The unaudited pro forma condensed consolidated balance sheet of Providence and its subsidiaries as of June 30, 2017, and the unaudited pro forma condensed consolidated statements of income of Providence and its subsidiaries for the six months ended June 30, 2017 and the year ended December 31, 2016 giving effect to Providences sale of its equity interest in Mission Providence
EX-1.99.1 2 exhibitproformastatements.htm EXHIBIT 99.1 Exhibit
Exhibit 99.1
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements have been derived by the application of pro forma adjustments to the historical consolidated financial information of The Providence Service Corporation (the “Company” or “Providence”), which have been presented to give effect to Providence’s sale of its equity interest in Mission Providence Pty Ltd (“Mission Providence”).
Mission Providence was formed in 2014 as a joint venture between Providence and Mission Australia ACN ("Mission Australia") to provide employment services under the Australian Government Department of Employment’s jobactive program. On September 29, 2017, Providence and Mission Australia completed the sale of 100% of the stock of Mission Providence to Konekt Limited, pursuant to the share sale agreement dated August 10, 2017.
At closing, Providence received AUD 20.2 million ($15.9 million) for its equity interest, net of transaction fees, based upon the exchange rate at that date of AUD 0.7839 to USD $1.00.
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2017 of the Company is presented as if the sale had occurred as of June 30, 2017. The unaudited pro forma condensed consolidated statements of income of the Company for the six months ended June 30, 2017 and the year ended December 31, 2016 are presented as if the sale had occurred on January 1, 2016.
The Company’s historical financial information was derived from its audited consolidated financial statements for the year ended December 31, 2016 (as included in its Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 10, 2017) and the Company’s unaudited condensed consolidated financial statements for the six months ended June 30, 2017 (as included in its Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on August 9, 2017). The Company’s historical financial statements used in preparing the unaudited pro forma financial data are summarized and should be read in conjunction with its historical financial statements and risk factors, all of which are included in the filings with the Securities and Exchange Commission noted above.
The unaudited pro forma adjustments give effect to events that are (i) directly attributable to the sale, (ii) factually supportable and (iii) based on estimates, available information and certain assumptions that the Company believes are reasonable given the information currently available. The unaudited pro forma adjustments and primary assumptions are described in the accompanying notes. The unaudited pro forma condensed consolidated balance sheet and statements of income are being provided for illustrative purposes only and do not purport to represent what the Company’s results of operations or financial position would have been if the sale had occurred on the dates indicated and are not intended to project the Company’s results of operations or financial position for any future period. Any of the factors underlying these estimates and assumptions may change or prove to be materially different and the estimates and assumptions may not be representative of facts that existed upon completion of the sale. Amounts in the unaudited pro forma condensed consolidated financial statements are presented in U.S. dollars.
The Providence Service Corporation
Pro Forma Condensed Consolidated Balance Sheet - Unaudited
June 30, 2017
(in thousands)
Providence Service Corporation Historical | Disposition of Mission Providence | Pro Forma | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 56,583 | $ | 15,553 | a | $ | 72,136 | ||||
Accounts receivable, net | 172,189 | — | 172,189 | ||||||||
Other current assets | 57,451 | — | 57,451 | ||||||||
Total current assets | 286,223 | 15,553 | 301,776 | ||||||||
Goodwill | 120,818 | — | 120,818 | ||||||||
Equity investments | 160,601 | (3,326 | ) | b | 157,275 | ||||||
Other non-current assets | 115,234 | — | 115,234 | ||||||||
Total assets | $ | 682,876 | $ | 12,227 | $ | 695,103 | |||||
Liabilities and stockholders' equity | |||||||||||
Current liabilities: | |||||||||||
Accrued expenses | $ | 105,464 | $ | — | $ | 105,464 | |||||
Accrued transportation costs | 83,812 | — | 83,812 | ||||||||
Other current liabilities | 49,345 | — | 49,345 | ||||||||
Total current liabilities | 238,621 | — | 238,621 | ||||||||
Other non-current liabilities | 81,022 | — | 81,022 | ||||||||
Total liabilities | 319,643 | — | 319,643 | ||||||||
Redeemable convertible preferred stock | |||||||||||
Convertible preferred stock, net | 77,565 | — | 77,565 | ||||||||
Stockholders' equity | |||||||||||
Common stock and APIC | 307,951 | — | 307,951 | ||||||||
Retained earnings | 153,266 | 12,134 | c | 165,400 | |||||||
Treasury shares | (144,193 | ) | — | (144,193 | ) | ||||||
Other stockholders' equity | (31,356 | ) | 93 | c | (31,263 | ) | |||||
Total stockholders' equity | 285,668 | 12,227 | 297,895 | ||||||||
Total liabilities, redeemable convertible preferred stock and stockholders' equity | $ | 682,876 | $ | 12,227 | $ | 695,103 | |||||
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
The Providence Service Corporation
Pro Forma Condensed Consolidated Statements of Income
for the six months ended June 30, 2017
Unaudited
(in thousands, except share and per share data)
Providence Service Corporation Historical | Disposition of Mission Providence | Pro Forma | |||||||||
Service revenue, net | $ | 807,477 | $ | — | $ | 807,477 | |||||
Operating expenses: | |||||||||||
Service expense | 746,446 | — | 746,446 | ||||||||
General and administrative expense | 35,076 | — | 35,076 | ||||||||
Depreciation and amortization | 13,169 | — | 13,169 | ||||||||
Total operating expenses | 794,691 | — | 794,691 | ||||||||
Operating income | 12,786 | — | 12,786 | ||||||||
Other expenses: | |||||||||||
Interest expense, net | 681 | — | 681 | ||||||||
Equity in net loss (gain) of investees | 530 | (963 | ) | d | (433 | ) | |||||
(Gain) loss on foreign currency translation | 400 | — | 400 | ||||||||
Income (loss) from continuing operations before income taxes | 11,175 | 963 | 12,138 | ||||||||
Provision for income taxes | 5,402 | — | 5,402 | ||||||||
Income from continuing operations, net of tax | 5,773 | 963 | 6,736 | ||||||||
Discontinued operations, net of tax | (5,984 | ) | — | (5,984 | ) | ||||||
Net income (loss) | (211 | ) | 963 | 752 | |||||||
Net loss (income) attributable to noncontrolling interests | (200 | ) | — | (200 | ) | ||||||
Net income (loss) attributable to Providence | $ | (411 | ) | $ | 963 | $ | 552 | ||||
Net income available to common | |||||||||||
stockholders | $ | (3,037 | ) | $ | (2,199 | ) | |||||
Earnings per common share: | |||||||||||
Basic | $ | (0.22 | ) | $ | (0.16 | ) | |||||
Diluted | $ | (0.22 | ) | $ | (0.16 | ) | |||||
Weighted-average number of common | |||||||||||
shares outstanding: | |||||||||||
Basic | 13,628,572 | 13,628,572 | |||||||||
Diluted | 13,687,183 | 13,687,183 | |||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
The Providence Service Corporation
Pro Forma Condensed Consolidated Statements of Income
for the year ended December 31, 2016
Unaudited
(in thousands, except share and per share data)
Providence Service Corporation Historical | Disposition of Mission Providence | Pro Forma | |||||||||
Service revenue, net | $ | 1,578,889 | $ | — | $ | 1,578,889 | |||||
Operating expenses: | |||||||||||
Service expense | 1,452,754 | — | 1,452,754 | ||||||||
General and administrative expense | 69,911 | — | 69,911 | ||||||||
Asset impairment charge | 21,003 | — | 21,003 | ||||||||
Depreciation and amortization | 26,604 | — | 26,604 | ||||||||
Total operating expenses | 1,570,272 | — | 1,570,272 | ||||||||
Operating income | 8,617 | — | 8,617 | ||||||||
Other expenses: | |||||||||||
Interest expense, net | 1,583 | — | 1,583 | ||||||||
Equity in net loss of investees | 10,287 | (8,521 | ) | d | 1,766 | ||||||
(Gain) loss on foreign currency translation | (1,375 | ) | — | (1,375 | ) | ||||||
Income (loss) from continuing operations before income taxes | (1,878 | ) | 8,521 | 6,643 | |||||||
Provision for income taxes | 17,036 | — | 17,036 | ||||||||
Income from continuing operations, net of tax | (18,914 | ) | 8,521 | (10,393 | ) | ||||||
Discontinued operations, net of tax | 108,760 | — | 108,760 | ||||||||
Net income (loss) | 89,846 | 8,521 | 98,367 | ||||||||
Net loss (income) attributable to noncontrolling interests | 2,082 | — | 2,082 | ||||||||
Net income (loss) attributable to Providence | $ | 91,928 | $ | 8,521 | $ | 100,449 | |||||
Net income available to common | |||||||||||
stockholders | $ | 74,374 | $ | 82,894 | |||||||
Earnings per common share: | |||||||||||
Basic | $ | 5.07 | $ | 5.65 | |||||||
Diluted | $ | 5.07 | $ | 5.65 | |||||||
Weighted-average number of common | |||||||||||
shares outstanding: | |||||||||||
Basic | 14,666,896 | 14,666,896 | |||||||||
Diluted | 14,666,896 | 14,666,896 | |||||||||
The accompanying notes are an integral part of these unaudited pro forma condensed consolidated financial statements.
The Providence Service Corporation
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
(in thousands)
1. Basis of presentation
The unaudited pro forma condensed consolidated financial statements have been prepared based on the Company’s historical financial information giving effect to the sale of its equity interest in Mission Providence described in these notes. Certain note disclosures normally included in the financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted as permitted by the SEC rules and regulations.
2. Pro forma adjustments to unaudited condensed consolidated financial statements
a. | Adjustment to record the cash received from the sale of Mission Providence, based upon the exchange rate as of June 30, 2017 of AUD 0.7686 to USD $1.00. |
b. | Adjustment to remove the equity investment in Mission Providence. |
c. | Adjustment to reflect the estimated gain on sale, net of tax, from the sale of the Company's equity interest in Mission Providence is calculated as follows: |
Cash consideration received by Providence using June 30, 2017 exchange rate of AUD 0.7686 to USD $1.00 | $ | 15,553 | |
Less: Book value of equity investment in Mission Providence at June 30, 2017 | 3,326 | ||
Less: Accumulated other comprehensive loss released for foreign currency translation adjustments | 93 | ||
Estimated pre-tax gain | 12,134 | ||
Provision for income taxes | — | ||
Estimated gain on sale, net of tax | $ | 12,134 | |
There is no provision for income taxes related to the book gain on sale, as for tax purposes, no tax benefit was recognized by Providence in the historical periods for the equity losses incurred.
d. | Adjustment to remove equity in net loss of investees attributable to Mission Providence. No related adjustment to the provision of income taxes is necessary as no tax benefit was recorded by Providence in the historical periods for the equity losses incurred. |
