Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - CDI CORP | a991-pressreleaseissuedbyt.htm |
| EX-1.1 - EXHIBIT 1.1 - CDI CORP | a11-agreementforthesaleand.htm |
| 8-K - 8-K - CDI CORP | form8-kxprojectspector.htm |
Exhibit 99.2
CDI CORP. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Financial Information
Introduction
On September 16, 2016, CDI Corporation (the “Company”), a subsidiary of CDI Corp., completed the sale of CDI AndersElite Limited ("Anders"), the Company's UK-based staffing and recruitment business, to AndersElite Holdings Ltd. ("Holdings"), an entity controlled by certain members of Anders' management (collectively, the "Buyer"), pursuant to an Agreement for the Sale and Purchase of CDI AndersElite Limited (the “Agreement”). Pursuant to the Agreement, consideration received by the Company included £4.50 million (or approximately $5.9 million) cash (the “Closing Date Consideration”), £1.75 million (or approximately $2.3 million) subordinated debt in Holdings and warrants representing 19.99% of the fully diluted equity in Holdings. Additionally, Holdings repaid £0.7 million (or approximately $0.9 million) to extinguish Anders' existing secured lending facility.
Pro Forma Financial Information
The following unaudited pro forma consolidated balance sheet and consolidated statements of operations (“financial statements”) are based upon the historical financial statements of CDI, adjusted to reflect the sale of Anders. The following unaudited pro forma consolidated financial statements of CDI should be read in conjunction with the related notes and with the historical consolidated financial statements of CDI and the related notes included in previous filings of Form 10-K and 10-Q with the Securities and Exchange Commission. The unaudited pro forma consolidated balance sheet gives effect to the disposition of Anders as if it occurred on June 30, 2016 while the unaudited pro forma consolidated statements of operations gives effect to the disposition as if it occurred on January 1, 2015. The pro forma adjustments, described in the related notes, are based on the best available information and assumptions that CDI's management believe are factually supportable.
The unaudited pro forma consolidated financial statements are provided for illustrative purposes only and are not necessarily indicative of the operating results or financial position that would have occurred had the disposition of Anders closed on June 30, 2016 for the unaudited pro forma consolidated balance sheet or on January 1, 2015 for the unaudited pro forma consolidated statements of operations. For example, these financial statements do not reflect any potential earnings or losses or other impacts from the use of the proceeds from the disposition or reductions of previously allocated corporate costs, nor do they reflect the impact of certain provisions of the Agreement that would not result in a more than de minimis effect. Readers should not rely on the unaudited pro forma consolidated financial statements as being indicative of the historical operating results that CDI would have achieved or any future operating results or financial position that it will experience after the transaction closes.
CDI CORP. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Balance Sheet
June 30, 2016
(Amounts in thousands)
(b) | |||||||||||||
Historical CDI Corp. | Pro Forma Adjustments | Pro Forma | |||||||||||
Assets | |||||||||||||
Current assets: | |||||||||||||
Cash and cash equivalents | $ | 4,675 | $ | 5,487 | (a) | $ | 10,162 | ||||||
Accounts receivable, net of allowances | 218,224 | (16,596 | ) | 201,628 | |||||||||
Prepaid expenses and other current assets | 12,554 | (750 | ) | 11,804 | |||||||||
Prepaid income taxes | 8,070 | (22 | ) | 8,048 | |||||||||
Total current assets | 243,523 | (11,881 | ) | 231,642 | |||||||||
Property and equipment, net of accumulated depreciation | 19,330 | (720 | ) | 18,610 | |||||||||
Deferred income taxes | 3,412 | — | 3,412 | ||||||||||
Goodwill | 45,576 | — | 45,576 | ||||||||||
Other intangible assets, net | 18,202 | (895 | ) | 17,307 | |||||||||
Other non-current assets | 9,988 | 650 | (a) | 10,638 | |||||||||
Total assets | $ | 340,031 | $ | (12,846 | ) | $ | 327,185 | ||||||
Liabilities and Equity | |||||||||||||
Current liabilities: | |||||||||||||
Credit facility | $ | 25,932 | $ | (932 | ) | (a) | $ | 25,000 | |||||
Accounts payable | 35,775 | (981 | ) | 34,794 | |||||||||
Accrued compensation and related expenses | 37,127 | (2,599 | ) | 34,528 | |||||||||
Other accrued expenses and other current liabilities | 13,839 | 72 | (c) | 13,911 | |||||||||
Income taxes payable | 332 | — | 332 | ||||||||||
Total current liabilities | 113,005 | (4,440 | ) | 108,565 | |||||||||
Deferred compensation | 7,388 | — | 7,388 | ||||||||||
Deferred income tax | 6,768 | — | 6,768 | ||||||||||
Other non-current liabilities | 5,806 | (186 | ) | 5,620 | |||||||||
Total liabilities | 132,967 | (4,626 | ) | 128,341 | |||||||||
Commitments and contingencies | |||||||||||||
Equity: | |||||||||||||
Preferred stock | — | — | — | ||||||||||
Common stock | 2,225 | — | 2,225 | ||||||||||
Class B common stock | — | — | — | ||||||||||
Additional paid-in-capital | 75,820 | — | 75,820 | ||||||||||
Retained earnings | 198,574 | (11,907 | ) | (c) | 186,667 | ||||||||
Accumulated other comprehensive loss | (11,460 | ) | 3,687 | (c) | (7,773 | ) | |||||||
Common stock in treasury, at cost | (58,095 | ) | — | (58,095 | ) | ||||||||
Total equity | 207,064 | (8,220 | ) | 198,844 | |||||||||
Total liabilities and equity | $ | 340,031 | $ | (12,846 | ) | $ | 327,185 | ||||||
See accompanying notes to unaudited pro forma consolidated financial information.
CDI CORP. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Operations
For the six months ended June 30, 2016
(Amounts in thousands, except per share amounts)
(a) | |||||||||||||
Historical CDI Corp. | Pro Forma Adjustments | Pro Forma | |||||||||||
Revenue | $ | 460,217 | $ | (43,467 | ) | $ | 416,750 | ||||||
Cost of services | 374,847 | (36,155 | ) | 338,692 | |||||||||
Gross profit | 85,370 | (7,312 | ) | 78,058 | |||||||||
Operating and administrative expenses | 95,362 | (8,907 | ) | 86,455 | |||||||||
Restructuring and other related costs | 289 | — | 289 | ||||||||||
Operating loss | (10,281 | ) | 1,595 | (8,686 | ) | ||||||||
Other expense, net | (601 | ) | 23 | (578 | ) | ||||||||
Loss before income taxes | (10,882 | ) | 1,618 | (9,264 | ) | ||||||||
Income tax expense | 1,419 | — | (b) | 1,419 | |||||||||
Net loss | $ | (12,301 | ) | $ | 1,618 | $ | (10,683 | ) | |||||
Earnings (loss) per common share: | |||||||||||||
Basic | $ | (0.63 | ) | $ | (0.55 | ) | |||||||
Diluted | $ | (0.63 | ) | $ | (0.55 | ) | |||||||
Weighted average shares outstanding - Basic and Diluted | 19,427 | 19,427 | |||||||||||
See accompanying notes to unaudited pro forma consolidated financial information.
CDI CORP. AND SUBSIDIARIES
Unaudited Pro Forma Consolidated Statement of Operations
For the year ended December 31, 2015
(Amounts in thousands, except per share amounts)
(a) | |||||||||||||
Historical CDI Corp. | Pro Forma Adjustments | Pro Forma | |||||||||||
Revenue | $ | 985,494 | $ | (104,978 | ) | $ | 880,516 | ||||||
Cost of services | 800,593 | (87,399 | ) | 713,194 | |||||||||
Gross profit | 184,901 | (17,579 | ) | 167,322 | |||||||||
Operating and administrative expenses | 187,433 | (19,996 | ) | 167,437 | |||||||||
Restructuring and other related costs | 4,217 | — | 4,217 | ||||||||||
Impairment | 21,537 | (10,654 | ) | 10,883 | |||||||||
Loss on disposition | 310 | — | 310 | ||||||||||
Operating loss | (28,596 | ) | 13,071 | (15,525 | ) | ||||||||
Other income, net | 61 | 48 | 109 | ||||||||||
Loss before income taxes | (28,535 | ) | 13,119 | (15,416 | ) | ||||||||
Income tax expense | 8,551 | — | (b) | 8,551 | |||||||||
Net loss | $ | (37,086 | ) | $ | 13,119 | $ | (23,967 | ) | |||||
Less: Loss attributable to noncontrolling interests | (83 | ) | — | (83 | ) | ||||||||
Net income (loss) attributable to CDI | $ | (37,003 | ) | $ | 13,119 | $ | (23,884 | ) | |||||
Earnings per common share: | |||||||||||||
Basic | $ | (1.88 | ) | $ | (1.21 | ) | |||||||
Diluted | $ | (1.88 | ) | $ | (1.21 | ) | |||||||
Weighted average shares outstanding - Basic and Diluted | 19,676 | 19,676 | |||||||||||
See accompanying notes to unaudited pro forma consolidated financial information.
CDI CORP. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Financial Information
(Amounts in thousands)
Pro Forma Adjustments
The unaudited pro forma consolidated financial information presented above reflects the following specific adjustments:
Unaudited Pro Forma Consolidated Balance Sheet
as of June 30, 2016
(a) | Adjustment reflects the effect of the total estimated consideration received from the sale of Anders. The total estimated consideration includes the estimated fair value of subordinated debt and warrants from Holdings, which fair value is based on a preliminary assessment and is subject to change. | |
Cash proceeds | $ | 5,895 | ||
Less: Anders cash balance | (408 | ) | ||
Net increase in cash and cash equivalents | 5,487 | |||
Receipt of subordinated debt and warrants from Holdings measured at estimated fair value | 650 | |||
Repayment of existing Anders secured lending facility | 932 | |||
Total estimated consideration | $ | 7,069 | ||
(b) | Adjustment reflects the elimination of the following assets and liabilities from the sale of Anders. | |
Assets | ||||
Accounts receivable, net of allowances | $ | 16,596 | ||
Prepaid expenses and other current assets | 750 | |||
Prepaid income taxes | 22 | |||
Property and equipment, net of accumulated depreciation | 720 | |||
Other intangible assets, net | 895 | |||
Total Assets | $ | 18,983 | ||
Liabilities | ||||
Accounts payable | $ | 981 | ||
Intercompany loans | 7,695 | |||
Accrued compensation and related expense | 2,599 | |||
Other accrued expense and other current liabilities | 567 | |||
Other non-current liabilities | 186 | |||
Total Liabilities | $ | 12,028 | ||
Net Assets | $ | 6,955 | ||
CDI CORP. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Financial Information
(Amounts in thousands)
(c) | Adjustment reflects the estimated loss arising from the sale of Anders. | |
Total estimated consideration - see note (a) | $ | 7,069 | ||
Less: Anders net assets - see note (b) | (6,955 | ) | ||
Cancellation of intercompany loans to Anders | (7,695 | ) | ||
Reclassified from accumulated other comprehensive loss | (3,687 | ) | ||
Accrual for transaction costs | (639 | ) | ||
Estimated loss on disposition | $ | (11,907 | ) | |
CDI CORP. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Consolidated Financial Information
(Amounts in thousands)
Unaudited Pro Forma Consolidated Statement of Operations
for the six months ended June 30, 2016
(a) | Adjustment reflects the elimination of the historical results of Anders for the period presented. | |
(b) | Anders has existing tax loss carry forwards which have been offset by a valuation allowance. As such, there is no additional tax expense as a result of the sale of Anders. | |
Unaudited Pro Forma Consolidated Statement of Operations
for the year ended December 31, 2015
(a) | Adjustment reflects the elimination of the historical results of Anders for the period presented. The estimated loss on the sale of Anders has not been reflected in the unaudited pro forma consolidated statement of operations as it is considered to be nonrecurring in nature. | |
(b) | Anders has existing tax loss carry forwards which have been offset by a valuation allowance. As such, there is no additional tax expense as a result of the sale of Anders. | |