NOVATION COMPANIES, INC. - FORM 8-K - EX-99.2 - UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS - April 17, 2014

Attached files

file filename
8-K - CURRENT REPORT - NOVATION COMPANIES, INC.novation_8k.htm
EX-2.1 - PURCHASE AND SALE AGREEMENT - NOVATION COMPANIES, INC.exhibit2-1.htm
EX-99.1 - PRESS RELEASE - NOVATION COMPANIES, INC.exhibit99-1.htm

Exhibit 99.2

NOVATION COMPANIES, INC.
PRO FORMA CONSOLIDATED BALANCE SHEETS
As of December 31, 2013
(Unaudited, dollars in thousands, except share and per share amounts)
 
{e}
Sale of
      Historical       StreetLinks       Pro Forma
Assets            
     Current Assets
          Cash and cash equivalents $ 9,267 $ 51,904 {a}{b} $ 61,171
          Mortgage securities 3,728 —   3,728
          Notes receivable, net 262 (90 ) {b} 172
          Service fee receivable, net   5,274 (4,064 ) {b}{c} 1,210
          Restricted cash 1,035 — 1,035
          Other current assets 3,071 (601 ) {b} 2,470
     Total current assets 22,637 47,149 69,786
     Non-Current Assets
          Property and equipment, net of accumulated depreciation 4,925   (909 ) {b} 4,016
          Goodwill 3,170 (3,170 ) {b}   —
          Deferred income tax asset, net 1,101 — 1,101
          Other assets 2,209 (1,438 ) {b} 771
     Total non-current assets   11,405   (5,517 ) 5,888
               Total assets $ 34,042 $ 41,632 $ 75,674
Liabilities and Shareholders' Deficit  
     Liabilities:
          Current Liabilities
               Accounts payable $ 3,453 $ (3,122 ) {b} $ 331
               Accrued expenses 6,406 (954 ) {b}{f} 5,452
               Deferred revenue 731 (621 ) {b} 110
               Note payable to related party 1,250 — 1,250
               Deferred income tax liability, net 1,101 — 1,101
               Other current liabilities 424 (178 ) {b} 246
          Total current liabilities 13,365 (4,875 ) 8,490
          Non-Current Liabilities
               Senior notes 83,867 — 83,867
               Note payable to related party 2,613 — 2,613
               Other liabilities 2,417 (224 ) {b} 2,193
          Total non-current liabilities 88,897 (224 ) 88,673
                    Total liabilities 102,262 (5,099 ) 97,163
     Commitments and contingencies
 
     Shareholders' deficit:
          Capital stock, $0.01 par value per share, 120,000,000
               shares authorized:
          Common stock, 91,479,519 shares issued and outstanding 915 — 915
          Additional paid-in capital 739,468 — 739,468
          Accumulated deficit      (811,742 )        46,767 {d}      (764,975 )
          Accumulated other comprehensive income 3,103 — 3,103
               Total Novation Companies, Inc. shareholders' (deficit) (68,256 ) 46,767 (21,489 )
          Noncontrolling interests 36 (36 ) {b} —
               Total shareholders' deficit (68,220 ) 46,731 (21,489 )
                    Total liabilities and shareholders' deficit $ 34,042 $ 41,632 $ 75,674

See accompanying notes to the unaudited pro forma consolidated financial statements


NOVATION COMPANIES, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2013
(Unaudited, dollars in thousands, except share and per share amounts)

{h}
Sale of
      Historical       StreetLinks       Pro Forma
Income and Revenues:       
     Service fee income $ 153,825 $ (143,553 )   {g}   $ 10,272
     Interest income – mortgage securities 5,468 — 5,468
Total 159,293 (143,553 ) 15,740
 
Costs and Expenses:
     Cost of services 127,339 (124,998 )   {g}   2,341
     Selling, general and administrative expense 34,158 (12,163 )   {g}   21,995
Total 161,497 (137,161 ) 24,336
 
     Other income 1,680 (999 )   {g}   681
     Interest expense (3,217 ) 35   {g}   (3,182 )
 
Loss before income taxes (3,741 ) (7,356 )   (11,097 )
Income tax expense 62,756 — 62,756
Net loss from continuing operations (66,497 ) (7,356 ) (73,853 )
Loss from discontinued operations, net of income taxes (1,015 ) —   (1,015 )
Net loss (67,512 ) (7,356 ) (74,868 )
Less: Net income (loss) attributable to noncontrolling interests 17 (634 )   {g}   (617 )
Net loss attributable to Novation $ (67,529 ) $ (6,722 ) $ (74,251 )
Earnings Per Common Share attributable to Novation:  
     Basic $ (0.74 ) $ (0.07 ) $ (0.82 )
     Diluted $ (0.74 )   $ (0.07 ) $ (0.82 )
Weighted average basic common shares outstanding      90,776,211      90,776,211        90,776,211
Weighted average diluted common shares outstanding 90,776,211 90,776,211 90,776,211

See accompanying notes to the unaudited pro forma consolidated financial statements


NOVATION COMPANIES, INC.
PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the Year Ended December 31, 2012
(Unaudited, dollars in thousands, except share and per share amounts)

{h}
Sale of
      Historical       StreetLinks       Pro Forma
Income and Revenues:       
     Service fee income $ 185,906 $ (176,645 )   {g}   $ 9,261
     Interest income – mortgage securities 4,753 — 4,753
Total 190,659 (176,645 ) 14,014
 
Costs and Expenses:
     Cost of services 160,594 (157,795 )   {g}   2,799
     Selling, general and administrative expense 29,003 (11,557 )   {g}   17,446
Total 189,597 (169,352 ) 20,245
 
     Other income 20 56   {g}   76
     Interest expense (3,131 ) 39   {g}   (3,092 )
 
Loss before income taxes (2,049 ) (7,198 ) (9,247 )
Income tax benefit (63,517 ) —   (63,517 )
Net income from continuing operations 61,468 (7,198 ) 54,270
Loss from discontinued operations, net of income taxes   (5,776 ) — (5,776 )
Net income 55,692 (7,198 ) 48,494
Less: Net loss attributable to noncontrolling interests (3,495 ) (695 )   {g}   (4,190 )
Net income attributable to Novation $ 59,187   $ (6,503 ) $ 52,684
Earnings Per Common Share attributable to Novation:    
     Basic $ 0.65 $ (0.07 ) $ 0.58
     Diluted $ 0.65   $ (0.07 )   $ 0.58
Weighted average basic common shares outstanding      90,577,541      90,577,541      90,577,541
Weighted average diluted common shares outstanding 91,426,216 91,426,216 91,426,216

See accompanying notes to the unaudited pro forma consolidated financial statements


NOVATION COMPANIES, INC.
NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

     
      {a}         Represents adjustment to record cash proceeds from sale of StreetLinks, LLC of $53.9M. Please note that proceeds amount was calculated using the Novation ownership percentage subsequent to the termination of the note payable to related party, as disclosed in the Company's current report on Form 8-K filed April 16, 2014.
 
{b} Represents adjustments to eliminate the assets, liabilities, and noncontrolling interests of StreetLinks, LLC.
   
{c} Adjustment amount includes the balance of intercompany obligations due to the Company from StreetLinks, LLC.
 
{d} Represents adjustments to record the gain on the sale of StreetLinks, LLC.
 
{e}   Represents the Consolidated Balance Sheet as of December 31, 2013 as included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.
 
{f} Adjustment amount includes accrued transaction expense, which is comprised of the commission owed to our financial advisor of approximately $1.3 million and estimated legal fees of approximately $0.3 million.
 
{g} Represents adjustments to eliminate the results of operations of StreetLinks, LLC.
  
{h} Represents the Consolidated Statement of Operations for the years ended December 31, 2013 and 2012 as included in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.

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