Attached files
file | filename |
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8-K/A - FORM 8-K/A - MICHAEL BAKER CORP | l40228e8vkza.htm |
EX-23.1 - EX-23.1 - MICHAEL BAKER CORP | l40228exv23w1.htm |
EX-99.3 - EX-99.3 - MICHAEL BAKER CORP | l40228exv99w3.htm |
EX-99.5 - EX-99.5 - MICHAEL BAKER CORP | l40228exv99w5.htm |
Exhibit 99.4
THE LPA GROUP INCORPORATED,
THE LPA GROUP OF NORTH CAROLINA, P.A.,
THE LPA GROUP, P.C., THE LPA DESIGN GROUP, INC.,
HORIZON ARCHITECTS, P.C., LPACIFIC GROUP INCORPORATED,
AND THE LPA GROUP OF CANADA INC
THE LPA GROUP OF NORTH CAROLINA, P.A.,
THE LPA GROUP, P.C., THE LPA DESIGN GROUP, INC.,
HORIZON ARCHITECTS, P.C., LPACIFIC GROUP INCORPORATED,
AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
THE LPA GROUP INCORPORATED,
THE LPA GROUP OF NORTH CAROLINA, P.A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
THE LPA GROUP OF NORTH CAROLINA, P.A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
TABLE OF CONTENTS
MARCH 31, 2010 AND 2009
PAGE | ||||
FINANCIAL STATEMENTS: |
||||
Combined Statement of Income |
1 | |||
Combined Balance Sheet |
2-3 | |||
Combined Statement of Cash Flows |
4 | |||
Combined Notes to Financial Statements |
5-8 |
THE LPA GROUP INCORPORATED,
THE LPA GROUP OF NORTH CAROLINA, P. A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (UNAUDITED)
THE LPA GROUP OF NORTH CAROLINA, P. A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2010 and 2009
For the three months | ||||||||
ended March 31, | ||||||||
2010 | 2009 | |||||||
Fees earned |
$ | 25,380,550 | $ | 22,102,420 | ||||
Operating
expenses: |
||||||||
Direct labor |
5,788,709 | 5,348,499 | ||||||
Direct consultants |
7,263,592 | 7,215,758 | ||||||
Other direct expenses |
1,463,521 | 621,455 | ||||||
Indirect labor |
3,988,279 | 3,138,266 | ||||||
Other indirect expenses |
4,752,125 | 4,461,456 | ||||||
Income from operations |
2,124,324 | 1,316,986 | ||||||
Other income/(expense): |
||||||||
Interest income |
3,821 | 12,118 | ||||||
Gain/(loss) on sale |
64 | (10,736 | ) | |||||
Income from unconsolidated affiliate
joint venture partnership |
88,790 | 137,914 | ||||||
Miscellaneous income |
| 4,989 | ||||||
Interest expense |
(42,737 | ) | (62,090 | ) | ||||
Income before income taxes |
2,174,262 | 1,399,181 | ||||||
Provision for income taxes |
804,477 | 517,697 | ||||||
Net income |
$ | 1,369,785 | $ | 881,484 | ||||
The accompanying notes to the financial statements are an integral part of this statement.
THE LPA GROUP OF NORTH CAROLINA, P. A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED BALANCE SHEETS (UNAUDITED)
MARCH 31, 2010 AND DECEMBER 31, 2009
As of | ||||||||
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS |
||||||||
Current Assets |
||||||||
Cash and cash equivalents |
$ | 3,975,861 | $ | 3,068,107 | ||||
Receivables, net of allowances of $234,506 |
13,517,153 | 11,402,187 | ||||||
Unbilled revenues on contracts in progress |
8,566,285 | 8,031,802 | ||||||
Cost and estimated earnings in excess of billings |
| 890,394 | ||||||
Prepaid income taxes |
106,933 | 61,153 | ||||||
Prepaid expenses |
390,254 | 568,730 | ||||||
Other receivables |
35,162 | 52,097 | ||||||
Total current assets |
26,591,648 | 24,074,470 | ||||||
Property, Plant and Equipment, net
|
4,060,030 | 4,029,358 | ||||||
Other Long-term Assets |
||||||||
Deposits |
113,816 | 126,666 | ||||||
Investments-affiliate |
136,936 | 48,146 | ||||||
Investments other |
14,400 | 14,400 | ||||||
Accounts receivable related party |
137,604 | 162,405 | ||||||
Retainage receivable |
463,925 | 381,823 | ||||||
Total other long-term assets |
866,681 | 733,440 | ||||||
Total assets |
$ | 31,518,359 | $ | 28,837,268 | ||||
The accompanying notes to the financial statements are an integral part of this statement.
THE LPA GROUP OF NORTH CAROLINA, P. A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED BALANCE SHEETS CONTINUED (UNAUDITED)
MARCH 31, 2010 AND DECEMBER 31, 2009
As of | ||||||||
March 31, | December 31, | |||||||
2010 | 2009 | |||||||
LIABILITIES AND SHAREHOLDERS INVESTMENT |
||||||||
Current Liabilities |
||||||||
Current portion of long-term debt |
$ | 1,000,020 | $ | 1,000,020 | ||||
Accounts payable |
6,266,080 | 5,228,580 | ||||||
Billings in excess of revenues on contracts in progress |
3,302,086 | 4,352,675 | ||||||
Payroll liabilities |
2,303,262 | 2,104,608 | ||||||
Income taxes payable |
804,477 | | ||||||
Accrued leave |
854,882 | 543,603 | ||||||
Deferred income tax liability |
3,817,673 | 3,817,673 | ||||||
Retirement contribution |
150,000 | 568,791 | ||||||
Total current liabilities |
18,498,480 | 17,615,950 | ||||||
Long-term Liabilities |
||||||||
Note payable long term |
5,583,245 | 5,833,250 | ||||||
Obligation under capital lease |
681,794 | 759,282 | ||||||
Due to affiliates |
3,770,000 | 3,770,000 | ||||||
Deferred compensation expense |
609,927 | 627,782 | ||||||
Reserves |
65,336 | 53,000 | ||||||
Total liabilities |
29,208,782 | 28,659,264 | ||||||
Shareholders Investment |
||||||||
Common Stock
(1,000,000 shares, authorized, 508,062 shares issued and outstanding) |
204,010 | 201,910 | ||||||
Cost of
296,971 shares of common stock held by the Company |
(18,352,689 | ) | (18,352,689 | ) | ||||
Additional paid-in capital |
3,040,916 | 2,281,227 | ||||||
Retained earnings |
17,417,340 | 16,047,556 | ||||||
Total shareholders investment |
2,309,577 | 178,004 | ||||||
Total liabilities and shareholders investment |
$ | 31,518,359 | $ | 28,837,268 | ||||
The accompanying notes to the financial statements are an integral part of this statement.
THE LPA GROUP INCORPORATED,
THE LPA GROUP OF NORTH CAROLINA, P. A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
THE LPA GROUP OF NORTH CAROLINA, P. A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDING MARCH 31, 2010 AND 2009
For the three months | ||||||||
ended March 31, | ||||||||
2010 | 2009 | |||||||
Cash Flows from Operating Activities |
||||||||
Net income |
$ | 1,369,785 | $ | 881,484 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation |
274,455 | 242,430 | ||||||
Net increase in receivables |
(1,742,240 | ) | (814,997 | ) | ||||
Net decrease in other current assets |
132,696 | 573,447 | ||||||
Net increase in other assets |
(133,242 | ) | (55,137 | ) | ||||
Net (decrease)/increase in accounts payables and accrued expense |
882,650 | 425,237 | ||||||
Net increase in other long term liabilities |
(5,519 | ) | 330,302 | |||||
Net increase in deferred income tax |
| (111,338 | ) | |||||
Net cash provided by operating activities |
778,585 | 1,471,428 | ||||||
Cash Flows from Investing Activities |
||||||||
Additions to property, plant and equipment |
(305,127 | ) | (416,669 | ) | ||||
Net cash used in investing activities |
(305,127 | ) | (416,669 | ) | ||||
Cash Flows from Financing Activities |
||||||||
Principal payments on long term debt |
(250,005 | ) | (250,005 | ) | ||||
Payments on capital lease obligations |
(77,488 | ) | | |||||
Sale of Common Stock |
761,789 | 188,294 | ||||||
Net cash provided by/(used) in financing activities |
434,296 | (61,711 | ) | |||||
Net increase in cash and cash equivalents |
907,754 | 993,048 | ||||||
Cash and cash equivalents, beginning of period |
3,068,107 | 2,873,576 | ||||||
Cash and cash equivalents, end of period |
$ | 3,975,861 | $ | 3,866,624 | ||||
The accompanying notes to the financial statements are an integral part of this statement.
THE
LPA GROUP INCORPORATED,
THE LPA GROUP OF NORTH CAROLINA, P.A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2010 AND 2009
Note A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Principals of Combination:
The combined condensed financial statements include the accounts of the following commonly owned
corporations (the Company):
THE LPA GROUP INCORPORATED
THE LPA GROUP OF NORTH CAROLINA, P.A.
THE LPA GROUP, P.C.
THE LPA DESIGN GROUP, INC.
HORIZON ARCHITECTS, P.C.
LPACIFIC GROUP INCORPORATED
THE LPA GROUP OF CANADA INC
Investments in joint ventures, over which the Company exercises significant influence, are
accounted for under the equity method. The Company renders services to its joint ventures and
records revenues in the period in which such services are provided. All intercompany balances and
transactions have been eliminated in consolidation.
Note B NATURE OF OPERATIONS:
The Company is an engineering, architectural and planning firm specializing in the construction of
airports, highways, bridges and other transportation infrastructure. The Companys fees are
derived from a variety of clients, the majority of whom are federal, state and local governments.
Note C INVESTMENT IN AFFILIATE:
The Companys investment in affiliate of $136,936 consists of an initial capital investment in,
and the undistributed net earnings from, its one third interest in Louisiana TIMED Managers
(LTM), a joint venture formed to manage a Louisiana Department of Transportation and
Development (DOTD) transportation construction contract. During the three months ended March
31, 2010 and 2009, the Company advanced $1,307,548 and $2,325,566, respectively to LTM in
labor and overhead related to the contract. As of March 31, 2010, $475,309 remains
uncollected. The Company has recognized $88,790 and $137,914 as
income from the unconsolidated
affiliate joint venture partnership during the three months ended March 31, 2010 and 2009,
respectively.
Conversely, the members are required to reimburse LTM for general and administrative expenses of
the joint venture and for the purchase of fixed assets. As of March 31, 2010 and December 31,
2009, the Company did not have a payable to LTM.
THE LPA GROUP INCORPORATED,
THE LPA GROUP OF NORTH CAROLINA, P.A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
THE LPA GROUP OF NORTH CAROLINA, P.A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2010 AND 2009
To date, the Company has received advance distributions totaling $3,770,000 from LTM. These
distributions represent advances from billings in excess of costs and estimated profits of the
joint venture. These advances bear no interest and have no specific repayment terms.
The Company includes equity income from unconsolidated joint ventures as a component of other
income as this income is derived from entities taxes as partnerships.
Summary financial information for LTM as of, and for the period ended, March 31, 2010, is presented
in the following table. LTM recognizes revenues from construction contracts on the
percentage-of-completion method, measured by the percentage of cost incurred to date to
estimated total cost for each contract.
Current assets |
$ | 9,940,580 | ||
Other assets |
11,343,554 | |||
Current liabilities |
20,873,328 | |||
Equity |
410,806 | |||
Contract revenues |
3,105,449 | |||
Contract expenses |
2,845,511 | |||
Other income |
6,431 | |||
Net income |
266,369 |
Note D NOTES PAYABLE TO BANK AND LONG-TERM DEBT:
The Company has a line of credit agreement with National Bank of South Carolina (NBSC) for an open
ended credit of $5,500,000. The agreement provides for variable interest to accrue at the banks
prime interest rate with interest paid monthly. The line is secured by accounts receivable and
property and equipment of the Company. The Company did not draw on the line during both the three
months ended March 31, 2010 and 2009. The line is due to renew on May 22, 2010.
Long-term debt at March 31, 2010 is as follows: |
||||
Note payable, NBSC, LIBOR plus 230 basis points,
due in monthly installments of $83,335, plus interest,
through November 2016, secured by accounts receivable
and property, plant and equipment of the Company. The
interest rate at March 31, 2010 was 3.25%. |
$ | 6,583,265 | ||
Less current portion long-term note payable |
( 1,000,020 | ) | ||
$ | 5,583,245 | |||
The line and note payable are subject to various covenants with the Bank. As of March 31, 2010 the
Company was in compliance with or had received waivers for compliance with these Bank loan
covenants.
THE LPA GROUP INCORPORATED,
THE LPA GROUP OF NORTH CAROLINA, P.A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
THE LPA GROUP OF NORTH CAROLINA, P.A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2010 AND 2009
MARCH 31, 2010 AND 2009
The five year maturity of long-term debt and future minimum lease payments under capital leases as
of March 31, 2010, is as follows:
Amount | ||||
For the nine months ending December 31, 2010 |
$ | 750,015 | ||
Fiscal year ending 2011 |
1,000,020 | |||
Fiscal year ending 2012 |
1,000,020 | |||
Fiscal year ending 2013 |
1,000,020 | |||
Fiscal year ending 2014 |
1,000,020 | |||
Thereafter |
1,833,170 | |||
$ | 6,583,265 | |||
Note F COMMITMENTS AND CONTINGENCES:
In the ordinary course of business, the Company has, from time to time, become a party to legal
claims and disputes. At March 31, 2010, management is not aware of any pending or threatened
litigation, or unasserted claims that would result in losses that would be material to the
financial statements. The Companys management in consultation with its legal counsel has recorded
a $50,000 reserve in the financial statements based upon its estimate of known claims.
Note G SHARE BASED COMPENSATION
The Company adopted the Equity Topic and the Compensation-Retirement Benefits Topic of the FASB
Accounting Standards Codification effective January 1, 2006. The cost of employee services
acquired through these Share-Based Compensation transactions have been recognized in the financial
statements. The fair value exercise price is determined annually based upon a weighted average
formula of the prior three audited financial statements. The shares vest over a three year period
from date of issue. As of March 31, 2010 shares issued were not fully vested. The amount expensed
during the three months ended March 31, 2010 as compensation was $17,855 and there was no
compensation expense during the comparable period in 2009. There was an accrued liability of
$609,927 related to share-based compensation arrangements as of March 31, 2010.
As of March 31, 2010, the Company had a fixed price stock option plan under which a single
principal may exercise stock options granted for up to 22,274 shares as follows: 10,331 shares in
2010, 3,714 shares in 2011, 4,114 shares in 2012 and 4,115 shares in 2013. The exercise price was
fixed in 2004. The plan requires the Company to issue additional shares of stock equal to
one-fourth of the shares exercised on the issuing four anniversary dates of the stock exercised.
The only contingency for issuance of these additional shares is the continued employment of the
principal. As of March 31, 2010 the Company has a contingent liability to issue 2,322 shares as
follows: 774 shares in 2010, 774 shares in 2011, 516 shares in 2012 and 258 shares in 2013.
THE LPA GROUP INCORPORATED,
THE LPA GROUP OF NORTH CAROLINA, P.A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
THE LPA GROUP OF NORTH CAROLINA, P.A., THE LPA GROUP, P.C.,
THE LPA DESIGN GROUP, INC., HORIZON ARCHITECTS, P.C.,
LPACIFIC GROUP INCORPORATED, AND THE LPA GROUP OF CANADA INC
COMBINED CONDENSED NOTES TO FINANCIAL STATEMENTS
MARCH 31, 2010 AND 2009
MARCH 31, 2010 AND 2009
If a change of control of the Company were to occur the exercise rights for future periods would
lapse and in exchange the Company would issue 740 shares for each year or partial year that the
principal was employed from January 2005 for a maximum of 10 years (7,740 shares). Additionally,
with a change of control, the Company is required to issue an equal number of shares that would
have been issued had the change of control not occurred and the principal had been employed for a
period of four years beyond the fourth anniversary of the last rights exercised by the principal.
Note H RECENT ACCOUNTING PRONOUNCEMENTS
In June 2009, the FASB issued authoritative guidance amending the timing and consideration of
analyses performed to determine if the Companys variable interests give it a controlling financial
interest in a variable interest entity, as well as requiring additional disclosures. The Company
adopted the provisions of this guidance on January 1, 2010. The adoption of this authoritative
guidance did not have a material impact on the condensed consolidated financial statements.
Note I SUBSEQUENT EVENTS
On May 3, 2010, the Michael Baker Corporation (Baker) entered into a Stock Purchase Agreement to
acquire 100% of the outstanding shares of the LPA Group Incorporated and all of its subsidiaries
and affiliates (LPA) for $59.4 million. This transaction was funded with $51.4 million of cash
and approximately $8.0 million of Bakers stock.
As required by the Subsequent Events Topic of the FASB Accounting Standards Codification,
management has considered subsequent events through July 15, 2010, the date of issuance, in
preparing the financial statements and notes hereto.