EX-99.2 12 v81078ex99-2.txt EXHIBIT 99.2 EXHIBIT 99.2 Health Personnel Options Corporation Unaudited Condensed Balance Sheets
March 31 June 30 2002 2001 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 1,000 $ 1,000 Accounts receivable, net of allowance for doubtful accounts of $229,806 at March 31, 2002 and $100,000 at June 30, 2001 12,823,951 5,603,956 Prepaid expenses and other current assets 479,042 221,979 Income taxes receivable 535,010 -- Deferred income taxes 89,624 468,753 ------------ ------------ Total current assets 13,928,627 6,295,688 Equipment and leasehold improvements, net 1,658,200 802,100 Goodwill, net 6,066,795 6,066,795 Deferred income taxes 87,924 87,924 Workers' compensation restricted deposits 146,481 -- Other assets 11,586 40,152 ------------ ------------ Total assets $ 21,899,613 $ 13,292,659 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 1,745,958 $ 1,672,560 Accrued expenses 4,076,707 2,034,845 Line of credit 1,255,007 696,101 Current portion of long-term debt 455,188 332,423 ------------ ------------ Total current liabilities 7,532,860 4,735,929 Deferred income taxes 83,106 43,253 Long-term debt 1,290,512 1,555,476 Shareholders' equity: Preferred stock, $1,000 par value Authorized shares -- 4,257.14 Issued and outstanding shares -- 3,304.76 3,304,760 3,304,760 Common stock, no par value (at amount paid in) Authorized shares -- 1,000,000 Issued and outstanding shares -- 194,200 2,425,400 2,425,400 Additional paid-in capital 2,095,240 2,095,240 Retained earnings (Accumulated deficit) 5,457,735 (867,399) ------------ ------------ 13,283,135 6,958,001 Less: Treasury Stock at cost; 21,100 shares of common stock 290,000 -- Total shareholders' equity 12,993,135 6,958,001 ------------ ------------ Total liabilities and shareholders' equity $ 21,899,613 $ 13,292,659 ============ ============
See accompanying notes to unaudited condensed financial statements. Health Personnel Options Corporation Unaudited Condensed Statements of Operations
Three Months Ended March 31, ------------------------------ 2002 2001 ------------ ------------ Revenues $ 29,650,175 $ 8,206,358 Cost of services 22,125,824 5,634,283 ------------ ------------ 7,524,351 2,572,075 Other operating expenses: Corporate, general and administrative 4,106,998 1,526,560 Depreciation and amortization 161,493 169,105 ------------ ------------ 4,268,491 1,695,665 ------------ ------------ Operating income 3,255,860 876,410 Interest expense, net (57,657) (146,323) ------------ ------------ Income before income taxes 3,198,203 730,087 Income tax expense 1,241,204 7,700 ------------ ------------ Net income $ 1,956,999 $ 722,387 ============ ============
See accompanying notes to unaudited condensed financial statements. Health Personnel Options Corporation Unaudited Condensed Statements of Operations
Nine Months Ended March 31, ------------------------------ 2002 2001 ------------ ------------ Revenues $ 84,771,098 $ 21,590,850 Cost of services 63,687,991 15,168,484 ------------ ------------ 21,083,107 6,422,366 Other operating expenses: Corporate, general and administrative 10,128,443 4,295,188 Depreciation and amortization 313,221 517,982 ------------ ------------ 10,441,664 4,813,170 ------------ ------------ Operating income 10,641,443 1,609,196 Interest expense, net (172,657) (419,322) ------------ ------------ Income before income taxes 10,468,786 1,189,874 Income tax expense 4,143,652 9,523 ------------ ------------ Net income $ 6,325,134 $ 1,180,351 ============ ============
See accompanying notes to unaudited condensed financial statements. Health Personnel Options Corporation Unaudited Condensed Statements of Shareholders' Equity
PREFERRED STOCK COMMON STOCK ADDITIONAL -------------------- --------------------- PAID-IN RETAINED SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL --------- ---------- ------- ----------- ---------- ----------- ------------ Balances June 30, 2000 2,828.57 $2,828,570 194,200 $ 2,425,400 $1,571,430 $(3,947,476) $ 2,877,924 Conversion of note payable 476.19 476,190 -- -- 523,810 -- 1,000,000 Net income and comprehensive income -- -- -- -- -- 3,080,077 3,080,077 -------- ---------- ------- ----------- ---------- ----------- ------------ Balances June 30, 2001 3,304.76 3,304,760 194,200 2,425,400 2,095,240 (867,399) 6,958,001 Repurchases of Common Stock -- -- (21,100) (290,000) -- -- (290,000) Net income and comprehensive income 6,325,134 6,325,134 --------- ---------- ------- ----------- ---------- ----------- ------------ Balances March 31, 2002 3,304.76 $3,304,760 173,100 $ 2,135,400 $2,095,240 $ 5,457,735 $ 12,993,135 ========= ========== ======= =========== ========== =========== ============
See accompanying notes to unaudited condensed financial statements. Health Personnel Options Corporation Unaudited Condensed Statements of Cash Flows
NINE MONTHS ENDED MARCH 31, ---------------------------- 2002 2001 ----------- ----------- OPERATING ACTIVITIES Net income $ 6,325,134 $ 1,180,351 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 313,221 517,982 Deferred income taxes 331,058 -- Changes in operating assets and liabilities: Accounts receivable (7,219,995) (1,059,697) Prepaid expenses and other current assets (131,796) (77,462) Accounts payable 393,570 (289,401) Accrued expenses 1,031,423 1,169,718 ----------- ----------- Net cash provided by operating activities 1,042,615 1,441,491 INVESTING ACTIVITIES Purchases of equipment and leasehold improvements (1,169,322) (120,653) ----------- ----------- Net cash used in investing activities (1,169,322) (120,653) FINANCING ACTIVITIES Increase in line of credit 558,906 -- Proceeds from long-term debt 290,300 -- Repayments of long-term debt (432,499) (1,320,838) Purchase of treasury stock (290,000) -- ----------- ----------- Net cash provided by (used in) financing activities 126,707 (1,320,838) ----------- ----------- Decrease in cash -- -- Cash at beginning of year 1,000 1,000 ----------- ----------- Cash at end of year $ 1,000 $ 1,000 =========== =========== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION Cash paid for interest $ 172,073 $ 443,172 =========== =========== Cash paid for taxes $ 4,260,210 $ 9,478 =========== ===========
See accompanying notes to unaudited condensed financial statements. Health Personnel Options Corporation Notes to Unaudited Condensed Financial Statements March 31, 2002 1. BASIS OF PRESENTATION The condensed balance sheet as of March 31, 2002 and the condensed statements of operations and cash flows for the three and nine month periods ended March 31, 2002 and 2001 of Health Personnel Options Corporation (the "Company" or "HPOC") are unaudited. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation for the periods presented have been included. These interim unaudited condensed financial statements for 2002 and 2001 should be read in conjunction with the June 30, 2001 audited financial statements and notes thereto. The results of operations for the three and nine months ended March 31, 2002 and 2001 are not necessarily indicative of the results to be expected for the full year. 2. LINE OF CREDIT The Company has a $4,500,000 revolving line of credit with The First National Bank of Southwest Ohio (First National). Borrowings totaled $1,255,007 at March 31, 2002 and bear interest at 1.0% over the prime rate (4.75% at March 31, 2002). The line of credit is collateralized by a security interest in all assets of the Company and expires on July 13, 2002. 3. LONG-TERM DEBT Long-term debt obligations are summarized as follows:
March 31, 2002 -------------- $290,300 note payable to First National at the prime rate (4.75% at March 31, 2002); due in monthly installments of $24,986, including interest through September 21, 2002 $ 122,964 $1,000,000 note payable to First National; variable interest rate at the prime rate plus 1.0 percent (4.75% at March 31, 2002); due in monthly installments of $16,028, including interest through March 29, 2004; collateralized by all assets of the Company 652,854 $550,025 note payable to First National; variable interest rate at the prime rate plus 1.0 percent (4.75% at March 31, 2002); due in monthly installments of $9,031, including interest through March 30, 2003; collateralized by all assets of the Company 280,471
Health Personnel Options Corporation Notes to Unaudited Condensed Financial Statements March 31, 2002 3. LONG-TERM DEBT (CONT'D) Note payable to shareholder; fixed interest rate of 5.75%; interest due quarterly; principal due April 8, 2004 459,280 Capitalized equipment leases; payable $11,386 monthly including interest from 7.75% to 9.8% 230,131 ----------- 1,745,700 Current portion (455,188) ----------- Long-term debt $ 1,290,512 ===========
4. SUBSEQUENT EVENTS On April 19, 2002, Health Personnel Options Corporation was acquired by On Assignment, Inc. The total purchase price paid by On Assignment, Inc. to the shareholders of the Company was approximately $144 million, consisting of the sum of approximately $66 million in cash paid, debt assumed of approximately $9 million and the issuance of 3,902,000 shares of On Assignment, Inc. common stock valued at $73,334,000 less $5 million related to an earn-out provision included in the Agreement and Plan of Merger, dated as of March 27, 2002 (Merger Agreement). The earn-out provision requires $5 million, currently held in escrow, to be paid to the Company's shareholders if the revenues of certain operations conducted by the Company meet or exceed specified target revenue amounts for the calendar year 2002. Under the terms of the Merger Agreement between the Company, On Assignment Acquisition Corp. (Acquisition Subsidiary) and On Assignment, Inc., the Company was merged into the Acquisition Subsidiary, with the Acquisition Subsidiary being the surviving corporation.