Attached files
| file | filename |
|---|---|
| EX-99.2 - EX-99.2 - CEB Inc. | d344200dex992.htm |
| 8-K - 8-K - CEB Inc. | d344200d8k.htm |
Exhibit 99.1
CXO Acquisition Holdings, LLC AND SUBSIDIARIES
Condensed Consolidated Financial Statements
Quarter Ended March 31, 2016 and 2015
CXO Acquisition Holdings, LLC AND SUBSIDIARIES
| TABLE OF CONTENTS | ||||
| CONDENSED CONSOLIDATED BALANCE SHEETS |
3 | |||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
4 | |||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
5 | |||
| NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS |
6 | |||
2
CXO Acquisition Holdings, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share amounts)
| March 31, 2016 | December 31, 2015 | |||||||
| (Unaudited) | ||||||||
| Assets |
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| Current assets |
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| Cash and cash equivalents |
$ | 11,804 | $ | 9,362 | ||||
| Accounts receivable, net of allowance for bad debts of $80 and $57 at March 31, 2016 and December 31, 2015, respectively |
17,979 | 4,899 | ||||||
| Unbilled receivables |
— | 8,366 | ||||||
| Deferred event costs |
3,669 | 877 | ||||||
| Deferred financing fees |
441 | 408 | ||||||
| Prepaid expenses and other |
683 | 458 | ||||||
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| Total current assets |
34,576 | 24,370 | ||||||
| Accounts receivable, non-current, net |
370 | 103 | ||||||
| Deferred financing fees, non-current, net |
494 | 690 | ||||||
| Property and equipment, net |
3,503 | 3,869 | ||||||
| Deferred event costs, non-current |
5 | 12 | ||||||
| Intangible assets, net |
17,371 | 18,523 | ||||||
| Goodwill |
65,780 | 65,780 | ||||||
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| Total Assets |
$ | 122,099 | $ | 113,347 | ||||
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| Liabilities |
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| Current Liabilities |
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| Accounts payable |
$ | 284 | $ | 1,162 | ||||
| Accrued expenses |
810 | 3,075 | ||||||
| Income tax payable |
366 | 1,806 | ||||||
| Current portion of term loan |
658 | 658 | ||||||
| Deferred revenue |
28,332 | 13,750 | ||||||
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| Total current liabilities |
30,450 | 20,451 | ||||||
| Deferred revenue, non-current |
717 | 103 | ||||||
| Deferred tax liability |
3,631 | 3,455 | ||||||
| Term loan |
64,320 | 64,484 | ||||||
| Other non-current liabilities |
250 | 226 | ||||||
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| Total liabilities |
99,366 | 88,719 | ||||||
| Redeemable preferred units, par value $1.00; 48,704 units authorized, 48,679 units issued and outstanding at each of March 31, 2016 and December 31, 2015 |
26,223 | 25,716 | ||||||
| Members’ Deficit |
||||||||
| Class A common units, par value $0.10; 25,634 units authorized; 25,621 units issued and outstanding at each of March 31, 2016 and December 31, 2015 |
2,562 | 2,562 | ||||||
| Class B common units, no-par value; 4,524 units authorized; 4,012 units issued and outstanding at each of March 31, 2016 and December 31, 2015 |
— | — | ||||||
| Additional paid-in-capital – preferred units |
(4,982 | ) | (4,982 | ) | ||||
| (Accumulated deficit) retained earnings |
(1,072 | ) | 1,332 | |||||
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| Total members’ deficit |
(3,492 | ) | (1,088 | ) | ||||
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| Total liabilities, redeemable preferred units, and members’ deficit |
$ | 122,099 | $ | 113,347 | ||||
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See accompanying notes to condensed consolidated financial statements.
3
CXO Acquisition Holdings, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Revenue |
$ | 2,120 | $ | 1,234 | ||||
| Cost of revenue |
639 | 853 | ||||||
| General and administrative expenses (including depreciation and amortization expense) |
3,501 | 2,961 | ||||||
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| Operating loss |
(2,020 | ) | (2,580 | ) | ||||
| Other Expenses |
||||||||
| Interest expense |
1,142 | 1,160 | ||||||
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| Loss before income tax benefit |
(3,162 | ) | (3,740 | ) | ||||
| Income tax benefit |
(1,265 | ) | (1,496 | ) | ||||
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| Net loss |
$ | (1,897 | ) | $ | (2,244 | ) | ||
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See accompanying notes to condensed consolidated financial statements.
4
CXO Acquisition Holdings, LLC AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
| Three Months Ended March 31, | ||||||||
| 2016 | 2015 | |||||||
| Cash flows from operating activities |
||||||||
| Net loss |
$ | (1,897 | ) | $ | (2,244 | ) | ||
| Adjustments to reconcile net income to net cash flows provided by operating activities |
||||||||
| Depreciation and amortization |
1,749 | 1,447 | ||||||
| Deferred income taxes |
176 | 70 | ||||||
| Changes in operating assets and liabilities: |
||||||||
| Accounts receivable, net |
(13,347 | ) | (17,643 | ) | ||||
| Unbilled receivables |
8,366 | 8,307 | ||||||
| Deferred event costs |
(2,785 | ) | (3,048 | ) | ||||
| Prepaid expenses and other |
(225 | ) | (245 | ) | ||||
| Accounts payable |
(878 | ) | (1,376 | ) | ||||
| Accrued expenses |
(2,265 | ) | (1,543 | ) | ||||
| Deferred revenue |
15,196 | 16,664 | ||||||
| Income tax payable |
(1,440 | ) | (1,568 | ) | ||||
| Other non-current liabilities |
24 | 275 | ||||||
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| Net cash flows provided by (used in) operating activities |
2,674 | (904 | ) | |||||
| Cash flows from investing activities |
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| Purchase of property and equipment |
(68 | ) | (334 | ) | ||||
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| Net cash flows used in investing activities |
(68 | ) | (334 | ) | ||||
| Cash flows from financing activities |
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| Borrowings from revolver |
— | 2,100 | ||||||
| Payments on term loan |
(164 | ) | (164 | ) | ||||
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| Net cash flows (used in) provided by financing activities |
(164 | ) | 1,936 | |||||
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| Net increase in cash and cash equivalents |
2,442 | 698 | ||||||
| Cash and cash equivalents, beginning of period |
9,362 | 1,757 | ||||||
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| Cash and cash equivalents, end of period |
$ | 11,804 | $ | 2,455 | ||||
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See accompanying notes to condensed consolidated financial statements.
5
CXO Acquisition Holdings, LLC AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
| 1. | NATURE OF THE BUSINESS AND BASIS OF PRESENTATION |
CXO Acquisition Holdings, LLC (“Company”) was formed on September 17, 2012 in the state of Delaware. The Company provides solutions that drive peer-to-peer engagement, networking and leadership development to C-Suite executives. The principal offices are located in Portland, Oregon.
The accompanying condensed consolidated financial statements have been prepared in accordance with US generally accepted accounting principles (“GAAP”) for interim financial information. Accordingly, certain information and disclosures required for complete consolidated financial statements are not included. It is recommended that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and related notes in the Company’s consolidated financial statements for the year ended December 31, 2015.
The accompanying condensed consolidated financial statements include the accounts of CXO Acquisition Co. and Sports Leadership Acquisition Co. In management’s opinion, all adjustments, consisting of a normal recurring nature, considered necessary for a fair presentation of the consolidated financial position, results of operations, and cash flows at the dates and in the periods presented have been included. The consolidated balance sheet at December 31, 2015 has been derived from the financial statements that were audited by the Company’s independent registered public accounting firm. The results of operations for the three months ended March 31, 2016 may not be indicative of the results that may be expected in the year ended December 31, 2016 or any other period within 2016.
| 2. | RECENT ACCOUNTING PRONOUNCEMENTS |
Not Yet Adopted
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). This ASU requires entities to recognize revenue through the application of a five-step model, which includes identification of the contract, identification of the performance obligations, determination of the transaction price, allocation of the transaction price to the performance obligations, and recognition of revenue as the entity satisfies the performance obligations. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which provided a one-year deferral of the effective date to periods beginning after December 15, 2017 with early adoption permitted as early as the initial effective date. The Company is in the process of evaluating the methods of adoption and assessing its impact on the Company’s consolidated financial statements and related disclosures.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). This ASU requires entities to recognize assets and liabilities for most leases on their balance sheets. It also requires additional qualitative and quantitative disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash flows arising from leases. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the effect that this standard will have on its consolidated financial statements and related disclosures.
| 3. | TAXATION |
The effective tax rate was 40% in the three months ended March 31, 2016 and 2015. The Company’s effective tax rate in the three months ended March 31, 2016 and 2015 differed from the federal statutory rate of 35% primarily due to state income taxes.
| 4. | REDEEMABLE PREFERRED UNITS |
The Company has authorized the issuance of up to 48,704 preferred units at the price of $1 per unit as of March 31, 2016 and December 31, 2015. Holders of preferred units are entitled to voting rights and distributions in accordance with the LLC agreement. The preferred units accrue a return of 8% per annum, compounding on the first day of each fiscal quarter, which totaled $507 thousand and $454 thousand for the three months ended March 31, 2016 and March 31, 2015, respectively. The preferred return is payable upon an election to have a discretionary distribution from the management committee. The cumulative preferred return at March 31, 2016 and December 31, 2015 was $11,884 thousand and $11,376 thousand.
These preferred units are redeemable at any time after September 28, 2017, if the unit holders holding over 50% of the preferred units then outstanding choose to redeem. Due to this redemption option, these units are classified outside of members’ deficit. In the event of any liquidation, dissolution or winding up of the Company, either voluntary or involuntary, the holders of the preferred units shall be entitled to receive, prior and in preference to distributions specified by the LLC agreement of any of the assets to the holders of class A common and class B common units by reason of their ownership thereof, and amount equal to all unreturned contributions plus any accrued and unpaid preferred return.
6
CXO Acquisition Holdings, LLC AND SUBSIDIARIES
| 5. | RELATED PARTY TRANSACTIONS |
In each of the three months ended March 31, 2016 and 2015, the Company paid management fees of $118 thousand to a member of the Company, Leeds Equity Partners V LP.
| 6. | SUBSEQUENT EVENTS |
The Company evaluated subsequent events through March 2, 2017, which is the date the condensed consolidated financial statements were available to be issued.
On April 29, 2016, CEB Inc. acquired the assets of CXO Acquisition Co., Sports Leadership Acquisition Co., Evanta Ventures, Inc., and Sports leadership Institute, Inc. CEB Inc. paid cash consideration of $285,500 thousand. That acquisition resulted in term debt of $65,142 thousand being paid-off in full at that date. Additionally, the acquisition triggered a liquidity event for the Company’s preferred stock and profit interest units.
7