vkza.htm |
EX-99.2 - EXHIBIT 99.2 - NCI, Inc. | c18570exv99w2.htm |
EX-23.1 - EXHIBIT 23.1 - NCI, Inc. | c18570exv23w1.htm |
Exhibit 99.3
Unaudited Pro Forma Condensed Consolidated Financial Statements
On April 1, 2011, NCI, Inc. (NCI or the Company) purchased AdvanceMed Corporation
(AdvanceMed) for $64.3 million in cash which includes a $2.3 million working capital adjustment.
The Company also incurred or will incur approximately $1.0 million in acquisition costs which will
be expensed in NCIs financial statements for the year ended December 31, 2011.
The pro forma condensed consolidated financial statements, which have been prepared in accordance
with rules prescribed by Article 11 of Regulation S-X, are provided for informational purposes only
and are not necessarily indicative of the past or future results of operations or financial
position of the Company.
The Unaudited Pro Forma Consolidated Statement of Income and Unaudited Pro Forma Consolidated
Balance Sheet are prepared to give the effect of the Companys purchase of AdvanceMed. The
AdvanceMed audited financial statements were prepared as of and for the year ended April 1, 2011
(the fiscal year end of AdvanceMeds former parent). NCIs fiscal year ended December 31, 2010.
Article 11 of Regulation S-X allows pro forma financial statement information to be prepared as if
the compared companies have similar fiscal years when the fiscal years in question ended within 93
days of each other. The Pro Forma Consolidated Statement of Income has been prepared as of the
beginning of the respective companies 2010 fiscal years. The Unaudited Pro Forma Consolidated
Balance Sheet presents the financial position of the Company as if the acquisition of AdvanceMed
occurred as of the end of the respective companies 2010 fiscal years. The acquisition has been
accounted for using the purchase method in accordance with Accounting Standards Codification 805,
Business Combinations.
This information should be read in conjunction with the previously filed Current Report on Form
8-K, dated April 1, 2011 and filed with the Securities and Exchange Commission, the previously
filed historical consolidated financial statements and accompanying notes contained in the
Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2010 and other
subsequent filings, and in conjunction with the historical financial statements and accompanying
notes of AdvanceMed included in this report on Form 8-K/A.
NCI, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(amounts in thousands, except per share data)
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(amounts in thousands, except per share data)
NCI For the | AdvanceMed For | |||||||||||||||
fiscal year ended | the fiscal year | |||||||||||||||
December 31, | ended April 1, | |||||||||||||||
2010 | 2011 | Adjustments | Pro Forma | |||||||||||||
Revenue |
581,341 | 54,135 | | 635,476 | ||||||||||||
Operating expenses: |
||||||||||||||||
Cost of revenue |
512,779 | 51,349 | (1,539 | )A | 562,589 | |||||||||||
General and administrative expenses |
23,730 | 446 | | 24,176 | ||||||||||||
Depreciation and amortization |
5,054 | | 777 | B | 7,370 | |||||||||||
1,539 | A | |||||||||||||||
Acquisition costs |
| | 1,000 | C | 1,000 | |||||||||||
Total operating expenses |
541,563 | 51,795 | 1,777 | 595,135 | ||||||||||||
Operating income (loss) |
39,778 | 2,340 | (1,777 | ) | 40,341 | |||||||||||
Interest expense, net |
598 | | 1,426 | D | 2,024 | |||||||||||
Income before tax expense |
39,180 | 2,340 | (3,203 | ) | 38,317 | |||||||||||
Income
tax expense (benefit) |
15,309 | 929 | (1,253 | )E | 14,985 | |||||||||||
Net
income (loss) |
23,871 | 1,411 | (1,950 | ) | 23,332 | |||||||||||
EPS |
||||||||||||||||
Basic: |
||||||||||||||||
Weighted average shares outstanding |
13,621 | 13,621 | ||||||||||||||
Net income per share |
1.75 | 1.71 | ||||||||||||||
Diluted: |
||||||||||||||||
Weighted average shares and equivalent shares outstanding |
13,878 | 13,878 | ||||||||||||||
Net income per share |
1.72 | 1.68 | ||||||||||||||
NCI, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(amounts in thousands)
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(amounts in thousands)
NCI As of | AdvanceMed | |||||||||||||||
December 31, | As of April 1, | |||||||||||||||
2011 | 2011 | Adjustments | Pro Forma | |||||||||||||
Assets: |
||||||||||||||||
Cash and cash equivalents |
$ | 2,791 | $ | | $ | (2,308 | )J | $ | 483 | |||||||
Accounts receivable, net |
132,693 | 17,128 | 149,821 | |||||||||||||
Deferred tax assets |
4,547 | | 4,547 | |||||||||||||
Prepaid expenses and other current assets |
3,347 | 180 | 3,527 | |||||||||||||
Total current assets |
143,378 | 17,308 | (2,308 | ) | 158,378 | |||||||||||
Property and equipment, net |
11,751 | 6,046 | 17,797 | |||||||||||||
Other assets |
1,590 | | 1,590 | |||||||||||||
Intangible assets, net |
6,179 | 132 | (132 | )F | 9,525 | |||||||||||
3,346 | J | |||||||||||||||
Goodwill |
106,580 | 12,760 | (12,760 | )F | 152,338 | |||||||||||
45,218 | J | |||||||||||||||
Total assets |
$ | 269,478 | $ | 36,246 | $ | 33,364 | $ | 339,628 | ||||||||
Liabilities and stockholders equity |
||||||||||||||||
Accounts payable |
$ | 61,046 | $ | 1,288 | $ | 62,334 | ||||||||||
Accrued salaries and benefits |
20,229 | 2,599 | (115 | )G | 22,713 | |||||||||||
Deferred revenue |
2,951 | | 2,951 | |||||||||||||
Other accrued expenses/liabilities |
3,468 | 3,944 | (540 | )H | 6,872 | |||||||||||
Total current liabilities |
87,694 | 7,831 | (655 | ) | 94,870 | |||||||||||
Long-term debt |
20,000 | | 62,000 | J | 82,000 | |||||||||||
Deferred tax liabilities |
7,450 | 706 | (706 | )H | 7,450 | |||||||||||
Deferred rent and other long-term liabilities |
1,287 | 1,065 | (631 | )G | 1,721 | |||||||||||
Total liabilities |
116,431 | 9,602 | 60,008 | 186,041 | ||||||||||||
Stockholders equity: |
||||||||||||||||
Common stock |
260 | | 260 | |||||||||||||
Additional paid-in capital |
67,889 | 25,234 | (9,490 | )I | 67,889 | |||||||||||
| (15,744 | )I | ||||||||||||||
Retained earnings |
84,898 | 1,410 | (1,410 | )I | 84,898 | |||||||||||
Total stockholders equity |
153,047 | 26,644 | (26,644 | ) | 153,047 | |||||||||||
Total liabilities and stockholders equity |
$ | 269,478 | $ | 36,246 | $ | 33,364 | $ | 339,088 | ||||||||
NCI, INC.
Notes to the Unaudited Pro Forma Consolidated Financial Statements
(amounts in thousands)
Notes to the Unaudited Pro Forma Consolidated Financial Statements
(amounts in thousands)
Statement of Income
A. | AdvanceMed incurred $1,539 of depreciation which is included within their Cost of revenue expenses. |
B. | This adjustment reflects the estimated annual amortization of the acquired contract backlog and customer relationships in the amount of $777 based on the preliminary purchase price allocation (See Note G below). |
C. | This adjustment reflected the estimated acquisition costs associated with the AdvanceMed purchase in the amount of $1,000 of which $200 has been incurred through March 31, 2011. |
D. | This adjustment reflects the application of interest expense for the funds borrowed for the acquisition of AdvanceMed in the amount of $1,426. NCI borrowed approximately $62,000 on its credit facility. As of April 1, 2011, the interest rate on our credit facility was approximately 2.3%. |
E. | This adjustment reflects the application of the Companys estimated 39.1% effective tax rate for 2011 for the items described above. |
Balance Sheet
These adjustments reflect the elimination of AdvanceMeds accounts in consolidation and adjusts
historical cost to estimated fair value as of April 1, 2011 for the assets and liabilities
acquired.
F. | NCI did not allocate any value to the AdvanceMed Customer Intangible asset or the historical Goodwill; as such adjustments were made for $132 and $12,760 to reduce intangible assets. |
G. | NCI did not assume the pension as described in the historical financial statements of AdvanceMed; as such adjustments in the amounts of $115 from current liabilities and $631 from long term liabilities were made to reduce the liabilities associated with the AdvanceMed pension. The pension was retained by AdvanceMeds prior parent, Computer Sciences Corporation. |
H. | Deferred tax liabilities are based on historical cost and not considered part of the acquired basis of AdvanceMed. Adjustments of $540 from current liabilities and $706 from long term liabilities were made to eliminate these items. |
I. | The historical balances of Additional Paid in Capital and Retained Earnings were eliminated as they are not considered part of the acquired basis of AdvanceMed. Adjustments of $25,234 and $1,410 were made to eliminate these items. |
J. | This adjustment reflects the purchase of AdvanceMed including the preliminary valuation of acquired intangible assets and goodwill as a result of the acquisition. The goodwill adjustment is calculated as the excess of purchase price over the estimated fair value of the net assets acquired. |
Purchase Price |
$ | 62,000 | ||
Working capital adjustment |
2,308 | |||
Total purchase price |
64,308 | |||
Less: |
||||
Net assets acquired |
15,744 | |||
Identified intangible assets (preliminary) |
3,346 | |||
19,090 | ||||
Goodwill |
$ | 45,218 | ||
Identified acquired intangible assets consist of the acquired contract backlog and customer
relationships. The preliminary value of the acquired contract backlog
is $3,348 which we
estimate to have a useful life of seven years.
The adjustment also reflects the cash expenditures and loan borrowings in conjunction with the
AdvanceMed acquisition. The cash expenditure of $2,308 was made from cash on hand as of the
date fo the transaction, April 1, 2011.