Harrison Conference Services of Wellesley Inactive
Filed: 2 Jun 11, 12:00am
Exhibit 99.2
MPBP HOLDINGS, INC. AND SUBSIDIARIES
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Condensed Consolidated Balance Sheets as of December 31, 2010 and March 31, 2010 | 2 | |||
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MPBP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except number of shares)
| December 31, 2010 | March 31, 2010 | |||||||
| (unaudited | ) | |||||||
ASSETS | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 3,611 | $ | 3,788 | ||||
Accounts receivable, net of allowances for doubtful accounts of $616 and $877, respectively | 10,502 | 13,365 | ||||||
Inventories | 6,430 | 6,965 | ||||||
Deferred income taxes | 6,329 | 6,285 | ||||||
Prepaid expenses and other current assets | 2,742 | 2,748 | ||||||
Total current assets | 29,614 | 33,151 | ||||||
Property and equipment, net | 3,847 | 5,057 | ||||||
Intangible assets | 28,634 | 33,873 | ||||||
Goodwill | 100,383 | 100,383 | ||||||
Deferred financing costs | 3,139 | 3,949 | ||||||
Total assets | $ | 165,617 | $ | 176,413 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY) | ||||||||
Current liabilities | ||||||||
Current portion of long-term debt | $ | 1,400 | $ | 1,400 | ||||
Current portion of capital lease obligations | 583 | 640 | ||||||
Accounts payable | 15,040 | 13,648 | ||||||
Accrued expenses | 8,742 | 11,604 | ||||||
Income taxes payable | 320 | 792 | ||||||
Deferred revenues | 6,548 | 9,158 | ||||||
Total current liabilities | 32,633 | 37,242 | ||||||
Long-term debt, less current portion | 165,350 | 166,400 | ||||||
Capital lease obligations, net of current portion | 924 | 1,354 | ||||||
Deferred income taxes | 8,917 | 8,917 | ||||||
Other liabilities | — | 75 | ||||||
Commitments and contingencies | ||||||||
Stockholders' equity (deficiency) | ||||||||
Common stock, $0.001 par value, 2,000,000 shares authorized, 1,699,912 shares issued and outstanding | 1,700 | 1,700 | ||||||
Additional paid-in capital | 170,305 | 170,175 | ||||||
Other comprehensive income | (15 | ) | 4 | |||||
Accumulated deficiency | (214,197 | ) | (209,454 | ) | ||||
Net stockholders' equity (deficiency) | (42,207 | ) | (37,575 | ) | ||||
Total liabilities and stockholders' equity (deficiency) | $ | 165,617 | $ | 176,413 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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MPBP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME
(in thousands)
| Three Months Ended December 31, | Nine Months Ended December 31, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
| (unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||
Revenues | $ | 27,997 | $ | 32,688 | $ | 86,852 | $ | 97,905 | ||||||||
Direct operating expenses | (19,699 | ) | (23,690 | ) | (61,441 | ) | (70,017 | ) | ||||||||
Gross margin | 8,298 | 8,998 | 25,411 | 27,888 | ||||||||||||
Selling, general and administrative expenses | (4,728 | ) | (5,691 | ) | (16,700 | ) | (18,589 | ) | ||||||||
Depreciation and amortization expenses | (2,236 | ) | (1,779 | ) | (6,706 | ) | (5,257 | ) | ||||||||
Goodwill and intangible asset impairments | — | — | — | (28,798 | ) | |||||||||||
Operating income (loss) | 1,334 | 1,528 | 2,005 | (24,756 | ) | |||||||||||
Interest expense | (1,944 | ) | (3,116 | ) | (5,951 | ) | (9,173 | ) | ||||||||
Decrease in fair value of derivative obligation | — | 706 | — | 2,114 | ||||||||||||
Litigation settlement | — | — | (121 | ) | — | |||||||||||
(Loss) before income taxes | (610 | ) | (882 | ) | (4,067 | ) | (31,815 | ) | ||||||||
Income tax benefit (expense) | (102 | ) | 90 | (676 | ) | 3,258 | ||||||||||
Net (loss) | (712 | ) | (792 | ) | (4,743 | ) | (28,557 | ) | ||||||||
Other comprehensive income – foreign currency translation | — | — | (19 | ) | — | |||||||||||
Net comprehensive (loss) | $ | (712 | ) | $ | (792 | ) | $ | (4,762 | ) | $ | (28,557 | ) | ||||
Accumulated deficiency – beginning of period | $ | (213,485 | ) | $ | (191,836 | ) | $ | (209,454 | ) | $ | (164,071 | ) | ||||
Net (loss) | (712 | ) | (792 | ) | (4,743 | ) | (28,557 | ) | ||||||||
Accumulated deficiency – end of period | $ | (214,197 | ) | $ | (192,628 | ) | $ | (214,197 | ) | $ | (192,628 | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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MPBP HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| Nine Months Ended December 31, | ||||||||
| 2010 | 2009 | |||||||
| (unaudited) | (unaudited) | |||||||
Cash flows from operating activities | ||||||||
Net (loss) | $ | (4,743 | ) | $ | (28,557 | ) | ||
Adjustments to reconcile net (loss) to net cash provided by operating activities | ||||||||
Goodwill and intangible asset impairments | — | 28,798 | ||||||
Depreciation and amortization | 6,706 | 5,257 | ||||||
Deferred income tax benefit | (44 | ) | (4,542 | ) | ||||
Bad debt expense | (25 | ) | 131 | |||||
Decrease in fair value of derivative obligation | — | (2,114 | ) | |||||
Amortization of deferred financing costs | 810 | 760 | ||||||
Share-based compensation charge | 130 | 160 | ||||||
Changes in assets and liabilities | ||||||||
Accounts receivable, excluding bad debt expense | 2,888 | (1,409 | ) | |||||
Inventories | 535 | (1,061 | ) | |||||
Prepaid expenses and other current assets | 6 | (50 | ) | |||||
Accounts payable | 1,392 | 1,280 | ||||||
Accrued expenses | (2,862 | ) | 294 | |||||
Income taxes payable | (472 | ) | 788 | |||||
Deferred revenues | (2,610 | ) | 850 | |||||
Net cash provided by operating activities | 1,711 | 585 | ||||||
Cash flows used in investing activities | ||||||||
Purchases of property and equipment | (144 | ) | (1,693 | ) | ||||
Other | (138 | ) | — | |||||
Net cash used in investing activities | (282 | ) | (1,693 | ) | ||||
Cash flows from financing activities | ||||||||
Repayments of term notes | (1,050 | ) | (1,050 | ) | ||||
Other | (537 | ) | (210 | ) | ||||
Net cash used in financing activities | (1,587 | ) | (1,260 | ) | ||||
Net decrease in cash | (158 | ) | (2,368 | ) | ||||
Cash and cash equivalents at beginning of period | 3,788 | 3,840 | ||||||
Foreign currency translation adjustment | (19 | ) | — | |||||
Cash and cash equivalents at end of period | $ | 3,611 | $ | 1,472 | ||||
Supplemental disclosures of cash flow information | ||||||||
Cash paid during the period for | ||||||||
Income taxes | $ | 214 | $ | 173 | ||||
Interest | $ | 5,559 | $ | 6,909 | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
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MPBP HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
AS OF AND FOR THE
THREE AND NINE MONTH PERIODS ENDED
DECEMBER 31, 2010 AND 2009
(in thousands)
1. Basis of Presentation
The accompanying unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments, consisting of normal recurring accruals considered necessary for a fair presentation, have been included. For further information, refer to the consolidated financial statements and footnotes thereto as of and for the years ended March 31, 2010, 2009 and 2008, filed as Exhibit 99.1 of this Form 8-K/A.
2. Inventories
Inventories as of December 31, 2010 consist of the following:
Unfinished goods | $ | 1,873 | ||
Work-in-progress | 2,653 | |||
Finished goods | 4,198 | |||
Total | 8,724 | |||
Less allowance for obsolescence | (2,294 | ) | ||
Net | $ | 6,430 | ||
3. Commitments and Contingencies
From time to time the Company is involved in various legal proceedings incidental to the normal conduct of its business. During the year ended March 31, 2010 the Company settled most aspects of one matter by agreeing with the claimant to a monthly payment arrangement extending through the year ending March 31, 2011. The settlement was expensed during the year ended March 31, 2010. An additional $121 was settled and expensed during the nine-month period ended December 31, 2010. The Company also has received claims involving employment matters claiming discrimination and unpaid compensation. These matters have been referred to the Company’s insurance carriers for defense. Several matters seek damages, including punitive damages, which may not be insured. These matters are in preliminary stages,
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and the outcomes are not predictable. Management believes that its insurance coverage is sufficient, has accrued no loss provision in addition to the settlement noted above, and does not believe that the legal proceedings are likely to have a material adverse effect upon the Company.
4. Subsequent Events
The Company was acquired on March 18, 2011. See Note 15 to the Company’s audited financial statements at Exhibit 99.1. These condensed consolidated financial statements do not include any adjustments for the carrying values of assets, liabilities or stockholders’ deficiency that are affected by such a transaction.
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