Exhibit 99.3
RBF CONSULTING
FINANCIAL STATEMENTS
UNAUDITED
As of September 30, 2011 and
For The Nine Months Ended September 30, 2011 and 2010
RBF CONSULTING
BALANCE SHEETS (unaudited)
As of | ||||
September 30, 2011 | ||||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ | 329,000 | ||
Accounts receivable, net | 36,320,000 | |||
Costs and estimated earnings in excess of billings on uncompleted contracts | 2,834,000 | |||
Income taxes receivable | — | |||
Prepaid expenses and other current assets (Note 2) | 5,445,000 | |||
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Total current assets | 44,928,000 | |||
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Equipment and improvements, net | 3,497,000 | |||
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Other assets, net | 1,911,000 | |||
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Total assets | $ | 50,336,000 | ||
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Continued...
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RBF CONSULTING
BALANCE SHEETS (unaudited) – CONTINUED
As of | ||||
September 30, 2011 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||
Current liabilities: | ||||
Line of credit borrowings (Note 3) | $ | 3,000,000 | ||
Accounts payable | 2,907,000 | |||
Accrued liabilities: | ||||
Compensation and fringe benefits | 3,339,000 | |||
Profit sharing 401(k) plan contributions | 384,000 | |||
Income taxes | 184,000 | |||
Other | 1,050,000 | |||
Billings in excess of costs and estimated earnings on uncompleted contracts | 2,035,000 | |||
Deferred income taxes | 21,104,000 | |||
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Total current liabilities | 34,003,000 | |||
Deferred rent | 754,000 | |||
Deferred compensation | 107,000 | |||
Deferred income taxes | 200,000 | |||
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Total liabilities | 35,064,000 | |||
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Commitments and contingencies (Note 4) | ||||
Stockholders’ equity : | ||||
Common stock, no par value; 5,000,000 shares authorized; 987,409 shares issued and outstanding | 11,550,000 | |||
Retained earnings | 3,722,000 | |||
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Total stockholders’ equity | 15,272,000 | |||
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Total liabilities and stockholders’ equity | $ | 50,336,000 | ||
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See accompanying notes to unaudited financial statements
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RBF CONSULTING
STATEMENTS OF OPERATIONS (unaudited)
For The Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Revenues: | ||||||||
Fees for professional services (including contract adjustments) | $ | 78,975,000 | $ | 78,302,000 | ||||
Less outside services and direct charges | (15,705,000 | ) | (13,648,000 | ) | ||||
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Net revenues | 63,270,000 | 64,654,000 | ||||||
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Expenses: | ||||||||
Compensation and fringe benefits | 48,907,000 | 48,420,000 | ||||||
Profit sharing 401(k) plan contributions | 385,000 | 452,000 | ||||||
Occupancy, excluding depreciation and amortization | 5,369,000 | 5,671,000 | ||||||
Depreciation and amortization | 1,732,000 | 2,234,000 | ||||||
Supplies | 1,082,000 | 1,240,000 | ||||||
Automotive, including taxes and licenses | 827,000 | 689,000 | ||||||
Insurance | 1,197,000 | 1,326,000 | ||||||
Telephone | 935,000 | 938,000 | ||||||
Professional services | 1,616,000 | 1,571,000 | ||||||
Dues and subscriptions | 222,000 | 242,000 | ||||||
Repair and maintenance | 91,000 | 88,000 | ||||||
Recruitment and advertising | 218,000 | 264,000 | ||||||
Travel and entertainment | 1,222,000 | 1,434,000 | ||||||
Provision for doubtful accounts | (70,000 | ) | — | |||||
Other | 11,000 | 48,000 | ||||||
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Total expenses | 63,744,000 | 64,617,000 | ||||||
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(Loss)/income from operations | (474,000 | ) | 37,000 | |||||
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Other income (expense): | ||||||||
Interest income | 18,000 | 5,000 | ||||||
Interest expense (Note 3) | (118,000 | ) | (106,000 | ) | ||||
Other | 277,000 | 72,000 | ||||||
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Total other income/(expense), net | 177,000 | (29,000 | ) | |||||
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(Loss)/income before benefit from income taxes | (297,000 | ) | 8,000 | |||||
Provision for income taxes | 352,000 | 4,000 | ||||||
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Net (loss)/income | $ | (649,000 | ) | $ | 4,000 | |||
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See accompanying notes to unaudited financial statements
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RBF CONSULTING
STATEMENT OF CASH FLOWS (unaudited)—CONTINUED
For The Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Cash flows from operating activities: | ||||||||
Net (loss)/income | $ | (649,000 | ) | $ | 4,000 | |||
Adjustments to reconcile net (loss)/income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 1,732,000 | 2,234,000 | ||||||
(Gain)/loss on disposition of equipment and improvements | (63,000 | ) | 20,000 | |||||
Provision for doubtful accounts | (70,000 | ) | — | |||||
Deferred income taxes | (246,000 | ) | 12,000 | |||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable | 5,764,000 | 10,708,000 | ||||||
Costs and estimated earnings in excess of billings on uncompleted contracts | (386,000 | ) | — | |||||
Prepaid expenses and other current assets | 11,098,000 | 11,080,000 | ||||||
Other assets | (304,000 | ) | (146,000 | ) | ||||
Accounts payable | 668,000 | 1,136,000 | ||||||
Accrued liabilities | 483,000 | 1,526,000 | ||||||
Billings in excess of costs and estimated earnings on uncompleted contracts | 505,000 | — | ||||||
Deferred compensation | 747,000 | 3,000 | ||||||
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Net cash provided by operating activities | 19,279,000 | 26,577,000 | ||||||
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Cash flows from investing activities: | ||||||||
Additions to equipment and improvements | (521,000 | ) | (607,000 | ) | ||||
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Net cash used in investing activities | (521,000 | ) | (607,000 | ) | ||||
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Cash flows from financing activities: | ||||||||
Payment on line on credit—net | (19,000,000 | ) | (22,000,000 | ) | ||||
Repurchases of common stock | (1,275,000 | ) | (1,981,000 | ) | ||||
Issuances of note payable | — | 752,000 | ||||||
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Net cash used in financing activities | (20,275,000 | ) | (23,229,000 | ) | ||||
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Net (decrease)/increase in cash and cash equivalents | (1,517,000 | ) | 2,741,000 | |||||
Cash and cash equivalents, beginning of period | 1,846,000 | 2,629,000 | ||||||
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Cash and cash equivalents, end of period | $ | 329,000 | $ | 5,370,000 | ||||
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See accompanying notes to unaudited financial statements
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RBF CONSULTING
NOTES TO FINANCIAL STATEMENTS (unaudited)
For The Nine Months Ended September 30, 2011 and 2010
NOTE 1 — GENERAL AND BASIS OF PRESENTATION
General
RBF Consulting (the “Company”) is engaged principally in providing planning, design and construction consulting services on credit terms to clients primarily in California, Arizona and Nevada.
Basis of Presentation
The accompanying unaudited condensed financial statements and notes have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial reporting. Accordingly, they do not include all of the information and related notes that would normally be required by GAAP for audited financial statements. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited condensed financial statements.
The accompanying unaudited condensed financial statements include all adjustments (of a normal and recurring nature) that management considers necessary for a fair statement of financial information for the interim periods. Interim results are not necessarily indicative of the results that may be expected for the remainder of the year ending December 31, 2011.
NOTE 2 — PREPAID EXPENSES AND OTHER CURRENT ASSETS
The Company has historically prepaid a significant portion of their expenses at year end. As of September 30, 2011 a majority of these prepaid assets have been expensed.
NOTE 3 — LINE OF CREDIT
The Company has a credit agreement with a bank, which provides for borrowings up to $22,000,000 under a revolving line of credit secured by substantially all of the Company’s assets. Borrowings under the line bear interest at a fluctuating rate equal to the highest of: (1) the prime rate, (2) the daily one month LIBOR rate plus 1.5%, (3) the federal funds rate plus 1.5%, or LIBOR plus 3%, for both 2011 and 2010. Borrowings under the line for 2011 bore interest at the bank’s prime rate (3.25% per annum at September 30, 2011). Interest is payable monthly with principal due on July 31, 2012. Under the line of credit agreement, the Company is required, among other things, to maintain certain minimum net worth and income requirements, and has restrictions related to capital equipment commitments, making loans, advances and investments, dividend and distributions in excess of specified levels, and must not have any outstanding borrowings under the agreement for a period of at least 30 consecutive days during each fiscal year. The Company was in compliance with all covenants of the credit agreement as of September 30, 2011. During the nine months ended September 30, 2011 and 2010, the
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RBF CONSULTING
NOTES TO FINANCIAL STATEMENTS (unaudited)
For The Nine Months Ended September 30, 2011 and 2010
Company recorded interest expense, including bank charges, under the line of credit totaling $118,000 and $106,000, respectively.
NOTE 4 — COMMITMENTS AND CONTINGENCIES
Litigation
There are certain legal actions pending against the Company arising in the normal course of business. In the opinion of management, the resolution of such matters will not have a material effect on the financial position, cash flows, or results of operations of the Company.
Indemnities and Guarantees
The Company has made certain indemnities and guarantees, under which it may be required to make payments to a guaranteed or indemnified party. The Company indemnifies its directors, officers, employees and agents to the maximum extent permitted under the laws of the State of California. In connection with its facility leases, the Company has indemnified its lessors for certain claims arising from the use of the facilities. In addition, in connection with the bank line of credit agreement, the Company has indemnified the bank for certain claims relating to or arising directly or indirectly out of the credit agreement. The duration of the indemnities and guarantees varies, and in many cases is indefinite. These indemnities and guarantees do not provide for any limitation of the maximum potential future payments the Company could be obligated to make. Historically, the Company has not been required to make any payments for these obligations and no liabilities have been recorded for these indemnities and guarantees in the accompanying financial statements.
NOTE 5 — SUBSEQUENT EVENTS
On October 3, 2011, the Michael Baker Corporation (“Baker”) entered into a Stock Purchase Agreement to acquire 100% of the outstanding shares of the Company for $49.3 million. This transaction was funded with $45.7 million of cash and approximately $3.6 million of Baker’s common stock. In addition, as part of the closing Baker received $1.2 million from the Company to fund professional liability tail insurance premiums and existing liabilities related to RBF bonus payments due in December 2011. This Stock Purchase Agreement is subject to a Net Working Capital adjustment that is expected to be approximately $5.0 million.
As required by the Subsequent Events Topic of the FASB Accounting Standards Codification, management has considered subsequent events through December 16, 2011, the date of issuance, in preparing the financial statements and notes hereto. The Company has evaluated and determined that no other events have occurred subsequent to the balance sheet date and through
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RBF CONSULTING
NOTES TO FINANCIAL STATEMENTS (unaudited)
For The Nine Months Ended September 30, 2011 and 2010
December 16, 2011, the date of issuance of these financial statements, which would require recording or disclosure in its financial statements.
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