EX-99.1 2 d32937dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

On June 24, 2015, Civitas Solutions, Inc. (the “Company”) announced its decision to discontinue ARY services in the states of Florida, Indiana, Louisiana, North Carolina and Texas. On November 2, 2015, we entered into an asset purchase agreement to sell our ARY operations in the state of North Carolina. As consideration the buyer will assume the Company’s lease obligations and service delivery obligations in exchange for the assets of the business, excluding working capital items, and the Company will make a cash payment of $1.25 million to the buyer. This transaction was completed on December 1, 2015. In connection with the sale, the Company will record a loss of $1.25 million in the first quarter of fiscal 2016. In the other four states, the Company is working with its public partners to transition each child or adolescent into other provider programs by the end of the first quarter of fiscal 2016. The pro forma effect of the divestiture of the ARY operations in the five states is reflected in the Unaudited Pro Forma Condensed Consolidated Financial Information. The Company assessed the disposal group under the guidance of ASU 2014-08, “Discontinued Operations and Disclosures of Disposals of Components of an Entity” and concluded that the planned divestiture does not represent a “strategic shift,” and therefore will not be classified as discontinued operations.

The following Unaudited Pro Forma Condensed Consolidated Financial Information was prepared in accordance with GAAP and pursuant to U.S. Securities and Exchange Commission Regulation S-X Article 11, and present the pro forma results of operations of the Company, based upon the historical information, after giving effect to the divestiture of ARY operations in the five states and related adjustments described in the Notes to the Unaudited Pro Forma Condensed Consolidated Financial Information. The Unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine months ended June 30, 2015 and the fiscal year ended September 30, 2014 are presented as if the divestiture had occurred on October 1, 2013. The pro forma effect of the divestiture on the Condensed Consolidated Balance Sheet as of June 30, 2015 is immaterial; therefore, it has not been included in the following Unaudited Pro Forma Condensed Consolidated Financial Information.

The following Unaudited Pro Forma Condensed Consolidated Financial Information is presented for illustrative and informational purposes only and is not intended to represent or be indicative of the results of operations that would actually have been recorded if the divestiture of the ARY operations in Florida, Indiana, Louisiana, North Carolina and Texas had occurred during the periods presented. In addition, the Unaudited Pro Forma Condensed Consolidated Financial Information is not intended to represent the Company’s results of operations for any future date or period.

The unaudited pro forma financial information includes the adjustments deemed appropriate by the Company’s management for the fair presentation of the divestiture. An explanation of the adjustments is set forth under the Notes to Unaudited Pro Forma Condensed Consolidated Financial Information.

The unaudited pro forma financial information should be read in conjunction with the Company’s historical audited Consolidated Financial Statements for the years ended September 30, 2014, 2013 and 2012 included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2014 and the unaudited Condensed Consolidated Financial Statements for the nine months ended June 30, 2015 and 2014 included in the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.

 

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Civitas Solutions, Inc

Unaudited Pro Forma Condensed Consolidated Statement of Operations

Nine Months Ended June 30, 2015

($ in thousands except share and per share amounts)

 

     Reported
Nine Months
Ended
June 30, 2015
    (a)
Pro Forma
Adjustments
    Pro Forma
Nine Months
Ended
June 30, 2015
 

Net revenue

   $ 1,015,764      $ 37,672      $ 978,092   

Cost of revenue (exclusive of depreciation and amortization expense shown below)

     786,024        30,095        755,929   

Operating expenses:

      

General and administrative

     119,452        4,920        114,532   

Depreciation and amortization

     64,278        9,311 (b)      54,967   
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     183,730        14,231        169,499   
  

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     46,010        (6,654     52,664   

Other income (expense):

      

Management fee of related party

     (162     —          (162

Other expense, net

     (333     —          (333

Extinguishment of debt

     (17,058     —          (17,058

Interest expense

     (28,868     —          (28,868
  

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations before income taxes

     (411     (6,654     6,243   

(Benefit) provision for income taxes

     (185     (2,995 )(d)      2,810   
  

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations

   $ (226   $ (3,659   $ 3,433   
  

 

 

   

 

 

   

 

 

 

(Loss) income per common share, basic and diluted:

      

(Loss) income from continuing operations, basic and diluted

   $ (0.01     $ 0.09   
  

 

 

     

 

 

 

Weighted average number of common shares outstanding, basic

     36,950,000          36,950,000   

Weighted average number of common shares outstanding, diluted

     36,950,000          37,046,897   

 

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Civitas Solutions, Inc

Unaudited Pro Forma Condensed Consolidated Statement of Operations

Fiscal Year Ended September 30, 2014

($ in thousands except share and per share amounts)

 

     Reported
Fiscal Year
Ended
September 30, 2014
    (c)
Pro Forma
Adjustments
    Pro Forma
Fiscal Year
Ended
September 30, 2014
 

Net revenue

   $ 1,255,838      $ 56,894      $ 1,198,944   

Cost of revenue (exclusive of depreciation and amortization expense shown below)

     983,043        46,902        936,141   

Operating expenses:

      

General and administrative

     145,041        7,931        137,110   

Depreciation and amortization

     67,488        1,915        65,573   
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     212,529        9,846        202,683   
  

 

 

   

 

 

   

 

 

 

Income from operations

     60,266        146        60,120   

Other income (expense):

      

Management fee of related party

     (9,488     —          (9,488

Other expense, net

     374        —          374   

Extinguishment of debt

     (14,699     —          (14,699

Interest expense

     (69,349     —          (69,349
  

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations before income taxes

     (32,896     146        (33,042

(Benefit) provision for income taxes

     (11,463     51 (d)      (11,514
  

 

 

   

 

 

   

 

 

 

(Loss) income from continuing operations

   $ (21,433   $ 95      $ (21,528
  

 

 

   

 

 

   

 

 

 

Loss per common share, basic and diluted:

      

Loss income from continuing operations, basic and diluted

   $ (0.84     $ (0.84
  

 

 

     

 

 

 

Weighted average number of common shares outstanding, basic and diluted

     25,538,493          25,538,493   

 

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Note to Unaudited Pro Forma Condensed Consolidated Financial Information

Pro Forma Adjustments

The following is a summary of the pro forma adjustments reflected in the Unaudited Pro Forma Condensed Consolidated Financial Information based on preliminary estimates, which may change as additional information is obtained:

 

a) Represents the elimination of the historical financial results of ARY operations in Florida, Indiana, Louisiana, North Carolina and Texas for the nine months ended June 30, 2015.
b) Pro forma adjustment includes the intangible asset impairment charge of $8.2 million related to the ARY operations in Florida, Indiana, Louisiana, North Carolina and Texas that was recorded in the nine months ended June 30, 2015.
c) Represents the elimination of the historical financial results of ARY operations in Florida, Indiana, Louisiana, North Carolina and Texas for the fiscal year ended September 30, 2014.
d) The tax effect of the pro forma adjustments was determined based on the Company’s effective tax rate for each respective period presented.

 

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