Author Topic: Bain Capital, CRC Health and Aspen Ed.  (Read 870 times)

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Offline Anonymous

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Bain Capital, CRC Health and Aspen Ed.
« on: November 10, 2007, 08:04:00 AM »
CRC Health Reports Operating Results for the Quarter & Year Ended December 31, 2006.

Publication: PR Newswire
Publication Date: 22-MAR-07
Delivery: Immediate Online Access
Author:
Company: CRC Health Corp.

Article Excerpt
CUPERTINO, Calif., March 22 /PRNewswire/ -- CRC Health Corporation (formerly known as CRC Health Group, Inc.) ("CRC" or the "Company"), the nation's largest substance abuse treatment and youth treatment provider, announced its results for the fourth quarter and the year ended December 31, 2006, reflecting contributions from the acquisition of Aspen Education Group, Inc. ("Aspen") in the fourth quarter of 2006 and other acquisitions in 2006, its acquisition of Sierra Tucson in May 2005 and other acquisitions in 2005, collectively (the "2005-06 acquisitions"), and continued organic growth. A new reportable segment, youth treatment division ("youth"), has been formed as a result of the acquisition of Aspen.

CRC's acquisition of Aspen

On November 17, 2006, CRC acquired all the outstanding capital stock of Aspen for approximately $273.9 million in cash purchase consideration and the assumption of approximately $20.6 million in Aspen's indebtedness as defined per the merger agreement (includes the buy-out of minority interest of $4.2 million).

Bain Capital Partners' acquisition of CRC

On February 6, 2006, investment funds managed by Bain Capital Partners, LLC ("Bain") completed the acquisition of CRC for approximately $723 million. As part of the transaction, certain members of the CRC management team partnered with Bain by retaining an equity stake in CRC. The acquisition resulted in several large merger-related expenses during the year ended 2006. CRC's pro forma results excluding these unusual items can be derived from the reconciliation of non-GAAP "EBITDA from continuing operations" to non-GAAP "Adjusted Pro Forma EBITDA", presented below. CRC refers to the February 6, 2006 Bain acquisition, the related mergers and related financings as the "Transactions."

The date of the Bain acquisition was February 6, 2006, but for accounting purposes and to coincide with its normal financial closing, CRC has utilized January 31, 2006 as the effective date of the Bain acquisition. As a result, CRC has reported operating results and financial position for all periods presented prior to January 31, 2006 as those of the Predecessor Company and for all periods from and after February 1, 2006 as those of the Successor Company due to the resulting change in the basis of accounting. CRC's operating results for the year ended December 31, 2006 are presented as the mathematical addition of CRC's operating results for the one month ended January 31, 2006 to the operating results for the eleven months ended December 31, 2006. This approach is not consistent with accounting principles generally accepted in the United States of America ("GAAP") and may yield results that are not strictly comparable on a period-to-period basis primarily due to the impact of purchase accounting entries recorded as a result of the Transactions. However, CRC's management believes that it is a meaningful way to present CRC's results of operations for the year ended December 31, 2006. In addition, due to differences in the basis of accounting, results for the year ended December 31, 2006 are not comparable to results of the year ended December 31, 2005.

Historical Financial Results Fourth Quarter and Year...


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« Last Edit: December 31, 1969, 07:00:00 PM by Guest »

Offline Anonymous

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Bain Capital, CRC Health and Aspen Ed.
« Reply #1 on: November 10, 2007, 08:10:22 AM »
« Last Edit: December 31, 1969, 07:00:00 PM by Guest »

Offline Anonymous

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Bain Capital, CRC Health and Aspen Ed.
« Reply #2 on: November 10, 2007, 08:13:35 AM »
http://sec.edgar-online.com/2007/04/02/ ... tion30.asp

Independence

Pursuant to our Compliance Code Manual, all employees and directors (including our named executive officers) who have, or whose immediate family members have, any financial interests in other entities where such involvement is or may appear to cause a conflict of interest situation are required to report to us the conflict. If the conflict involves a director or executive officer or is considered material, the situation will be reviewed by the Audit Committee. The Audit Committee will determine whether a conflict exists or will exist, and if so, what action should be taken to resolve the conflict or potential conflict.

Arrangements with Our Investors

On February 6, 2006, investment funds managed by Bain Capital Partners, LLC and certain members of our management entered into a stockholders agreement related to the purchase of shares of capital stock of Holdings. The stockholders agreement contains agreements among the parties with respect to the election of our directors and the directors of our direct parent company, restrictions on the issuance or transfer of shares, including tag-along rights and drag-along rights, other special corporate governance provisions (including the right to approve various corporate actions), registration rights (including customary indemnification provisions) and call options. Three of our directors, Steven Barnes, John Connaughton and Chris Gordon hold the position of managing director or principal with Bain Capital Partners, LLC.

105




Table of Contents


Rollover of Certain Management Equity Interests

In connection with the closing of the Bain Merger on February 6, 2006, and pursuant to a rollover and subscription agreement, certain members of our management converted options to purchase stock of our predecessor company into options to purchase stock of Holdings with an aggregate value of approximately $9.1 million. Dr. Barry W. Karlin, Jerome E. Rhodes, Kevin Hogge, Philip L. Herschman, Kathleen Sylvia, Dr. Thomas J. Brady and Pamela B. Burke converted options with a value of $5.0 million, $0.9 million, $0.9 million, $0.9 million, $0.5 million, $185,000 and $125,000, respectively.

In connection with the closing of the Aspen Acquisition on November 17, 2006 and pursuant to a rollover and subscription agreement, certain employees of Aspen Education Group, Inc. converted options to purchase stock of Aspen Education Group, Inc. into options to purchase stock of the Group with an aggregate value of approximately $1.8 million. Mr. Elliot Sainer converted options with a value of $0.6 million.

Management Agreement

Upon the consummation of the Bain Merger, we and our parent companies entered into a management agreement with an affiliate of Bain Capital Partners, LLC pursuant to which such entity or its affiliates will provide management services. Pursuant to such agreement, an affiliate of Bain Capital Partners, LLC will receive an aggregate annual management fee of $2.0 million, and reimbursement for out-of-pocket expenses incurred in connection with the Transactions prior to the closing of the Transactions and in connection with the provision of services pursuant to the agreement. In addition, pursuant to such agreement, an affiliate of Bain Capital Partners, LLC also received aggregate transaction fees of approximately $7.2 million in connection with services provided by such entity related to the Transactions. The management agreement has a five year, evergreen term, however, in certain circumstances, such as an initial public offering or change of control of Holdings, we may terminate the management agreement and buy out our remaining obligations under the agreement to Bain Capital Partners, LLC and its affiliates. In addition, the management agreement provides that an affiliate of Bain Capital Partners, LLC may receive fees in connection with certain subsequent financing and acquisition transactions. In connection with the Aspen Acquisition and the related amending and restating of our then existing senior secured credit facility, an affiliate of Bain Capital Partners, LLC received aggregate transaction fees of $3,200,000. The management agreement includes customary indemnification provisions in favor of Bain Capital Partners, LLC and its affiliates.

Director Independence

CRC is a privately held corporation. None of our directors meet the standards for "independent directors" of a national stock exchange.
« Last Edit: December 31, 1969, 07:00:00 PM by Guest »