UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
_____________________
FORM
8-K/A
(Amendment
#1)
CURRENT
REPORT
PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
March 31,
2006
Date
of
Report (Date of earliest event reported)
Huron
Consulting Group Inc.
(Exact
name of registrant as specified in its charter)
|
Delaware
|
000-50976
|
01-0666114
|
|
(State
or other jurisdiction
|
(Commission
|
(IRS
Employer
|
|
of
incorporation or organization)
|
File
Number)
|
Identification
Number)
|
550
West Van Buren Street
Chicago,
Illinois
60607
(Address
of principal executive offices)
(Zip
Code)
(312)
583-8700
(Registrant’s
telephone number, including area code)
_____________________
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Explanatory
Note
On
April
6, 2006, Huron Consulting Group Inc. announced that it had acquired the assets
of Galt & Company pursuant to an Asset Purchase Agreement by and between
MSGalt & Company, LLC, Huron Consulting Services, LLC, M. Scott Gillis,
Joseph R. Shalleck and Leroy J. Mergy dated as of March 31, 2006. A Current
Report on Form 8-K was filed on April 6, 2006 disclosing the acquisition.
Pursuant to Item 9.01(a)(4), audited financial statements of the business
acquired and related pro forma financial information are being filed by this
amendment.
Item
9.01 Financial
Statements and Exhibits.
| (a) |
Financial
Statements of Business Acquired.
|
The
financial statements of MSGalt & Company, LLC, as of December 31, 2005 and
December 31, 2004 and for the years then ended, together with the accompanying
Report of Independent Auditors, are set forth in Exhibit 99.1.
| (b) |
Pro
Forma Financial Information.
|
The
unaudited pro forma financial information is set forth in
Exhibit 99.2.
| (d) |
Exhibits.
|
|
23.1
|
Consent
of independent accountants.
|
|
99.1
|
Financial
statements of MSGalt & Company, LLC, as of December 31, 2005 and
December 31, 2004 and for the years then ended.
|
|
99.2
|
Unaudited
pro forma financial
information.
|
-
1
-
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
Huron
Consulting Group Inc.
|
|||
|
(Registrant)
|
|||
|
Date:
|
June 16,
2006
|
/s/
Gary L. Burge
|
|
|
Gary
L. Burge
|
|||
|
Vice
President,
|
|||
|
Chief
Financial Officer and
Treasurer
|
-
2
-
EXHIBIT
INDEX
|
Exhibit
Number
|
Description
|
|
|
23.1
|
Consent
of independent accountants.
|
|
|
99.1
|
Financial
statements of MSGalt & Company, LLC, as of December 31, 2005 and
December 31, 2004 and for the years then ended.
|
|
|
99.2
|
Unaudited
pro forma financial
information.
|
EXHIBIT
23.1
CONSENT
OF INDEPENDENT ACCOUNTANTS
We
hereby
consent to the incorporation by reference in the Registration Statement on
Form
S-8 (No. 333-119697) of Huron Consulting Group, Inc. of our report dated June
15, 2006 relating to the financial statements of MSGalt & Company, LLC,
which appears in the Current Report on Form 8-K/A of Huron Consulting Group,
Inc. dated March 31, 2006.
/s/
PricewaterhouseCoopers LLP
Chicago,
Illinois
June
16,
2006
EXHIBIT
99.1
MSGALT
& COMPANY, LLC
FINANCIAL
STATEMENTS
INDEX
|
Page
|
|
| Report of Independent Auditors |
1
|
| Balance Sheets at December 31, 2005 and 2004 |
2
|
| Statements of Income for the years ended December 31, 2005 and 2004 |
3
|
| Statements of Members’ Equity for the years ended December 31, 2005 and 2004 |
4
|
| Statements of Cash Flows for the years ended December 31, 2005 and 2004 |
5
|
| Notes to Financial Statements |
6
|
Report
of Independent Auditors
To
the
Members of MSGalt & Company, LLC:
In
our
opinion, the accompanying balance sheets and
the
related statements of income, of members’ equity, and of cash flows present
fairly, in all material respects, the financial position of MSGalt &
Company, LLC at December 31, 2005 and 2004, and the results of its operations
and its cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States
of
America. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these statements
in
accordance with auditing standards generally accepted in the United States
of
America. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management,
and
evaluating the overall financial statement presentation. We believe that
our
audits provide a reasonable basis for our opinion.
/s/
PricewaterhouseCoopers LLP
Chicago,
Illinois
June
15,
2006
-
1
-
MSGALT
& COMPANY, LLC
BALANCE
SHEETS
(In
thousands)
|
December
31,
|
|||||||
|
2005
|
2004
|
||||||
|
Assets
|
|||||||
|
Current
assets:
|
|||||||
|
Cash
and cash equivalents
|
$
|
4,768
|
$
|
835
|
|||
|
Receivables
from clients, net
|
2,798
|
2,011
|
|||||
|
Unbilled
services
|
2,180
|
415
|
|||||
|
Prepaid
expenses
|
36
|
9
|
|||||
|
Total
current assets
|
9,782
|
3,270
|
|||||
|
Fixed
assets, net
|
12
|
9
|
|||||
|
Total
assets
|
$
|
9,794
|
$
|
3,279
|
|||
|
Liabilities
and members’ equity
|
|||||||
|
Accounts
payable and accrued expenses
|
$
|
153
|
$
|
634
|
|||
|
Total
current liabilities
|
153
|
634
|
|||||
|
Contingencies
|
¾
|
¾
|
|||||
|
Members’
equity
|
9,641
|
2,645
|
|||||
|
Total
liabilities and members’ equity
|
$
|
9,794
|
$
|
3,279
|
|||
The
accompanying notes are an intergral part of the financial
statements.
-
2
-
MSGALT
& COMPANY, LLC
STATEMENTS
OF INCOME
(In
thousands)
|
Year
Ended
December
31,
|
|||||||
|
2005
|
2004
|
||||||
|
Revenues
and reimbursable expenses:
|
|||||||
|
Revenues
|
$
|
16,779
|
$
|
5,589
|
|||
|
Reimbursable
expenses
|
2,426
|
1,226
|
|||||
|
Total
revenues and reimbursable expenses
|
19,205
|
6,815
|
|||||
|
Direct
costs and reimbursable expenses (exclusive
of depreciation
shown in operating expenses):
|
|||||||
|
Direct
costs
|
7,812
|
2,931
|
|||||
|
Reimbursable
expenses
|
2,425
|
1,190
|
|||||
|
Total
direct costs and reimbursable expenses
|
10,237
|
4,121
|
|||||
|
Operating
expenses:
|
|||||||
|
Selling,
general and administrative
|
283
|
110
|
|||||
|
Depreciation
|
2
|
1
|
|||||
|
Total
operating expenses
|
285
|
111
|
|||||
|
Operating
income
|
8,683
|
2,583
|
|||||
|
Interest
income
|
30
|
2
|
|||||
|
Net
income
|
$
|
8,713
|
$
|
2,585
|
|||
The
accompanying notes are an intergral part of the
financial statements.
-
3
-
MSGALT
& COMPANY, LLC
STATEMENTS
OF MEMBERS’ EQUITY
(In
thousands)
|
Members’
Equity
|
||||
|
Balance
at December 31, 2003
|
$
|
60
|
||
|
Net
income
|
2,585
|
|||
|
Distributions
to members
|
¾
|
|||
|
Balance
at December 31, 2004
|
$
|
2,645
|
||
|
Net
income
|
8,713
|
|||
|
Distributions
to members
|
(1,717
|
)
|
||
|
Balance
at December 31, 2005
|
$
|
9,641
|
||
The
accompanying notes are an integral part of the financial
statements.
-
4
-
MSGALT
& COMPANY, LLC
STATEMENTS
OF CASH FLOWS
(In
thousands)
|
Year
Ended
December 31,
|
|||||||
|
2005
|
2004
|
||||||
|
Net
income
|
$
|
8,713
|
$
|
2,585
|
|||
|
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
|||||||
|
Depreciation
|
2
|
1
|
|||||
|
Allowances
for
doubtful accounts
|
(66
|
)
|
66
|
||||
|
Changes
in operating assets and liabilities:
|
|||||||
|
Increase
in
receivables from clients
|
(721
|
)
|
(2,077
|
)
|
|||
|
Increase
in
unbilled services
|
(1,765
|
)
|
(357
|
)
|
|||
|
Increase
in
prepaid expenses
|
(27
|
)
|
(9
|
)
|
|||
|
(Decrease)
increase in accounts payable and accrued expenses
|
(481
|
)
|
634
|
||||
|
Net
cash provided by operating activities
|
5,655
|
843
|
|||||
|
Cash
flows from investing activities:
|
|||||||
|
Purchases
of fixed assets
|
(5
|
)
|
(8
|
)
|
|||
|
Net
cash used in investing activities
|
(5
|
)
|
(8
|
)
|
|||
|
Cash
flows from financing activities:
|
|||||||
|
Distributions
to members
|
(1,717
|
)
|
¾
|
||||
|
Net
cash used in financing activities
|
(1,717
|
)
|
¾
|
||||
|
Net
increase in cash and cash equivalents
|
3,933
|
835
|
|||||
|
Cash
and cash equivalents:
|
|||||||
|
Beginning
of the period
|
835
|
¾
|
|||||
|
End
of the period
|
$
|
4,768
|
$
|
835
|
|||
The accompanying notes are an integral part of the financial statements.
-
5
-
MSGALT
& COMPANY, LLC
NOTES
TO FINANCIAL STATEMENTS
1. Description
of Business
MSGalt
& Company, LLC (the “Company”), a Delaware limited liability company formed
in 2003, is a specialized consulting firm that designs and implements
corporate-wide programs to improve shareholder returns.
2. Summary
of Significant Accounting Policies
Basis
of Presentation
The
accompanying financial statements reflect the results of operations and cash
flows for the years ended December 31, 2005 and 2004.
Use
of Estimates
The
preparation
of
financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and
assumptions that affect the amounts that are reported in the financial
statements and accompanying disclosures. Actual results may differ from these
estimates.
Revenue
Recognition
The
Company recognizes revenues in accordance with Staff Accounting Bulletin (“SAB”)
No. 101, “Revenue Recognition in Financial Statements,” as amended by SAB No.
104, “Revenue Recognition” when persuasive evidence of an arrangement exists,
the related services are provided, the price is fixed and determinable and
collectibility is reasonably assured. Fees for services are billed to clients
for the work performed primarily based on pre-determined monthly rates. Losses,
if any, on engagements are recognized in the period in which the loss first
becomes probable and reasonably estimable. Direct costs incurred on engagements
are expensed in the period incurred.
Expense
reimbursements that are billable to clients are included in total revenues
and
reimbursable expenses, and typically an equivalent amount of reimbursable
expenses are included in total direct costs and reimbursable expenses.
Reimbursable expenses are recognized as revenue in the period in which the
expense is incurred.
Differences
between the timing of billings and the recognition of revenue are recognized
as
unbilled services. Revenues recognized for services performed but not yet billed
to clients have been recorded as unbilled services in the accompanying balance
sheets.
Direct
Costs and Reimbursable Expenses
Direct
costs (exclusive of depreciation and amortization) and reimbursable expenses
consists primarily of billable employee compensation and their related benefit
costs, the cost of outside consultants or subcontractors assigned to revenue
generating activities and direct expenses to be reimbursed by clients. Direct
costs also reflect contractual compensation for members of the Company.
Allowances
for Doubtful Accounts and Unbilled Services
The
Company typically bills its clients at the beginning of each month for the
services rendered during the prior month. Receivables from clients and unbilled
services are valued at management’s estimate of the amount that will ultimately
be collected. No allowances for doubtful accounts and unbilled services were
deemed necessary at December 31, 2005. The allowance for doubtful accounts
and
unbilled services at December 31, 2005 and 2004 totaled $0 and
approximately $66,000, respectively.
-
6
-
MSGALT
& COMPANY, LLC
NOTES
TO FINANCIAL STATEMENTS
Customer
Concentration
A
small
number of clients account for the Company’s revenues. During 2005, the Company
had five clients of whom one generated $9.6 million, or 57.2%, of the
Company’s revenues, while a second client generated $5.2 million, or 30.9%,
of the Company’s revenues. During 2004, the Company had four clients of whom one
generated $3.0 million, or 53.2%, of the Company’s revenues, while a second
client generated $1.4 million, or 25.1%, of the Company’s revenues, and a
third client generated $1.1 million, or 19.9%, or the Company’s
revenues.
Cash
and Cash Equivalents
The
Company considers all highly liquid investments with original maturities of
three months or less to be cash equivalents.
Fixed
Assets
Fixed
assets are stated at cost, less accumulated depreciation totaling approximately
$3,400 and $1,200 at December 31, 2005 and 2004, respectively. Fixed assets
consist of computer equipment and office furniture, which are depreciated on
a
straight-line basis over an estimated useful life of five years.
Income
Taxes
The
Company is organized as a limited liability company whereby its taxable income
is included with that of its members for purposes of determining federal, state
and local income taxes. Therefore, no income tax expense has been recorded
in
the accompanying financial statements.
Fair
Value of Financial Instruments
Cash
and
cash equivalents are stated at cost, which approximates fair market value.
The
carrying values for receivables from clients, unbilled services, accounts
payable and other accrued liabilities reasonably approximate fair market value
due to the nature of the financial instrument and the short-term maturity of
these items.
Segment
Reporting
The
Company operates under one segment that designs and implements corporate-wide
programs to improve shareholder returns.
Accordingly, segment information is not applicable.
3. Members’
Equity
The
Company is organized as a limited liability company. Under the terms of the
operating agreement of the limited liability company, the Company is authorized
to establish a capital account for each member equal to the member’s initial
capital contribution. The member’s capital account is adjusted by any additional
contributions made by the member and the member’s share of the Company’s income.
The amounts and timing of distributions, if any, are determined by joint
agreement of the members.
4. Contingencies
From
time
to time, the Company is involved in various legal matters arising out of the
ordinary course of business. Although the outcome of these matters cannot
presently be determined, in the opinion of management, disposition of these
matters will not have a material adverse effect on the financial position or
results of operations of the Company.
-
7
-
MSGALT
& COMPANY, LLC
NOTES
TO FINANCIAL STATEMENTS
5. Subsequent
Event
On
April
3, 2006, Huron Consulting Group Inc. (“Huron”) acquired substantially all of the
assets of the Company for $20.4 million. Additional purchase consideration
may be payable by Huron if specific performance targets are met over a four-year
period. Also, additional payments may be made based on the amount of revenues
Huron receives from referrals made by Galt employees over a four-year
period.
-
8
-
EXHIBIT
99.2
HURON
CONSULTING GROUP INC.
UNAUDITED
PRO FORMA FINANCIAL INFORMATION
The
following unaudited pro forma financial information reflects the estimated
effect of the acquisition of MSGalt & Company, LLC (“Galt”) by Huron
Consulting Group Inc. (the “Company”).
The
pro
forma consolidated statement of income for the year ended December 31, 2005
combine the respective statements of the Company and Galt as if the acquisition
was consummated at the beginning of the periods presented. The pro forma
consolidated balance sheet as of December 31, 2005 combines the respective
balance sheets of the Company and Galt as if the acquisition was consummated
as
of the balance sheet date.
These
unaudited pro forma consolidated statement of income and balance sheet are
based
on the assumptions and adjustments as described in the accompanying notes and
are based upon the purchase method of accounting. These pro forma statements
do
no reflect the potential impact of contingent payments that could be made to
the
members of Galt. The Company is in the process of obtaining a third-party
valuation of certain intangible assets; thus, the allocation of the purchase
price is subject to refinement. The unaudited pro forma financial information
should be read in conjunction with Galt’s audited financial statements and notes
thereto for the years ended December 31, 2004 and 2005, which are filed as
Exhibit 99.1 to this current report on Form 8-K, as well as the Company’s
consolidated financial statements and notes thereto for the years ended
December 31, 2004 and 2005 included in the Company’s annual report on
Form 10-K.
The
unaudited pro forma consolidated financial information is not necessarily
indicative of what actually would have occurred if the acquisition had been
effective for the periods presented and should not be taken as representative
of
our future consolidated results of operations or financial
position.
-
1
-
Huron
Consulting Group Inc.
Unaudited
Pro Forma Consolidated Balance Sheet
As
of December 31, 2005
(In
thousands, except per share amounts)
|
Company
|
Galt
|
Pro
Forma
Adjustments
|
Note
|
Pro
Forma
Consolidated
|
||||||||||||
|
Assets
|
||||||||||||||||
|
Current
assets:
|
||||||||||||||||
|
Cash
and cash equivalents
|
$
|
31,820
|
$
|
4,768
|
$
|
(13,887
|
)
|
1
|
$
|
17,933
|
||||||
|
(4,768
|
)
|
3
|
||||||||||||||
|
Receivables
from clients, net
|
29,164
|
2,798
|
(2,798
|
)
|
3
|
29,164
|
||||||||||
|
Unbilled
services, net
|
18,187
|
2,180
|
(2,180
|
)
|
3
|
18,187
|
||||||||||
|
Income
tax receivable
|
232
|
¾
|
¾
|
232
|
||||||||||||
|
Deferred
income taxes
|
12,553
|
¾
|
¾
|
12,553
|
||||||||||||
|
Other
current assets
|
5,799
|
36
|
(36
|
)
|
3
|
5,799
|
||||||||||
|
Total
current assets
|
97,755
|
9,782
|
(23,669
|
)
|
83,868
|
|||||||||||
|
Property
and equipment, net
|
13,162
|
12
|
¾
|
13,174
|
||||||||||||
|
Deferred
income taxes
|
2,154
|
¾
|
¾
|
2,154
|
||||||||||||
|
Deposits
|
1,147
|
¾
|
¾
|
1,147
|
||||||||||||
|
Intangible
assets, net
|
844
|
¾
|
4,600
|
2
|
5,444
|
|||||||||||
|
Goodwill
|
14,637
|
¾
|
15,775
|
2
|
30,412
|
|||||||||||
|
Total
assets
|
$
|
129,699
|
$
|
9,794
|
$
|
(3,294
|
)
|
$
|
139,199
|
|||||||
|
Liabilities
and stockholders’/ members’
equity
|
||||||||||||||||
|
Current
liabilities:
|
||||||||||||||||
|
Accounts
payable
|
$
|
2,671
|
$
|
153
|
$
|
(153
|
)
|
3
|
$
|
2,671
|
||||||
|
Accrued
expenses
|
4,357
|
¾
|
¾
|
4,357
|
||||||||||||
|
Accrued
payroll and related benefits
|
32,073
|
¾
|
¾
|
32,073
|
||||||||||||
|
Income
tax payable
|
491
|
¾
|
¾
|
491
|
||||||||||||
|
Deferred
revenues
|
4,609
|
¾
|
¾
|
4,609
|
||||||||||||
|
Current
portion of borrowings and capital
lease obligations
|
1,282
|
¾
|
6,500
|
1
|
7,782
|
|||||||||||
|
Total
current liabilities
|
45,483
|
153
|
6,347
|
51,983
|
||||||||||||
|
Non-current
liabilities:
|
||||||||||||||||
|
Accrued
expenses
|
274
|
¾
|
¾
|
274
|
||||||||||||
|
Borrowings
and capital lease obligations, net
of current portion
|
2,127
|
¾
|
¾
|
2,127
|
||||||||||||
|
Deferred
lease incentives
|
6,283
|
¾
|
¾
|
6,283
|
||||||||||||
|
Total
non-current liabilities
|
8,684
|
¾
|
¾
|
8,684
|
||||||||||||
|
Stockholders’
/ members’ equity
|
75,532
|
9,641
|
(9,641
|
)
|
3
|
75,532
|
||||||||||
|
Total
liabilities and stockholders’ equity
|
$
|
129,699
|
$
|
9,794
|
$
|
(3,294
|
)
|
$
|
136,199
|
|||||||
See
accompanying notes.
-
2
-
Huron
Consulting Group Inc.
Unaudited
Pro Forma Consolidated Statement of Income
For
The Year Ended December 31, 2005
(In
thousands, except per share amounts)
|
Company
|
Galt
|
Pro
Forma Adjustments
|
Note
|
Pro
Forma Consolidated
|
||||||||||||
|
Revenues
and reimbursable expenses:
|
||||||||||||||||
|
Revenues
|
$
|
207,213
|
$
|
16,779
|
$
|
(657
|
)
|
4
|
$
|
223,335
|
||||||
|
Reimbursable
expenses
|
18,749
|
2,426
|
(178
|
)
|
4
|
20,997
|
||||||||||
|
Total
revenues and reimbursable expenses
|
225,962
|
19,205
|
(835
|
)
|
244,332
|
|||||||||||
|
Direct
costs and reimbursable expenses (exclusive
of depreciation and amortization
shown
in operating expenses):
|
||||||||||||||||
|
Direct
costs
|
117,768
|
7,812
|
(657
|
)
|
4
|
125,669
|
||||||||||
|
746
|
5
|
|||||||||||||||
|
Intangible
assets amortization
|
1,314
|
¾
|
1,800
|
6
|
3,114
|
|||||||||||
|
Reimbursable
expenses
|
18,982
|
2,425
|
(178
|
)
|
4
|
21,229
|
||||||||||
|
Total
direct costs and reimbursable expenses
|
138,064
|
10,237
|
1,711
|
150,012
|
||||||||||||
|
Operating
expenses:
|
||||||||||||||||
|
Selling,
general and administrative
|
51,035
|
283
|
¾
|
51,318
|
||||||||||||
|
Depreciation
and amortization
|
5,282
|
2
|
1,760
|
6
|
7,044
|
|||||||||||
|
Total
operating expenses
|
56,317
|
285
|
1,760
|
58,362
|
||||||||||||
|
Operating
income
|
31,581
|
8,683
|
(4,306
|
)
|
35,958
|
|||||||||||
|
Other
income (expense)
|
435
|
30
|
(884
|
)
|
7
|
(419
|
)
|
|||||||||
|
Income
before provision for income taxes
|
32,016
|
8,713
|
(5,190
|
)
|
35,539
|
|||||||||||
|
Provision
(benefit) for income taxes
|
14,247
|
¾
|
(2,087
|
)
|
8
|
15,663
|
||||||||||
|
3,503
|
9
|
|||||||||||||||
|
Net
income
|
$
|
17,769
|
$
|
8,713
|
$
|
(6,606
|
)
|
$
|
19,876
|
|||||||
|
Earnings
per share:
|
||||||||||||||||
|
Basic
|
$
|
1.13
|
$
|
1.26
|
||||||||||||
|
Diluted
|
$
|
1.05
|
$
|
1.18
|
||||||||||||
|
Weighted
average shares used in calculating earnings per share:
|
||||||||||||||||
|
Basic
|
15,741
|
15,741
|
||||||||||||||
|
Diluted
|
16,858
|
16,858
|
||||||||||||||
See
accompanying notes.
-
3
-
Huron Consulting Group Inc.
Notes
to Unaudited Pro Forma Financial Information
(1) This
adjustment is to record the funding of the acquisition, which consisted of
the
following (in thousands):
|
Cash
paid at closing
|
$
|
13,887
|
||
|
Borrowings
|
6,500
|
|||
|
Total
purchase price
|
$
|
20,387
|
The
Company borrowed $6.5 million under its bank credit agreement, which
expires on July 10, 2006. Borrowings under the agreement bear interest at
LIBOR plus 1.25%.
(2) The
purchase price was allocated, based on a preliminary valuation, as follows
(in
thousands):
|
Net
assets purchased
|
$
|
12
|
||
|
Customer
contracts
|
1,800
|
|||
|
Customer
relationships
|
1,500
|
|||
|
Non-competition
agreements
|
1,300
|
|||
|
Goodwill
|
15,775
|
|||
|
Total
purchase price
|
$
|
20,387
|
(3) This
adjustment is to eliminate the assets and liabilities that the Company did
not
purchase or assume.
(4) This
adjustment is to eliminate intercompany revenues and expenses.
(5) This
adjustment is to record contractual obligations pursuant to employment
agreements entered into between the Company and certain Galt employees
in
connection with the acquisition.
(6) This
adjustment is to record estimated amortization expense for identifiable
intangible assets, which includes customer contracts, customer relationships
and
non-competition agreements as presented
above.
(7) This
adjustment is to record interest expense relating to borrowings of
$6.5 million on the acquisition date and the interest income foregone
relating to the cash outlay. The $6.5 million of borrowings bear interest
at LIBOR plus 1.25%, which was 6.08% as of the acquisition date. A variance
of
0.125% in the interest rate would have a $4,000 effect on pro forma net
income.
(8) This
adjustment is to record the tax benefit relating to contractual obligations
under the employment agreements, intangible assets amortization, and interest
expense.
(9) This
adjustment is to record an income tax provision as if Galt had filed its
income
tax returns on a consolidated basis with the Company.
-
4
-