EX-99.4 7 cross994.htm PRO FORMA FINANCIALS United States Securities and Exchange Commission Edgar Filing

EXHIBIT 99.4


Cross Country Healthcare, Inc.

Unaudited Pro Forma Financial Statements

Links

Unaudited Pro Forma Condensed Combined Financial Information

1

Unaudited Pro Forma Condensed Combined Statement of Operations - Year Ended December 31, 2007

2

Notes to the Unaudited Pro Forma Condensed Combined Financial Information for the
Year Ended December 31, 2007

3

Unaudited Pro Forma Condensed Combined Statement of Operations - Three Months Ended
March 31, 2008

4

Notes to the Unaudited Pro Forma Condensed Combined Financial Information for the
Three Months Ended March 31, 2008

5

Unaudited Pro Forma Condensed Combined Statement of Operations - Six Months Ended June 30, 2008

6

Pro Forma Condensed Combined Balance Sheet as of June 30, 2008

7

Notes to the Unaudited Pro Forma Condensed Combined Financial Information for the
Six Months Ended June 30, 2008

8

Unaudited Pro Forma Condensed Combined Statement of Operations - Nine Months Ended
September 30, 2008

9

Notes to the Unaudited Pro Forma Condensed Combined Financial Information for the
Nine Months Ended September 30, 2008

10



Cross Country Healthcare, Inc.

Unaudited Pro Forma Condensed Combined Financial Information

On September 9, 2008, Cross Country Healthcare, Inc. (the “Company” or “CCH Inc.”) consummated the acquisition of substantially all of the assets of privately-held MDA Holdings, Inc. and its subsidiaries and all of the outstanding stock of a subsidiary of MDA Holdings, Inc. (collectively, “MDA”). The Company paid $115.9 million in cash at closing, which included $3.6 million as an estimated net working capital adjustment which is subject to final adjustments. The Company’s senior secured revolving credit facility was amended and restated in connection with the acquisition of MDA. The $200.0 million Credit Agreement, dated as of November 10, 2005 and Amended and Restated as of September 9, 2008 (the “Credit Agreement”) keeps in place an existing $75.0 million revolving credit facility and provides for a 5-year $125.0 million term loan facility with Wachovia Capital Markets, LLC and certain of its affiliates, Banc of America Securities LLC and certain other lenders. The proceeds from the term loan were used to fund the acquisition, pay financing related fees, and pay certain acquisition expenses. The remainder of the proceeds was used to reduce borrowings under its revolving credit agreement.

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2007, the three months ended March 31, 2008, the six months ended June 30, 2008, and the nine months ended September 30, 2008, give effect to this acquisition as if the transaction had occurred at the beginning of each period. The unaudited pro forma condensed combined balance sheet as of June 30, 2008, gives effect to this acquisition as if the transaction occurred at June 30, 2008.

The unaudited pro forma condensed combined financial information is based on the historical statements of the acquired business giving effect to the transaction under the purchase method of accounting and the assumptions and adjustments described in the accompanying notes to the pro forma condensed combined financial information.

The pro forma information does not purport to be indicative of the combined results of operations that actually would have taken place if transactions had occurred on such dates.





1


Cross Country Healthcare, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations - Year Ended
December 31, 2007

(unaudited, amount in thousands)


 

 

CCH Inc.

As Reported

December 31,

2007

 

MDA
Consolidated

As Reported

December 31,

2007 (a)

 

Pro Forma

Adjustments

 

 

 

Pro Forma

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services

     

$

718,272

     

$

158,022

     

$

—

 

 

     

$

876,294

 

Operating expenses:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses

     

 

543,608

     

 

117,934

     

 

—

 

 

 

 

661,542

 

Selling, general and administrative expenses

     

 

122,692

     

 

28,858

     

 

(1,384

)

(b)

 

 

150,166

 

ESOP expenses

     

 

—

     

 

2,130

 

 

(2,130

)

(c)

 

 

—

 

Bad debt expense

     

 

1,559

     

 

20

     

 

 

 

 

 

 

1,579

 

Depreciation

     

 

6,309

     

 

393

     

 

253

 

(d)

 

 

6,955

 

Amortization

     

 

2,051

     

 

—

     

 

2,427

 

(e)

 

 

4,478

 

Legal settlement charge

     

 

34

     

 

—

     

 

—

 

 

 

 

34

 

Total operating expenses

     

 

676,253

     

 

149,335

     

 

(834

)

 

 

 

824,754

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

     

 

42,019

     

 

8,687

     

 

834

 

 

 

 

51,540

 

Other expenses:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange loss/other

     

 

93

     

 

—

     

 

—

 

 

 

 

93

 

Interest expense, net

     

 

2,587

     

 

(601

)

 

7,221

 

(f)

 

 

9,207

 

ESOP interest expense

     

 

—

 

 

3,480

     

 

(3,480

)

(g)

 

 

—

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

     

 

39,339

     

 

5,808

     

 

(2,907

)

 

 

 

42,240

 

Income tax expense

 

 

14,759

     

 

369

     

 

791

 

(h)

 

 

15,919

 

Income from continuing operations

     

$

24,580

     

$

5,439

     

$

(3,698

)

 

 

$

26,321

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations per common share:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

     

$

0.77

     

 

 

 

 

 

 

 

 

$

0.82

 

Diluted

     

$

0.76

     

 

 

 

 

 

 

 

 

$

0.81

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - Basic

     

 

31,973

     

 

 

 

 

 

 

 

 

 

31,973

 

Weighted average shares outstanding - Diluted

     

 

32,484

     

 

 

 

 

 

 

 

 

 

32,484

 





2


Notes to the Unaudited Pro Forma Condensed Combined Financial Information for the
Year Ended December 31, 2007

(amounts in thousands)


(a)

Represents the audited consolidated historical results of MDA for the year ended December 31, 2007.

(b)

Pro forma adjustment to remove expenses that will not continue as a result of the acquisition, primarily related to MDA’s Performance Share Plan.

(c)

Pro forma adjustment to remove the expense of MDA’s Employee Stock Ownership Plan (ESOP) which is excluded from the transaction.

(d)

Pro forma adjustment to record additional depreciation expense related to a write-up of software costs to its estimated fair value.

(e)

Pro forma adjustment to record the estimated amortization of specifically identifiable assets with definite lives acquired of $23,000 over their estimated lives, including $20,000 of customer relationships over 12 years, $2,000 of database value over 5 years and $1,000 of non-compete agreements over a weighted average life of 4 years.

(f)

Pro forma adjustment to interest expense to reflect the impact of the incremental borrowings under our term loan from the beginning of the period.

(g)

Pro forma adjustment to remove interest expense related to ESOP debt that is excluded from the transaction.

(h)

Effect of the pro forma adjustments on the provision for income taxes.



3


Cross Country Healthcare, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations - Three Months Ended
March 31, 2008

(unaudited, amount in thousands)


 

 

CCH Inc.

Three Months

Ended

March 31,

2008

 

MDA
Consolidated

Three Months

Ended

March 31,

2008 (a)

 

Pro Forma

Adjustments

 

 

 

Pro Forma

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services

     

$

179,251

     

$

40,363

     

$

—

 

 

     

$

219,614

 

Operating expenses:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses

     

 

134,074

     

 

30,430

     

 

—

 

 

 

 

164,504

 

Selling, general and administrative expenses

     

 

32,165

     

 

9,014

     

 

(1,880

)

(b)

 

 

39,299

 

ESOP expenses

     

 

—

     

 

67

 

 

(67

)

(c)

 

 

—

 

Bad debt expense

     

 

484

     

 

(47

)

 

 

 

 

 

 

437

 

Depreciation

     

 

1,786

     

 

181

 

 

63

 

(d)

 

 

2,030

 

Amortization

     

 

673

     

 

—

     

 

607

 

(e)

 

 

1,280

 

Total operating expenses

     

 

169,182

     

 

39,645

     

 

(1,277

)

 

 

 

207,550

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

     

 

10,069

     

 

718

     

 

1,277

 

 

 

 

12,064

 

Other expenses:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange loss/other

     

 

(6

)

 

—

     

 

—

 

 

 

 

(6

)

Interest expense, net

     

 

639

     

 

(141

)

 

1,918

 

(f)

 

 

2,416

 

ESOP interest expense

     

 

—

 

 

802

     

 

(802

)

(g)

 

 

—

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

     

 

9,436

     

 

57

     

 

161

 

 

 

 

9,654

 

Income tax expense

 

 

3,586

     

 

72

     

 

15

 

(h)

 

 

3,673

 

Income from continuing operations

     

$

5,850

     

$

(15

)

$

146

 

 

 

$

5,981

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations per common share:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

     

$

0.19

     

 

 

 

 

 

 

 

 

$

0.19

 

Diluted

     

$

0.19

     

 

 

 

 

 

 

 

 

$

0.19

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - Basic

     

 

31,149

     

 

 

 

 

 

 

 

 

 

31,149

 

Weighted average shares outstanding - Diluted

     

 

31,333

     

 

 

 

 

 

 

 

 

 

31,333

 





4


Notes to the Unaudited Pro Forma Condensed Combined Financial Information for the
Three Months Ended March 31, 2008

(amounts in thousands)


(a)

Represents the unaudited historical results of MDA for the three months ended March 31, 2008.

(b)

Pro forma adjustment to remove expenses that will not continue as a result of the acquisition, primarily related to MDA’s Performance Share Plan.

(c)

Pro forma adjustment to remove the expense of MDA’s Employee Stock Ownership Plan (ESOP) that has been excluded from the transaction.

(d)

Pro forma adjustment to record additional depreciation expense related to a write-off of software costs pursuant to an estimated valuation of software.

(e)

Pro forma adjustment to record the estimated amortization of specifically identifiable assets with definite lives acquired of $23,000 over their estimated lives, including $23,000 of customer relationships over 12 years, $2,000 of database value over 5 years and $1,000 of non-compete agreements over a weighted average life of 4 years.

(f)

Pro forma adjustment to interest expense to reflect the impact of the incremental borrowings under our term loan from the beginning of the period.

(g)

Pro forma adjustment to remove interest expense related to ESOP debt that is excluded from the transaction.

(h)

Effect of the pro forma adjustments on the provision for income taxes.



5


Cross Country Healthcare, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations - Six Months Ended
June 30, 2008

(unaudited, amount in thousands)


 

 

CCH Inc.

Six Months

Ended

June 30,

2008

 

MDA
Consolidated

Six Months

Ended

June 30,

2008 (a)

 

Pro Forma

Adjustments

 

 

 

Pro Forma

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services

     

$

350,202

     

$

84,715

     

$

—

 

 

     

$

434,917

 

Operating expenses:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses

     

 

259,385

     

 

63,202

     

 

—

 

 

 

 

322,587

 

Selling, general and administrative expenses

     

 

64,288

     

 

18,623

     

 

(3,685

)

(b)

 

 

79,226

 

ESOP expenses

     

 

—

     

 

396

 

 

(396

)

(c)

 

 

—

 

Bad debt expense

     

 

484

     

 

159

 

 

 

 

 

 

 

643

 

Depreciation

     

 

3,563

     

 

376

 

 

126

 

(d)

 

 

4,065

 

Amortization

     

 

1,316

     

 

—

     

 

1,213

 

(e)

 

 

2,529

 

Total operating expenses

     

 

329,036

     

 

82,756

     

 

(2,742

)

 

 

 

409,050

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

     

 

21,166

     

 

1,959

     

 

2,742

 

 

 

 

25,867

 

Other expenses:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange loss/other

     

 

(40

)

 

—

     

 

 

 

 

 

 

(40

)

Interest expense, net

     

 

1,172

     

 

(223

)

 

3,694

 

(f)

 

 

4,643

 

ESOP interest expense

     

 

—

 

 

1,634

     

 

(1,634

)

(g)

 

 

—

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

     

 

20,034

     

 

548

     

 

682

 

 

 

 

21,264

 

Income tax expense

 

 

7,813

     

 

151

     

 

341

 

(h)

 

 

8,305

 

Income from continuing operations

     

$

12,221

     

$

397

 

$

341

 

 

 

$

12,959

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations per common share:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

     

$

0.40

     

 

 

 

 

 

 

 

 

$

0.42

 

Diluted

     

$

0.39

     

 

 

 

 

 

 

 

 

$

0.42

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - Basic

     

 

30,908

     

 

 

 

 

 

 

 

 

 

30,908

 

Weighted average shares outstanding - Diluted

     

 

31,093

     

 

 

 

 

 

 

 

 

 

31,093

 




6


Cross Country Healthcare, Inc.

Pro Forma Condensed Combined Balance Sheet as of June 30, 2008

(unaudited, amounts in thousands)


 

 

CCH Inc.

 

MDA
Consolidated

(i)

 

Pro Forma

Adjustments

 

 

 

Pro Forma

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current assets:

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

     

$

4,812

     

$

6,859

     

$

(3,859

)

(j)

     

$

7,812

 

Restricted cash

     

 

—

 

 

5,000

 

 

—

 

 

 

 

5,000

 

Accounts receivable, net

     

 

107,503

     

 

23,533

     

 

—

 

 

 

 

131,036

 

Deferred income taxes

     

 

6,531

     

 

—

 

 

—

 

 

 

 

6,531

 

Other current assets

     

 

17,209

     

 

2,351

 

 

—

 

 

 

 

19,560

 

Total current assets

     

 

136,055

     

 

37,743

 

 

(3,859

)

 

 

 

169,939

 

Property and equipment, net

     

 

22,147

     

 

3,389

     

 

758

 

(k)

 

 

26,294

 

Goodwill and other intangible assets, net

     

 

373,415

     

 

—

     

 

94,450

 

(k)

 

 

467,865

 

Debt issuance costs

     

 

549

 

 

—

 

 

2,635

 

(k)

 

 

3,184

 

Other assets

     

 

1,060

 

 

28

 

 

—

 

 

 

 

1,088

 

Total assets

     

$

533,226

     

$

41,160

 

$

93,984

 

 

 

$

668,370

 

 

     

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities:

     

 

 

 

 

 

     

 

 

 

 

 

 

 

 

Accounts payable and accrued expenses

     

$

7,365

     

$

4,082

 

$

(3,021

)

(l)

 

$

8,426

 

Accrued employee compensation and benefits

     

 

27,514

 

 

14,632

     

 

(125

)

(l)

 

 

42,021

 

Income tax payable

     

 

3,829

     

 

—

     

 

—

 

 

 

 

3,829

 

Current portion of long-term debt and note payable

     

 

3,093

 

 

627

 

 

(627

)

(l)

 

 

3,093

 

Current portion of ESOP Note

 

 

—

     

 

1,049

 

 

(1,049

)

(l)

 

 

—

 

Other current liabilities

     

 

8,279

     

 

551

 

 

—

 

 

 

 

8,830

 

Total current liabilities

     

 

50,080

     

 

20,941

 

 

(4,822

)

 

 

 

66,199

 

Deferred income taxes

     

 

49,544

 

 

—

 

 

—

 

 

 

 

49,544

 

Long term debt

     

 

31,248

 

 

5,609

 

 

113,416

 

(m)

 

 

150,273

 

ESOP Note

     

 

—

     

 

27,511

 

 

(27,511

)

(l)

 

 

—

 

Other long-term liabilities

 

 

9,962

     

 

5,084

 

 

(5,084

)

(l)

 

 

9,962

 

Total liabilities

 

 

140,834

 

 

59,145

 

 

75,999

 

 

 

 

275,978

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Common stock

 

 

3

 

 

—

 

 

—

 

 

 

 

3

 

Additional paid-in-capital

 

 

235,714

 

 

—

 

 

—

 

 

 

 

235,714

 

Other stockholders' equity

 

 

156,675

 

 

(17,985

)

 

17,985

 

(n)

 

 

156,675

 

Total stockholders' equity

 

 

392,392

 

 

(17,985

)

 

17,985

 

 

 

 

392,392

 

Total liabilities and stockholders' equity

 

$

533,226

 

$

41,160

 

$

93,984

 

 

 

$

668,370

 




7


Notes to the Unaudited Pro Forma Condensed Combined Financial Information for the
Six Months Ended June 30, 2008

(Amounts in thousands)


(a)

Represents the unaudited historical results of MDA for the six months ended June 30, 2008.

(b)

Pro forma adjustment to remove expenses that will not continue as a result of the acquisition, primarily related to MDA’s Performance Share Plan.

(c)

Pro forma adjustment to remove the expense of MDA’s Employee Stock Ownership Plan (ESOP) that has been excluded from the transaction.

(d)

Pro forma adjustment to record additional depreciation expense related to a write-off of software costs to its estimated fair value.

(e)

Pro forma adjustment to record the estimated amortization of specifically identifiable assets with definite lives acquired of $23,000 over their estimated lives, including $20,000 of customer relationships over 12 years, $2,000 of database value over 5 years and $1,000 of non-compete agreements over a weighted average life of 4 years.

(f)

Pro forma adjustment to interest expense to reflect the impact of the incremental borrowings under our term loan from the beginning of the period.

(g)

Pro forma adjustment to remove interest expense related to ESOP debt that is excluded from the transaction.

(h)

Effect of the pro forma adjustments on the provision for income taxes.

(i)

Represents the unaudited historical balance sheet of MDA as of June 30, 2008.

(j)

Pro forma adjustment to exclude: 1) $2,700 of excess cash at the Captive that is excluded from the transaction and 2) adjustment to remove excluded corporate cash - $1,159.

(k)

Represents: 1) purchase accounting adjustment to record the estimated fair value of tangible and intangible assets (subject to adjustments after outside valuation is performed); and 2) estimated debt issuance costs for term loan.

(l)

Pro forma adjustment for excluded liabilities as per the asset purchase agreement.

(m)

Pro forma adjustment for: incremental borrowings ($125,000 term loan net of revolver repayment) necessary to fund acquisition and related estimated costs - $119,025; and 2) adjustment to exclude debt not assumed in transaction - $5,609.

(n)

Represents the elimination of MDA’s equity.



8


Cross Country Healthcare, Inc.

Unaudited Pro Forma Condensed Combined Statement of Operations - Nine Months Ended
September 30, 2008

(unaudited, amount in thousands)


 

 

CCH Inc.

Nine Months

Ended

September 30,
2008

 

MDA
Consolidated

Period

From

January 1,

2008 to

September 8,

2008 (a)

 

Pro Forma

Adjustments

 

 

 

Pro Forma

Combined

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue from services

 

$

528,336

     

$

119,705

     

$

—

 

 

     

$

648,041

 

Operating expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Direct operating expenses

 

 

390,081

     

 

90,055

     

 

—

 

 

 

 

480,136

 

Selling, general and administrative expenses

 

 

97,763

     

 

25,836

     

 

(5,218

)

(b)

 

 

118,381

 

ESOP expenses

 

 

—

     

 

3,818

 

 

(3,818

)

(c)

 

 

—

 

Bad debt expense

 

 

687

     

 

205

 

 

 

 

 

 

 

892

 

Depreciation

 

 

5,352

     

 

614

 

 

189

 

(d)

 

 

6,155

 

Amortization

 

 

2,029

     

 

—

     

 

1,672

 

(e)

 

 

3,701

 

Total operating expenses

 

 

495,912

     

 

120,528

     

 

(7,175

)

 

 

 

609,265

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

 

32,424

     

 

(823

)

 

7,175

 

 

 

 

38,776

 

Other expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign exchange loss/other

 

 

(119

)

 

—

     

 

 

 

 

 

 

(119

)

Interest expense, net

 

 

1,960

     

 

(279

)

 

5,009

 

(f)

 

 

6,690

 

ESOP interest expense

 

 

—

 

 

2,269

     

 

(2,269

)

(g)

 

 

—

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

30,583

     

 

(2,813

)

 

4,435

 

 

 

 

32,205

 

Income tax expense

 

 

12,191

     

 

302

 

 

347

 

(h)

 

 

12,840

 

Income from continuing operations

 

$

18,392

     

$

(3,115

)

$

4,088

 

 

 

$

19,365

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations per common share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.60

     

 

 

 

 

 

 

 

 

$

0.63

 

Diluted

 

$

0.59

     

 

 

 

 

 

 

 

 

$

0.62

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding - Basic

 

 

30,842

     

 

 

 

 

 

 

 

 

 

30,842

 

Weighted average shares outstanding - Diluted

 

 

31,032

     

 

 

 

 

 

 

 

 

 

31,032

 




9


Notes to the Unaudited Pro Forma Condensed Combined Financial Information for the
Nine Months Ended September 30, 2008

(dollar amounts in thousands)


(a)

Represents the unaudited historical results of MDA for the period from January 1, 2008 to September 8, 2008.

(b)

Pro forma adjustment to remove expenses that will not continue as a result of the acquisition, primarily related to MDA’s Performance Share Plan.

(c)

Pro forma adjustment to remove the expense of MDA’s Employee Stock Ownership Plan (ESOP) that has been excluded from the transaction.

(d)

Pro forma adjustment to record additional depreciation expense related to a write-off of software costs pursuant to an estimated valuation of software.

(e)

Pro forma adjustment to record the estimated amortization of specifically identifiable assets with definite lives acquired of $23,000 over their estimated lives, including $20,000 of customer relationships over 12 years, $2,000 of database value over 5 years and $1,000 of non-compete agreements over a weighted average life of 4 years.

(f)

Pro forma adjustment to interest expense to reflect the impact of the incremental borrowings under our term loan from the beginning of the period.

(g)

Pro forma adjustment to remove interest expense related to ESOP debt that is excluded from the transaction.

(h)

Effect of the pro forma adjustments on the provision for income taxes.





























10