Exhibit 99.1
PRO FORMA FINANCIAL INFORMATION
On May 31, 2002, Transcend Services, Inc. ("Transcend" or the "Company") sold
certain assets and the operations of Cascade Health Information Software, Inc.
("Cascade"), a wholly owned subsidiary of the Company, to QuadraMed Operating
Corporation ("QuadraMed") for $1,250,000 payable in cash and the assumption of
certain liabilities of Cascade (the "Transaction"), all pursuant to an Asset
Purchase Agreement dated May 31, 2002 by and among the parties to the
transaction (the "Agreement"). QuadraMed's performance and observance of all of
the terms, conditions and covenants of the Agreement are unconditionally and
irrevocably guaranteed by QuadraMed Corporation. The assets sold included, among
other items, intellectual property and contract rights related to Xxxxxxx's
operations, trade accounts receivable, prepaid expenses and computer equipment.
QuadraMed assumed the obligations under the acquired contract rights, accounts
payable and accrued liabilities.
The following unaudited Pro Forma Consolidated Condensed Balance Sheet as of
March 31, 2002, gives effect to the Transaction as if it had occurred on that
date. The following unaudited Pro Forma Consolidated Condensed Statements of
Operations for the year ended December 31, 2001 and the three months ended March
31, 2002 have been prepared to reflect adjustments to Transcend's historical
consolidated results of operations to give effect to the Transaction as if the
Transaction had occurred on January 1 of each period presented.
These Pro Forma Consolidated Condensed Financial Statements are not necessarily
indicative of the results of operations which would have been attained had the
Transaction been consummated on the dates indicated or which may be attained in
the future. These Pro Forma Consolidated Condensed should be read in conjunction
with the historical consolidated financial statements and notes thereto of
Transcend included in the Quarterly Report on Form 10-Q of Transcend for the
quarterly period ended March 31, 2002 and the Annual Report on Form 10-K of
Transcend for the year ended December 31, 2001.
Transcend Services, Inc.
Consolidated Condensed Pro Forma Balance Sheet
As of March 31, 2002
Pro Form
As Reported Adjustments Pro Forma
March 31, 2002 (Note 2) March 31, 2002
ASSETS
Cash and cash equivalents $ 13,000 $ 877,000 $ 890,000
Accounts receivable, net 1,370,000 (313,000) 1,057,000
Prepaid expenses and other current assets 233,000 (25,000) 208,000
------------- ------------
Total current assets 1,616,000 2,155,000
------------- ------------
Property and equipment, net 1,646,000 (188,000) 1,458,000
Other assets 53,000 53,000
------------- ------------
Total assets $ 3,315,000 $ 3,666,000
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 147,000 (5,000) $ 142,000
Accrued compensation and benefits 359,000 (18,000) 341,000
Other accrued liabilities 1,029,000 (688,000) 341,000
------------- ------------
Total current liabilities 1,535,000 824,000
------------- ------------
Preferred stock 3,000 3,000
Common stock 225,000 225,000
Additional paid-in capital 28,141,000 28,141,000
Subscription receivable (126,000) (126,000)
Accumulated deficit (26,463,000) 1,062,000 (25,401,000)
------------- ------------
Total stockholders' equity 1,780,000 2,842,000
------------- ------------
Total liabilities and stockholders' equity $ 3,315,000 $ 3,666,000
============= ============
See accompanying Notes to Pro Forma Consolidated Condensed
Financial Statements.
Transcend Services, Inc.
Consolidated Condensed Pro Forma Statements of Operations
For the Year Ended December 31, 2001 and the Three Months Ended March 31, 2002
Pro Forma
As Reported Adjustments (Note 3) Pro Forma
------------------------ ------------------------ ------------------------
Year 3 Months Year 3 Months Year 3 Months
Ended Ended Ended Ended Ended Ended
12/31/2001 3/31/2002 12/31/2001 3/31/2002 12/31/2001 3/31/2002
Revenue $13,785,000 $3,258,000 ($1,968,000 ($345,000) $11,817,000 $2,913,000
Direct costs 9,846,000 2,358,000 (718,000) (166,000) 9,128,000 2,192,000
------------------------ ------------------------ ------------------------
Gross profit 3,939,000 900,000 (1,250,000) (179,000) 2,689,000 721,000
------------------------ ------------------------ ------------------------
Operating expenses:
Sales and marketing 852,000 149,000 (474,000) (65,000) 378,000 84,000
Research and development 870,000 151,000 (546,000) (67,000) 324,000 84,000
General and administrative 2,880,000 708,000 (429,000) (118,000) 2,451,000 590,000
------------------------ ------------------------ ------------------------
Total operating expenses 4,602,000 1,008,000 (1,449,000) (250,000) 3,153,000 758,000
------------------------ ------------------------ ------------------------
Operating loss (663,000) (108,000) 199,000 71,000 (464,000) (37,000)
Interest expense, net (18,000) (1,000) (18,000) (1,000)
Loss on legal settlement (576,000) 0 (576,000) 0
Gain on sale of assets 553,000 0 1,051,000 1,155,000 1,604,000 1,155,000
------------------------ ------------------------
Income (loss) before income taxes and discontinued (704,000) (109,000) 546,000 1,117,000
operations
Income tax benefit 116,000 0 116,000 0
------------------------ ------------------------
Income (loss) before discontinued operations (588,000) (109,000) 662,000 1,117,000
Loss from discontinued operations 0 0 (199,000) (71,000) (199,000) (71,000)
------------------------ ------------------------
Net (income) loss (588,000) (109,000) 463,000 1,046,000
Dividends on preferred stock (479,000) (120,000) (479,000) (120,000)
------------------------ ------------------------
Net income (loss) attributable to common
stockholders ($1,067,000 ($229,000) ($16,000) $926,000
======================== ========================
Basic income (loss) per share:
From continuing operations ($0.24) ($0.05) $0.04 $0.22
From discontinued operations 0.00 0.00 (0.05) (0.02)
------------------------ ------------------------
Total ($0.24) ($0.05) ($0.00) $0.21
======================== ========================
Weighted average shares outstanding 4,404,000 4,513,000 4,404,000 4,513,000
======================== ========================
Fully diluted income (loss) per share:
From continuing operations ($0.24) ($0.05) $0.04 $0.22
From discontinued operations 0.00 0.00 (0.05) (0.02)
------------------------ ------------------------
Total ($0.24) ($0.05) ($0.00) $0.20
======================== ========================
Weighted average shares outstanding 4,404,000 4,513,000 4,404,000 4,526,000
======================== ========================
See Accompanying Notes to Pro Forma Consolidated Condensed Financial Statements.
Transcend Services, Inc.
Notes to Pro Forma Consolidated Condensed Financial Statements
March 31, 2002 and December 31, 2001
1. GENERAL
The accompanying Pro Forma Consolidated Condensed Balance Sheet as of March 31,
2002 gives effect to the sale of certain assets and the operations of Cascade by
Transcend and the assumption of certain liabilities of Cascade by the purchaser
of said assets and operations (the "Transaction") as if the Transaction had
occurred on March 31, 2002. Adjustments to the accompanying Pro Forma
Consolidated Condensed Balance Sheet are directly attributable to the
Transaction and are factually supportable. See Note 2.
The accompanying Pro Forma Consolidated Condensed Statements of Operations for
the year ended December 31, 2001 and the three months ended March 31, 2002 give
effect to the Transaction as if the Transaction had occurred on January 1 of
each period presented. Adjustments to the accompanying Pro Forma Consolidated
Condensed Statements of Operations are (a) directly attributable to the
Transaction, (b) expected to have a continuing effect on Transcend and (c)
factually supportable. All intercompany transactions between Transcend and
Cascade were at arms-length and have been appropriately eliminated. See Note 3.
2. BALANCE SHEET
The pro forma adjustments included in the accompanying Pro Forma Consolidated
Condensed Balance Sheet as of March 31, 2002 assume that the Transaction was
consummated on March 31, 2002. The adjustments reflect (a) the cash received by
Transcend, (b) the disposition of the assets sold to QuadraMed, which consist of
Cascade's net accounts receivable, prepaid expenses, computer equipment and
proprietary software, each stated at its net book value as of March 31, 2002,
(c) the elimination of certain liabilities assumed by QuadraMed, specifically,
Cascade's accounts payable, accrued compensation and benefits and deferred
revenue, each stated at its carrying value as of March 31, 2002, and (d) the
resulting gain on the Transaction for Transcend. The cash received by Transcend
was determined by the following formula included in the Agreement: $1,250,000
less the sum of Cascade's accounts payable, accrued compensation and benefits
and deferred revenue, all of which were assumed by QuadraMed, plus the sum of
Cascade's net accounts receivable and prepaid expenses, all of which were sold
by Transcend to QuadraMed.
3. STATEMENTS OF OPERATIONS
The pro forma adjustments included in the accompanying Pro Forma Consolidated
Condensed Statements of Operations for the year ended December 31, 2001 and the
three months ended March 31, 2002 assume that the Transaction had occurred on
January 1 of each period presented. The adjustments consist of the historical
operating results of
Cascade for each period presented with the following two exceptions: (a)
software amortization of $20,833 per month related to a license of proprietary
Transcend software held by Cascade that was not sold to QuadraMed and (b)
depreciation expense of $1,000 per month related to Cascade's furniture and
fixtures that were not sold to QuadraMed.
