Exhibit 99.1
Beech Street Corporation
(a Delaware corporation)
Consolidated Financial Statements
As of September 30, 2005 and for the Nine Months Ended
September 30, 2005 and 2004 (unaudited)
Beech Street Corporation
(a Delaware corporation)
Index
As of September 30, 2005 and for the Nine Months Ended
September 30, 2005 and 2004 (unaudited)
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| Consolidated Financial Statements: | | |
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Balance Sheet | | 1 |
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Statements of Income | | 2 |
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Statements of Cash Flows | | 3 |
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Notes to Consolidated Financial Statements | | 4 |
Beech Street Corporation
(a Delaware corporation)
Consolidated Balance Sheet (unaudited)
September 30, 2005
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Assets | | | | |
Current assets | | | | |
Cash and cash equivalents | | $ | 2,752,000 | |
Accounts receivable, net | | | 6,142,000 | |
Other receivables | | | 880,000 | |
Prepaid expenses and other current assets | | | 8,120,000 | |
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Total current assets | | | 17,894,000 | |
Equipment, software and fixtures, net | | | 2,422,000 | |
Goodwill and other intangible assets, net | | | 22,216,000 | |
Deposits and other assets | | | 154,000 | |
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Total assets | | $ | 42,686,000 | |
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Liabilities and Shareholders’ Equity | | | | |
Current liabilities | | | | |
Accounts payable | | $ | 828,000 | |
Accrued expenses | | | 13,363,000 | |
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Total current liabilities | | | 14,191,000 | |
Shareholders’ equity | | | | |
Common Stock | | | 303,000 | |
Additional paid-in capital | | | 30,985,000 | |
Accumulated deficit | | | (2,793,000 | ) |
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Total shareholders’ equity | | | 28,495,000 | |
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Total liabilities and shareholders’ equity | | $ | 42,686,000 | |
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The accompanying notes are an integral part of these consolidated financial statements.
1
Beech Street Corporation
(a Delaware corporation)
Consolidated Statements of Income (unaudited)
Nine Months Ended September 30, 2005 and 2004
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| | | 2005
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Revenues, gross | | $ | 52,692,000 | | | $ | 53,532,000 | |
Rebates | | | (1,163,000 | ) | | | (1,183,000 | ) |
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Revenues, net | | | 51,529,000 | | | | 52,349,000 | |
Expenses | | | | | | | | |
Operating expenses | | | 50,944,000 | | | | 44,230,000 | |
Depreciation and amortization | | | 1,850,000 | | | | 2,172,000 | |
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Total expenses | | | 52,794,000 | | | | 46,402,000 | |
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(Loss) income from operations | | | (1,265,000 | ) | | | 5,947,000 | |
Interest expense, net | | | 104,000 | | | | 242,000 | |
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(Loss) income before provision for income taxes | | | (1,369,000 | ) | | | 5,705,000 | |
(Benefit) provision for income taxes | | | (6,562,000 | ) | | | 2,281,000 | |
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Net income | | $ | 5,193,000 | | | $ | 3,424,000 | |
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The accompanying notes are an integral part of these consolidated financial statements.
2
Beech Street Corporation
(a Delaware corporation)
Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended September 30, 2005 and 2004
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| | | 2005
| | | 2004
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Cash flows from operating activities | | | | | | | | |
Net income | | $ | 5,193,000 | | | $ | 3,424,000 | |
Adjustments to reconcile net income to net cash provided by operating activities | | | | | | | | |
Depreciation and amortization | | | 1,850,000 | | | | 2,172,000 | |
Bad debt expense | | | 689,000 | | | | 456,000 | |
Loss on disposal | | | 31,000 | | | | — | |
Deferred income taxes | | | (6,503,000 | ) | | | — | |
Changes in operating assets and liabilities, net of business acquired | | | | | | | | |
Accounts receivable | | | 20,000 | | | | (598,000 | ) |
Other receivables | | | (716,000 | ) | | | 1,590,000 | |
Prepaid expenses and other current assets | | | (3,255,000 | ) | | | 54,000 | |
Deposits and other assets | | | 2,753,000 | | | | (742,000 | ) |
Accounts payable | | | (750,000 | ) | | | (417,000 | ) |
Accrued expenses | | | 8,140,000 | | | | (280,000 | ) |
Other long-term liabilities | | | (2,784,000 | ) | | | 901,000 | |
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Net cash provided by operating activities | | | 4,668,000 | | | | 6,560,000 | |
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Cash flows from investing activities | | | | | | | | |
Purchases of equipment, software and fixtures | | | (793,000 | ) | | | (1,363,000 | ) |
Purchase of business, net of cash acquired | | | (1,500,000 | ) | | | (2,424,000 | ) |
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Net cash used in investing activities | | | (2,293,000 | ) | | | (3,787,000 | ) |
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Cash flows from financing activities | | | | | | | | |
Stock options exercised | | | 300,000 | | | | 5,000 | |
Dividends paid | | | (3,149,000 | ) | | | (3,935,000 | ) |
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Net cash used in financing activities | | | (2,849,000 | ) | | | (3,930,000 | ) |
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Net decrease in cash and cash equivalents | | | (474,000 | ) | | | (1,157,000 | ) |
Cash and cash equivalents | | | | | | | | |
Beginning of period | | | 3,226,000 | | | | 5,103,000 | |
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End of period | | $ | 2,752,000 | | | $ | 3,946,000 | |
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The accompanying notes are an integral part of these consolidated financial statements.
3
Beech Street Corporation
(a Delaware corporation)
Notes to Consolidated Financial Statements (unaudited)
The balance sheet as of September 30, 2005, the statements of income for the nine months ended September 30, 2005 and 2004, and the statements of cash flows for the nine months ended September 30, 2005 and 2004 have been prepared by Beech Street Corporation (the “Company”) without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at September 30, 2005 and 2004 have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s financial statements for the year ended December 31, 2004. The results of operations for the nine months ended September 30, 2005 and 2004 are not necessarily indicative of the results that may be expected for the full year.
| 2. | Detail of Selected Balance Sheet Account |
Accrued expenses consist of the following as of September 30:
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| | | 2005
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Accrued litigation reserve | | $ | 4,500,000 |
Deferred compensation plan | | | 3,432,000 |
Accrued employee paid time off | | | 1,343,000 |
Accrued payroll | | | 922,000 |
Accrued income taxes | | | 970,000 |
Accrued severance | | | 404,000 |
Accrued rebates and broker fees | | | 380,000 |
Other | | | 1,412,000 |
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| | | $ | 13,363,000 |
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The Company is party to certain claims and litigation initiated in the ordinary course of business. Based on the status of new and existing outstanding legal claims, we accrued a significant amount for legal fees in 2005. Actual costs in future periods could differ materially the amounts accrued, depending upon the amounts of settlements, if any.
On October 3, 2005, all of the outstanding shares of the Company’s capital stock were acquired by Concentra Operating Corporation in a $165.0 million cash transaction.
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