Exhibit 99.2
Summary Consolidated and Unaudited Pro Forma Condensed Combined Financial Data
 
The following tables set forth summary consolidated and unaudited pro forma condensed combined financial information and other financial data for the periods ended and as of the dates indicated below.
 
We have derived the summary consolidated financial data for ExamWorks Group, Inc. and its consolidated subsidiaries (“we,” “us,” “our,” the “Company” or “ExamWorks”) as of December 31, 2009 and 2010 and for each of the years in the three year-period ended December 31, 2010 from our audited consolidated financial statements. We have derived the summary consolidated balance sheet data as of December 31, 2008 from our audited consolidated financial statements as of such date. We have derived the summary historical consolidated financial data as of March 31, 2010 and 2011 and for each of the three-month periods ended March 31, 2010 and 2011 from our unaudited consolidated financial statements, which have been prepared on the same basis as our audited consolidated financial statements. Our results of operations for the three months ended March 31, 2011 are not necessarily indicative of the results that may be expected for our full-year results for the year ending December 31, 2011. We have derived the summary historical consolidated financial data for the twelve months ended March 31, 2011 by combining the applicable financial data from our audited consolidated financial statements for the year ended December 31, 2010 with the applicable financial data from our unaudited consolidated financial statements for the three months ended March 31, 2011, less the applicable financial data from our unaudited consolidated financial statements for the three months ended March 31, 2010.
 
We have derived the summary unaudited pro forma combined financial data as of March 31, 2011 and for the twelve month period ended March 31, 2011 from our unaudited pro forma combined statements appearing elsewhere in this Exhibit 99.2, which, with respect to statement of operations data, give effect to the offering of Notes pursuant to the Private Offering and the use of proceeds therefrom, and the acquisitions of MES, Premex, Royal Medical Consultants, Inc., BME Gateway, UK Independent Medical Services, Health Cost Management, Verity Medical, Exigere, SOMA Medical Assessments, Direct IME, Network Medical Review, Independent Medical Services and 401 Diagnostics as if they had occurred on January 1, 2010 and, with respect to balance sheet data, give effect to the offering of Notes pursuant to the Private Offering and the use of proceeds therefrom and the Premex Acquisition as if they had occurred on March 31, 2011. The summary unaudited financial data is for informational purposes only and does not purport to represent what our results of operations would have been if the offering of Notes pursuant to the Private Offering and the relevant acquisitions had occurred as of one of those dates or what those results will be for future periods. We cannot assure you that the assumptions used by our management, which they believe are reasonable, for preparation of the summary pro forma combined financial data will prove to be correct.

 
 
 
 
       
Years Ended
December 31,
 
  
Three Months Ended
March 31,
 
  
Twelve Months
Ended
March 31,
 
  
Pro Forma
Twelve Months
Ended
March 31,
 
  
       
2008
 
  
2009
 
  
2010
 
  
2010
 
  
2011
 
  
2011
 
  
2011
 
  
       
(dollars in thousands)

  
Consolidated Statement of
Operations Data:

                                                              
Revenues
      
$
14,694
    
$
49,634
    
$
163,511
    
$
25,400
    
$
66,588
    
$
204,699
    
$
449,916
    
Costs and expenses:

                                                              
Costs of revenues
        
9,828
      
32,026
      
103,606
      
16,132
      
43,569
      
131,043
      
293,268
    
Selling, general and administrative expenses
        
4,610
      
15,811
      
37,689
      
6,011
      
14,328
      
46,006
      
83,767
    
Depreciation and amortization
        
2,392
      
6,889
      
19,505
      
2,977
      
8,609
      
25,137
      
52,053
    
Total costs and expenses
        
16,830
      
54,726
      
160,800
      
25,120
      
66,506
      
202,186
      
429,088
    
(Loss) income from operations
        
(2,136
)
    
(5,092
)
    
2,711
      
280
      
82
      
2,513
      
20,828
    
Interest and other expenses, net:

                                                              
Interest expense, net
        
515
      
1,807
      
8,178
      
1,439
      
1,182
      
7,921
      
32,312
    
Loss on early extinguishment of debt
        
—
      
461
      
3,169
      
—
      
—
      
3,169
      
3,169
    
Loss (gain) on interest rate swap
        
955
      
(343
)
    
42
      
25
      
(170
)
    
(153
)
    
(153
)
  
Realized foreign currency gain
        
—
      
—
      
(156
)
    
—
      
—
      
(156
)
    
(156
)
  
Total interest and other expenses, net
        
1,470
      
1,925
      
11,233
      
1,464
      
1,012
      
10,781
      
35,172
    
Loss before income taxes
        
(3,606
)
    
(7,017
)
    
(8,522
)
    
(1,184
)
    
(930
)
    
(8,268
)
    
(14,344
)
  
Income tax benefit
        
(1,434
)
    
(2,613
)
    
(2,484
)
    
(589
)
    
(371
)
    
(2,266
)
    
(5,655
)
  
Net loss
      
$
(2,172
)
  
$
(4,404
)
  
$
(6,038
)
  
$
(595
)
  
$
(559
)
  
$
(6,002
)
  
$
(8,689
)
  
Consolidated Balance Sheet Data
(at period end):

                                        
Cash and cash equivalents
      
$
1,203
    
$
1,499
    
$
33,624
    
$
10,114
    
$
15,381
    
$
15,381
    
$
35,453
    
Working capital (deficit)
        
(965
)
    
(9,374
)
    
37,000
      
1,176
      
37,817
      
37,817
      
94,470
    
Total assets
        
38,898
      
76,547
      
249,062
      
112,956
      
469,747
      
469,747
      
661,519
    
Total debt
        
13,239
      
38,351
      
9,856
      
50,989
      
174,937
      
174,937
      
296,737
    
Long-term contingent earnout obligation and other long-term liabilities
        
970
      
1,753
      
3,698
      
2,016
      
14,226
      
14,226
      
32,148
    
Stockholders’ equity
        
20,523
      
20,400
      
200,240
      
45,780
      
232,454
      
232,454
      
247,572
    
Consolidated Cash Flow Data:

                                                              
Net cash (used in) provided by:

                                                              
Operating activities
      
$
(289
)
  
$
4,177
    
$
18,303
    
$
2,762
    
$
6,266
    
$
21,807
            
Investing activities
        
(23,173
)
    
(25,775
)
    
(116,537
)
    
(24,853
)
    
(189,596
)
    
(281,280
)
          
Financing activities
        
24,249
      
21,894
      
130,319
      
30,706
      
165,007
      
264,620
            
Capital expenditures, net
        
(358
)
    
(1,559
)
    
(1,730
)
    
(567
)
    
(1,968
)
    
(3,131
)
          
Other Financial Data:

                                                              
Adjusted EBITDA (1)
      
$
1,076
    
$
6,496
    
$
30,321
    
$
4,166
    
$
10,902
    
$
37,057
    
$
79,147
    
Cash Interest Expense (2)
  
23,353
    
Ratio of Adjusted EBITDA to Cash Interest Expense
  
3.39
x
  
Ratio of Total Debt to Adjusted EBITDA
  
3.75
x
  
 
(1)  
Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss below and is not a substitute for the GAAP equivalent. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition related transaction costs, stock based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the

 
 
 

impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability. The following table presents a reconciliation of Adjusted EBITDA to net income (loss), the most comparable GAAP measure, for each of the periods indicated. The following table also presents a reconciliation of pro forma Adjusted EBITDA to pro forma net income (loss), for each of the periods indicated.
       
Years Ended
December 31,
 
  
Three Months Ended
March 31,
 
  
Twelve
Months
Ended
March 31,
 
  
Pro Forma
Twelve
Months
Ended
March 31,
 
  
       
2008
 
  
2009
 
  
2010
 
  
2010
 
  
2011
 
  
2011
 
  
2011
 
  
       
(dollars in thousands)

  
Reconciliation of Adjusted EBITDA:

                                                
Net loss
      
$
(2,172
)
  
$
(4,404
)
  
$
(6,038
)
  
$
(595
)
  
$
(559
)
  
$
(6,002
)
  
$
(8,689
)
  
Interest and other expenses, net (a)
        
1,470
      
1,925
      
11,233
      
1,464
      
1,012
      
10,781
      
35,172
    
Income tax benefit
        
(1,434
)
    
(2,613
)
    
(2,484
)
    
(589
)
    
(371
)
    
(2,266
)
    
(5,655
)
  
Depreciation and amortization
        
2,392
      
6,889
      
19,505
      
2,977
      
8,609
      
25,137
      
52,053
    
Share-based compensation expense
        
101
      
218
      
1,816
      
114
      
977
      
2,679
      
3,820
    
Acquisition-related transaction costs
        
719
      
2,109
      
6,101
      
795
      
767
      
6,073
      
—
    
Monitoring fee (b)
        
—
      
1,738
      
—
      
—
      
—
      
—
      
—
    
Other non-recurring costs (c)
        
—
      
634
      
188
      
—
      
467
      
655
      
2,446
    
Adjusted EBITDA
      
$
1,076
    
$
6,496
    
$
30,321
    
$
4,166
    
$
10,902
    
$
37,057
    
$
79,147
    
 
(a)  
Includes interest expense, net, loss on early extinguishment of debt, loss (gain) on interest rate swap and realized foreign currency gain.

(b)  
See our Annual Report on Form 10-K filed with the SEC on March 31, 2011 for a description of the monitoring fee.

(c)  
Other non-recurring costs consist of severance and facility termination costs.

(2)  
Cash interest expense on a pro forma basis includes estimated interest expense on the notes offered hereby, amounts outstanding under the Premex Working Credit Facility and UKIM Working Capital Facility, and amounts outstanding under seller notes and unused line fees related to the Senior Revolving Credit Facility.

 
 
 

CAPITALIZATION
 
The following table sets forth our capitalization as of March 31, 2011, on (1) an actual basis (2) on an as adjusted basis to reflect the Premex Acquisition completed on May 10, 2011 and the subsequent borrowing under the Premex Working Capital Facility, and (3) on an as further adjusted basis giving effect to the Second Amendment to our Senior Revolving Credit Facility and the offering of the Notes in the Private Offering and the application of the net proceeds therefrom.
       
Actual
 
  
As Adjusted
for Premex (1)
 
  
As further
adjusted for
Notes offered
hereby (2)
 
  
       
(dollars in millions)

  
Cash and cash equivalents
      
$
15.4
    
$
17.7
    
$
35.5
    
Long-term debt:

                              
Senior Revolving Credit Facility(3)
        
165.0
      
223.2
      
—
    
UKIM Working Capital Facility(4)
        
5.3
      
5.3
      
5.3
    
Premex Working Capital Facility(5)
        
—
      
36.8
      
36.8
    
Seller notes(6)
        
4.6
      
4.6
      
4.6
    
New senior unsecured notes offered hereby
        
—
      
—
      
250.0
    
Total long-term debt
        
174.9
      
269.9
      
296.7
    
Total stockholders’ equity
        
232.5
      
247.6
      
247.6
    
Total capitalization
      
$
407.4
    
$
517.5
    
$
544.3
    
 
(1)  
As adjusted to give effect to the Premex Acquisition, which was completed on May 10, 2011. We paid total consideration consisting of $66.5 million in cash, 661,610 shares of our common stock with a fair value of approximately $15.1 million (using a value of $22.85 per share, the closing price of the our common stock on May 10, 2011) and $26.8 million of assumed indebtedness under Premex’s receivables facility which was paid off at closing. We financed the cash portion of the transaction with proceeds from our Senior Revolving Credit Facility. The Premex Working Capital Facility was put in place on May 12, 2011. $36.8 million of borrowings under the Premex Working Capital Facility were used to repay an intercompany loan from ExamWorks, which was used to reduce borrowings under our Senior Revolving Credit Facility.
 
(2)  
Gives effect to the Second Amendment to the Credit Facility and the offering of the Notes in the Private Offering and the application of the net proceeds from the offering of Notes in the Private Offering as if such transactions had been consummated on March 31, 2011.

(3)  
After giving effect to the Second Amendment described in “Summary—Recent Developments”, our Senior Revolving Credit Facility will provide for a total borrowing capacity of $262.5 million. As of March 31, 2011, after giving effect to the Premex Acquisition, the subsequent borrowings under the Premex Working Capital Facility, the Second Amendment to the Senior Revolving Credit Facility and the offering of Notes in the Private Offering pursuant to the Private Offering and the use of proceeds therefrom, we had no amounts outstanding and $262.5 million of undrawn commitments under our Senior Revolving Credit Facility (without taking into account $220,000 of outstanding letters of credit). However, the credit agreement governing our Senior Revolving Credit Facility contains restrictive covenants, including among other things, financial covenants which may limit the amount of borrowings available to us.

(4)  
The UKIM Working Capital Facility provides for total borrowing capacity of £5.0 million (or $8.0 million using an exchange rate of $1.60:£1.00, as of March 31, 2011). As of March 31, 2011, unused borrowing capacity under the UKIM Working Capital Facility was £1.7 million (or $2.7 million).

(5)  
The Premex Working Capital Facility provides for total borrowing capacity of £26.5 million (or $42.4 million). As of March 31, 2011, on a pro forma basis, unused borrowing capacity under the Premex Working Capital Facility was £3.5 million (or $5.6 million).

(6)  
The seller notes are contractually subordinated to the Senior Revolving Credit Facility and will rank equally with the Notes offered pursuant to the Private Offering.

 
 
 

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
 
We operate in a highly fragmented industry and have completed numerous acquisitions. Following is a list of the acquisitions completed by us since July 2008:

Acquisition Date
Name
2011 Acquisitions
●  Premex Group
May 10, 2011
February 28, 2011
●  MES Group
February 18, 2011
●  National IME Centres
2010 Acquisitions
●  Royal Medical Consultants
December 20, 2010
October 1, 2010
●  BMEGateway
September 7, 2010
●  UK Independent Medical Services
September 1, 2010
●  Health Cost Management
August 6, 2010
●  Verity Medical
 
●  Exigere
June 30, 2010
●  SOMA Medical Assessments
 
●  Direct IME
 
●  Network Medical Review
 
●  Independent Medical Services
 
●  401 Diagnostics
March 26, 2010
●  Metro Medical Services
March 15, 2010
●  American Medical Bill Review
 
●  Medical Evaluations
2009 Acquisitions
●  Abeton
December 31, 2009
 
●  Medical Assurance Group
 
●  MedNet I.M.S.
 
●  QualMed
 
●  IME Operations of Physician Practice
August 14, 2009
●  The Evaluation Group
August 4, 2009
●  Benchmark Medical Consultants
July 7, 2009
●  IME Software Solutions
May 21, 2009
●  Florida Medical Specialists
 
●  Marquis Medical Administrators
April 17, 2009
●  Ricwel
2008 Acquisitions
●  CFO Medical Services
July 14, 2008
 
●  Crossland Medical Review Services
 
●  Southwest Medical
 
The unaudited pro forma condensed combined statements of operations combine our consolidated results of operations and the results of operations for each of the acquisitions completed in 2010 and 2011 for the year ended December 31, 2010 and for the three months ended March 31, 2011 and March 31, 2010, as if the acquisitions had occurred on January 1, 2010. The unaudited pro forma condensed combined balance sheet combines our consolidated balance sheet as of March 31, 2011, as if the Premex Acquisition and the related borrowing under the Premex Working Capital Facility in 2011 had occurred on March 31, 2011. In addition, the unaudited pro forma condensed combined statement of operations and balance sheet give effect to the offering of Notes in the Private Offering and the use of proceeds therefrom.
 
The unaudited pro forma condensed combined financial information has been prepared from, and should be read in conjunction with, our historical consolidated financial statements and related notes and the audited financial statements with respect to the acquisitions included in the Company’s Annual Report on Form 10-K.

 
 
 

The historical financial statements of SOMA Medical Assessments (“SOMA”), Direct IME and National IME Centres (“National IME”) were presented in Canadian dollars and the historical financial statements of UK Independent Medical Services (“UKIM”) and Premex Group Limited (“Premex”) were presented in pounds sterling. The historical profit and loss accounts and balance sheet of UKIM and Premex have been prepared in accordance with generally accepted accounting principles in the United Kingdom (“UK GAAP”). For purposes of presenting the unaudited pro forma consolidated financial information, the profit and loss accounts for the periods ended have been adjusted to conform to U.S. generally accepted accounting principles as described in Note 5. Additionally, for the purpose of presenting the unaudited pro forma condensed combined financial information, the adjusted income statements of SOMA, Direct IME, National IME, UKIM and Premex for the periods ended December 31, 2010, March 31, 2011 and March 31, 2010 have been translated into U.S. Dollars at the average daily rates for the periods ended December 31, 2010, March 31, 2011 and March 31, 2010, respectively.
 
The pro forma acquisition adjustments described in Note 4 were based on available information and certain assumptions made by our management, and may be revised as additional information becomes available. The unaudited pro forma condensed combined financial information included in this Exhibit 99.2 is not intended to represent what our financial position is or results of operations would have been if the acquisition had occurred on that date or to project our results of operations for any future period. Since the Company and each of the acquired businesses were not under common control or management for some of or any period presented, the unaudited pro forma condensed combined financial results may not be comparable to, or indicative of, future performance.
 
Certain information and certain footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to these rules and regulations; however, management believes that the disclosures are adequate to make the information presented not misleading.
 
The unaudited pro forma condensed combined financial information does not reflect any cost savings, operating synergies or revenue enhancements that the combined company may achieve as a result of the acquisition, the costs to combine our operations and the acquisitions or the costs necessary to achieve these cost savings, operating synergies and revenue enhancements.

 
 
 
 
EXAMWORKS AND ACQUIRED BUSINESSES
 
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2010

       
ExamWorks
 
  
2010
Acquisitions
 
  
2011
Acquisitions
 
  
Pro-Forma
Adjustments
 
  
Pro Forma
Combined
 
  
       
(dollars in thousands except per share data)
  
Revenues
      
$
163,511
    
$
67,613
    
$
217,175
    
$
(1,455
)(a)
  
$
446,844
    
Costs and expenses:

                                              
Costs of revenues
        
103,606
      
42,518
      
145,337
      
(1,455
)(a)
    
290,006
    
Selling, general and administrative expenses
        
37,689
      
14,639
      
52,858
      
(24,025
)(b)
    
81,161
    
Depreciation and amortization
        
19,505
      
412
      
4,391
      
27,406
(c)
    
51,714
    
Total costs and expenses
        
160,800
      
57,569
      
202,586
      
1,926
      
422,881
    
Income (loss) from operations
        
2,711
      
10,044
      
14,589
      
(3,381
)
    
23,963
    
Interest and other expenses, net
        
11,233
      
743
      
1,155
      
23,863
(d)
    
36,994
    
Income (loss) before income taxes
        
(8,522
)
    
9,301
      
13,434
      
(27,244
)
    
(13,031
)
  
Provision (benefit) for income taxes
        
(2,484
)
    
(11
)
    
5,031
      
(7,655
)(e)
    
(5,119
)
  
Net (loss) income
      
$
(6,038
)
  
$
9,312
    
$
8,403
    
$
(19,589
)
  
$
(7,912
)
  
                                               
Net loss per share attributable to common stockholders — basic and diluted
      
$
(0.33
)
                          
$
(0.36
)
  
                                               
Pro-Forma weighted average number of common shares outstanding used in computing per share amounts

                                              
Basic and Diluted —
        
18,500,859
                              
21,929,820
(f)
  
                                               
Other Financial Data:

                                              
Adjusted EBITDA (1)
                                      
$
81,356
    
                                               
Reconciliation of Adjusted EBITDA:

                                              
Net loss
                                      
$
(7,912
)
  
Interest and other expenses, net (2)
                                        
36,994
    
Income tax benefit
                                        
(5,119
)
  
Depreciation and amortization
                                        
51,714
    
Share-based compensation expense
                                        
2,957
    
Other non-recurring costs (3)
                                        
2,722
    
Adjusted EBITDA
                                      
$
81,356
    
 
(1)  
Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss above and is not a substitute for the GAAP equivalent. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition related transaction costs, stock based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability.

(2)  
Includes interest expense, net, loss on early extinguishment of debt, loss on interest rate swap and realized foreign currency gain.

(3)  
Other non-recurring costs consist of severance and facility termination costs.

 
 
 
 
EXAMWORKS AND ACQUIRED BUSINESSES
 
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2011

       
ExamWorks
 
  
2011
Acquisitions
 
  
Pro-Forma
Adjustments
 
  
Pro Forma
Combined
 
  
       
(dollars in thousands except per share data)
  
Revenues
      
$
66,588
    
$
44,888
    
$
—
    
$
111,476
    
Costs and expenses:

                                      
Costs of revenues
        
43,569
      
29,248
      
—
      
72,817
    
Selling, general and administrative expenses
        
14,328
      
12,106
      
(4,365
)(b)
    
22,069
    
Depreciation and amortization
        
8,609
      
472
      
4,254
(c)
    
13,335
    
Total costs and expenses
        
66,506
      
41,826
      
(111
)
    
108,221
    
Income from operations
        
82
      
3,062
      
111
      
3,255
    
Interest and other expenses, net
        
1,012
      
114
      
5,592
(d)
    
6,718
    
Income (loss) before income taxes
        
(930
)
    
2,948
      
(5,481
)
    
(3,463
)
  
Provision (benefit) for income taxes
        
(371
)
    
1,077
      
(2,087
)(e)
    
(1,381
)
  
Net (loss) income
      
$
(559
)
  
$
1,871
    
$
(3,394
)
  
$
(2,082
)
  
                                       
Net loss per share attributable to common stockholders — basic and diluted
      
$
(0.02
)
                  
$
(0.06
)
  
                                       
Pro-Forma weighted average number of common shares outstanding used in computing per share amounts

                                      
Basic and Diluted —
        
32,739,428
                      
34,341,372
(f)
  
                                       
Other Financial Data:

                                      
Adjusted EBITDA (1)
                              
$
18,822
    
                                       
Reconciliation of Adjusted EBITDA:

                                      
Net loss
                              
$
(2,082
)
  
Interest and other expenses, net (2)
                                
6,718
    
Income tax benefit
                                
(1,381
)
  
Depreciation and amortization
                                
13,335
    
Share-based compensation expense
                                
1,262
    
Other non-recurring costs (3)
                                
970
    
Adjusted EBITDA
                              
$
18,822
    
 
(1)  
Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss above and is not a substitute for the GAAP equivalent. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition related transaction costs, stock based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability.

(2)  
Includes interest expense, net and gain on interest rate swap.

(3)  
Other non-recurring costs consist of severance and facility termination costs.

 
 
 

EXAMWORKS AND ACQUIRED BUSINESSES
 
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2010

       
ExamWorks
 
  
2010
Acquisitions
 
  
2011
Acquisitions
 
  
Pro-Forma
Adjustments
 
  
Pro Forma
Combined
 
  
       
(dollars in thousands except per share data)
  
Revenues
      
$
25,400
    
$
30,615
    
$
52,697
    
$
(308
)(a)
  
$
108,404
    
Costs and expenses:

                                              
Costs of revenues
        
16,132
      
18,751
      
34,980
      
(308
)(a)
    
69,555
    
Selling, general and administrative expenses
        
6,011
      
6,986
      
13,302
      
(6,836
)(b)
    
19,463
    
Depreciation and amortization
        
2,977
      
192
      
1,094
      
8,733
(c)
    
12,996
    
Total costs and expenses
        
25,120
      
25,929
      
49,376
      
1,589
      
102,014
    
Income (loss) from operations
        
280
      
4,686
      
3,321
      
(1,897
)
    
6,390
    
Interest and other expenses, net
        
1,464
      
171
      
40
      
6,865
(d)
    
8,540
    
Income (loss) before income taxes
        
(1,184
)
    
4,515
      
3,281
      
(8,762
)
    
(2,150
)
  
Provision (benefit) for income taxes
        
(589
)
    
32
      
1,252
      
(1,540
)(e)
    
(845
)
  
Net (loss) income
      
$
(595
)
  
$
4,483
    
$
2,029
    
$
(7,222
)
  
$
(1,305
)
  
                                               
Net loss per share attributable to common stockholders — basic and diluted
      
$
(0.04
)
                          
$
(0.07
)
  
                                               
Pro-Forma weighted average number of common shares outstanding used in computing per share amounts

                                              
Basic and Diluted —
        
13,943,454
                              
19,011,048
(f)
  
                                               
Other Financial Data:

                                              
Adjusted EBITDA (1)
                                      
$
21,031
    
                                               
Reconciliation of Adjusted EBITDA:

                                              
Net loss
                                      
$
(1,305
)
  
Interest and other expenses, net (2)
                                        
8,540
    
Income tax benefit
                                        
(845
)
  
Depreciation and amortization
                                        
12,996
    
Share-based compensation expense
                                        
399
    
Other non-recurring costs (3)
                                        
1,246
    
Adjusted EBITDA
                                      
$
21,031
    
 
(1)  
Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss above and is not a substitute for the GAAP equivalent. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition related transaction costs, stock based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability.

(2)  
Includes interest expense, net and loss on interest rate swap.

(3)  
Other non-recurring costs consist of severance and facility termination costs.

 
 
 
 
EXAMWORKS AND ACQUIRED BUSINESSES
 
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTHS ENDED MARCH 31, 2010
 
       
Year
Ended
December 31,
2010
 
  
Three
Months
Ended
March 31,
2011
 
  
Three
Months
Ended
March 31,
2010
 
  
Twelve
Months
Ended
March 31,
2011 (4)
 
  
       
(dollars in thousands except per share data)
  
Revenues
      
$
446,844
    
$
111,476
    
$
108,404
    
$
449,916
    
Costs and expenses:

                                      
Costs of revenues
        
290,006
      
72,817
      
69,555
      
293,268
    
Selling, general and administrative expenses
        
81,161
      
22,069
      
19,463
      
83,767
    
Depreciation and amortization
        
51,714
      
13,335
      
12,996
      
52,053
    
Total costs and expenses
        
422,881
      
108,221
      
102,014
      
429,088
    
Income from operations
        
23,963
      
3,255
      
6,390
      
20,828
    
Interest and other expenses, net
        
36,994
      
6,718
      
8,540
      
35,172
    
Loss before income taxes
        
(13,031
)
    
(3,463
)
    
(2,150
)
    
(14,344
)
  
Income tax benefit
        
(5,119
)
    
(1,381
)
    
(845
)
    
(5,655
)
  
Net loss
      
$
(7,912
)
  
$
(2,082
)
  
$
(1,305
)
  
$
(8,689
)
  
                                       
Other Financial Data:

                                      
Adjusted EBITDA (1)
      
$
81,356
    
$
18,822
    
$
21,031
    
$
79,147
    
                                       
Reconciliation of Adjusted EBITDA:

                                      
Net loss
                              
$
(8,689
)
  
Interest and other expenses, net (2)
                                
35,172
    
Income tax benefit
                                
(5,655
)
  
Depreciation and amortization
                                
52,053
    
Share-based compensation expense
                                
3,820
    
Other non-recurring costs (3)
                                
2,446
    
Adjusted EBITDA
                              
$
79,147
    
 
(1)  
Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss above and is not a substitute for the GAAP equivalent. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition related transaction costs, stock based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability.

(2)  
Includes interest expense, net, loss on early extinguishment of debt, loss (gain) on interest rate swap and realized foreign currency gain.

(3)  
Other non-recurring costs consist of severance and facility termination costs.

(4)  
We have derived the summary historical consolidated financial data for the twelve months ended March 31, 2011 by combining the applicable financial data from our audited consolidated financial statements for the year ended December 31, 2010 with the applicable financial data from our unaudited consolidated financial statements for the three months ended March 31, 2011, less the applicable financial data from our unaudited consolidated financial statements for the three months ended March 31, 2010.

 
 
 
 
 
EXAMWORKS AND ACQUIRED BUSINESSES
 
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF MARCH 31, 2011

       
March 31,
2011
 
  
Premex
Group (1)(2)
 
  
Pro Forma
Adjustments
 
  
Pro Forma
Combined
 
  
Assets
 
      
(dollars in thousands)
  
Current assets:

                                      
Cash and cash equivalents
      
$
15,381
    
$
511
    
$
19,561
(g)
  
$
35,453
    
Accounts receivable, net
        
66,477
      
72,288
      
—
      
138,765
    
Other receivables
        
94
      
8
      
—
      
102
    
Prepaid expenses
        
3,220
      
1,085
      
—
      
4,305
    
Deferred tax assets
        
3,047
      
—
      
—
      
3,047
    
Other current assets
        
26
      
132
      
—
      
158
    
Total current assets
        
88,245
      
74,024
      
19,561
      
181,830
    
Property, equipment and leasehold improvements, net
        
6,643
      
2,498
      
(1,848
)(h)
    
7,293
    
Goodwill
        
254,245
      
6,509
      
36,075
(i)
    
296,829
    
Intangible assets, net
        
115,975
      
1,387
      
44,566
(i)
    
161,928
    
Deferred financing costs, net
        
4,215
      
—
      
9,000
(k)
    
13,215
    
Other assets
        
424
      
—
      
—
      
424
    
Total assets
      
$
469,747
    
$
84,418
    
$
107,354
    
$
661,519
    
                                       
Liabilities and Stockholders’ Equity

                                      
Current liabilities:

                                      
Accounts payable
      
$
28,123
    
$
48,249
    
$
(28,931
)(j)
  
$
47,441
    
Accrued expenses
        
11,905
      
4,420
      
—
      
16,325
    
Deferred revenue
        
1,063
      
6,290
      
(6,290
)(l)
    
1,063
    
Current portion of subordinated unsecured notes payable
        
2,298
      
—
      
—
      
2,298
    
Current portion of contingent earnout obligation
        
2,155
      
—
      
—
      
2,155
    
Other current liabilities
        
4,884
      
13,194
      
—
      
18,078
    
Total current liabilities
        
50,428
      
72,153
      
(35,221
)
    
87,360
    
Senior revolving credit facility
        
165,000
      
—
      
(165,000
)(j)
    
—
    
Working capital facilities
        
5,308
              
36,800
(j)
    
42,108
    
Senior notes due 2019
        
—
      
—
      
250,000
(j)
    
250,000
    
Long-term subordinated unsecured notes payable, less current portion
        
2,331
      
—
      
—
      
2,331
    
Long-term contingent earnout obligation, less current portion
        
2,121
      
—
      
—
      
2,121
    
Deferred tax liability, noncurrent
        
9,989
      
—
      
17,922
(i)
    
27,911
    
Other long-term liabilities
        
2,116
      
—
      
—
      
2,116
    
Total liabilities
        
237,293
      
72,153
      
104,501
      
413,947
    
Commitments and contingencies

                                      
Stockholders’ equity:

                                      
Preferred stock
        
—
      
—
      
—
      
—
    
Common stock
        
3
      
63
      
(63
)(m)
    
3
    
Additional paid-in capital
        
243,790
      
563
      
14,555
(m)
    
258,908
    
Accumulated other comprehensive income
        
2,060
      
—
      
—
      
2,060
    
(Accumulated deficit) retained earnings
        
(13,399
)
    
11,639
      
(11,639
)(m)
    
(13,399
)
  
Total stockholders’ equity
        
232,454
      
12,265
      
2,853
      
247,572
    
Total liabilities and stockholders’ equity
      
$
469,747
    
$
84,418
    
$
107,354
    
$
661,519
    
 
(1)  
Balance sheet information for Premex as of February 28, 2011, their most recently completed fiscal quarter.

(2)  
Balance sheet information for Premex is converted from Great British Pounds to U.S. Dollars using the exchange rate of $1.61:£1.00, the exchange rate as of June 29, 2011, the most recent date available.

 
 
 
 
EXAMWORKS AND ACQUIRED BUSINESSES
 
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

 
NOTE 1 — Basis of Presentation
 
The acquisitions are accounted for under the acquisition method of accounting in accordance with ASC Topic 805-10, “Business Combinations — Overall” (“ASC 805-10”). The Company accounts for the transaction by using its historical information and accounting policies and adding the assets and liabilities of the acquired businesses as of each respective acquisition date at their respective fair values. Pursuant to ASC 805-10, under the acquisition method, the total estimated purchase price for each acquisition (consideration transferred) as described in Note 3, Preliminary Purchase Price Allocation, is measured at the acquisition closing dates using the fair value of the net assets acquired. The assets and liabilities of the acquisitions have been measured based on various estimates and assumptions that the Company’s management believes are reasonable and appropriate given the currently available information. Use of different estimates and judgments could yield different results.
 
The process for estimating the fair values of identifiable intangible assets and certain tangible assets requires the use of significant estimates and assumptions, including estimating future cash flows and developing appropriate discount rates. The excess of the purchase price (consideration transferred) over the estimated amounts of identifiable assets and liabilities of the acquisitions as of the effective date was allocated to goodwill in accordance with ASC 805-10.
 
For purposes of measuring the estimated fair value of the assets acquired and liabilities assumed as reflected in the unaudited pro forma condensed combined financial statements, the Company used the guidance in ASC Topic 820-10, “Fair Value Measurement and Disclosure — Overall” (“ASC 820-10”), which established a framework for measuring fair values. ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). Market participants are assumed to be buyers and sellers in the principal (most advantageous) market for the asset or liability. Additionally, under ASC 820-10, fair value measurements for an asset assume the highest and best use of that asset by market participants. As a result, the Company may be required to value assets of the acquired companies at fair value measures that do not reflect the Company’s intended use of those assets. Use of different estimates and judgments could yield different results.
 
Under ASC 805-10, acquisition related transaction costs (e.g., advisory, legal, valuation, and other professional fees) are not included as a component of consideration transferred but are required to be expensed as incurred.
 
NOTE 2 — Accounting Policies
 
Upon completion of each acquisition, the Company has performed a detailed review of each acquired business’ accounting policies. As a result, the Company has adjusted the financial statements of each acquired entity to conform to the Company’s presentation and policies. As such, the presented pro forma financial information is consistent with the acquiree and conforms to requirements as promulgated by U.S. GAAP.
 
NOTE 3 — Purchase Price Allocation
 
Acquisitions completed after March 31, 2011
 
On May 10, 2011, the Company completed the acquisition of 100% of the outstanding share capital of Premex Group Limited for $108.4 million. The Company paid total consideration consisting of $66.5 million in cash, 661,610 shares of Company common stock with a fair value of approximately $15.1 million (using a value of $22.85 per share, the closing price of the Company’s common stock on May 10, 2011) and $26.8 million of assumed indebtedness under Premex’s receivables facility which was paid off at closing.

 
 
 
 
EXAMWORKS AND ACQUIRED BUSINESSES
 
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
 
NOTE 3 — Purchase Price Allocation (Continued)
 
       
(dollars in
thousands)
Property, equipment and leasehold improvements
      
$
650
  
Customer relationships
        
32,886
  
Tradename
        
10,602
  
Covenants not to compete
        
109
  
Technology
        
2,356
  
Goodwill
        
42,584
  
Deferred liability associated with step-up in book basis
        
(17,922
)
Assets acquired and liabilities assumed, net
        
37,092
  
Total
      
$
108,357
  
 
The estimated fair values of assets acquired and liabilities assumed are based on a preliminary valuation. The final valuation and related allocation of the purchase price at the closing of the acquisition may be materially different from the allocation based on this preliminary valuation. On this basis, we have estimated the fair value of identified intangibles to be $46.0 million and goodwill to be $42.6 million.
 
NOTE 4 — Pro Forma Adjustments
 
Item (a): Adjustment represents the elimination of revenues and related costs of revenue between certain acquired businesses during the year ended December 31, 2010 and the three months ended March 31, 2010 of approximately $1.5 million and $308,000, respectively. There were no such adjustments for the three months ended March 31, 2011.
 
Item (b): Adjustment represents the elimination of certain selling, general and administrative costs that represent material, non-recurring costs related to the acquired entities.
 
Adjustments of approximately $24.0 million, $4.4 million and $6.8 million for the year ended December 31, 2010 and for the three months ended March 31, 2011 and March 31, 2010, respectively, represent certain salary and related personal expenses attributable to the previous owners of the acquired businesses. These adjustments represent contractual reductions for new compensation terms entered into as part of the acquisition agreement. The expenses in the historical financial statements are considered to be non-recurring and are not expected to have a continuing impact on the operations of the Company.
 
Item (c): Adjustments to reflect incremental depreciation and amortization expense for the pro forma periods are as follows:

       
Fair
Value
 
  
Useful life
(months)
 
  
Expected
depreciation
and amortization
for the
year ended
December 31,
2010
 
  
       
(dollars in thousands)
  
Property, equipment and leasehold improvements
      
$
3,660
    
12–24
  
$
1,858
    
Customer relationships
        
117,046
    
42–60
    
21,314
    
Covenants not to compete
        
1,305
    
36
    
360
    

 
 
 

EXAMWORKS AND ACQUIRED BUSINESSES
 
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
 
 
NOTE 4 — Pro Forma Adjustments (Continued)

       
Fair
Value
 
  
Useful life
(months)
 
  
Expected
depreciation
and amortization
for the
year ended
December 31,
2010
 
                             
Tradenames
      
$
37,981
    
45–84
  
$
6,690
  
Technology
        
4,685
    
24
    
1,987
  
       
$
164,677
          
32,209
  
Less amounts recorded
                    
(4,803
)
Net adjustments to depreciation and amortization expense
                  
$
27,406
  
 
       
Fair
Value
 
  
Useful life
(months)
 
  
Expected
depreciation
and amortization
for the
three months ended
March 31,
2011
 
  
       
(dollars in thousands)
  
Property, equipment and leasehold improvements
      
$
2,450
    
12–24
  
$
231
    
Customer relationships
        
72,119
    
42–60
    
2,964
    
Covenants not to compete
        
870
    
36
    
51
    
Tradenames
        
28,028
    
45–84
    
1,122
    
Technology
        
3,118
    
24
    
358
    
       
$
106,585
          
4,726
    
Less amounts recorded
                    
(472
)
  
Net adjustments to depreciation and amortization expense
                  
$
4,254
    
 
       
Fair
Value
 
  
Useful life
(months)
 
  
Expected
depreciation
and amortization
for the
three months ended
March 31,
2010
 
  
       
(dollars in thousands)
  
Property, equipment and leasehold improvements
      
$
3,660
    
12–24
  
$
605
    
Customer relationships
        
117,046
    
42–60
    
6,747
    
Covenants not to compete
        
1,305
    
36
    
108
    
Tradenames
        
37,981
    
45–84
    
1,980
    
Technology
        
4,685
    
24
    
579
    
       
$
164,677
          
10,019
    
Less amounts recorded
                    
(1,286
)
  
Net adjustments to depreciation and amortization expense
                  
$
8,733
    
 
Item (d): Adjustment assumes that acquisition related debt was incurred on January 1, 2010 and reflects additional interest expense incurred from this borrowing. Adjustments to interest expense consist of the following (in thousands):

 
 
 

EXAMWORKS AND ACQUIRED BUSINESSES
 
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
 
 
NOTE 4 — Pro Forma Adjustments (Continued)

       
Year
ended
December 31,
2010
 
  
Three months
ended
March 31,
2011
 
  
Three Months
ended
March 31,
2010
 
  
       
(dollars in thousands)
  
Incremental interest expense on term loan and senior revolving credit facility borrowings to finance acquisitions (assuming interest rates of 4.5% to 7.5%) and notes offered hereby
      
$
24,560
    
$
5,426
    
$
6,770
    
Eliminate acquired companies’ pre-acquisition interest expense
        
(1,898
)
    
(114
)
    
(211
)
  
Incremental interest expense incurred from the amortization of
capitalized loan costs
        
1,125
      
280
      
280
    
Incremental interest expense on seller note acquired
        
76
      
—
      
26
    
       
$
23,863
    
$
5,592
    
$
6,865
    
 
Item (e):  Adjustment reflects the calculated income tax provision for acquired businesses.
 
Item (f):  Adjustment to the weighted average number of common shares outstanding used in computing

       
Year
ended
December 31,
2010
 
  
Three months
ended
March 31,
2011
 
  
Three Months
ended
March 31,
2010
 
  
       
(dollars in thousands)
  
Historical weighted average common shares outstanding
        
18,500,859
    
32,739,428
    
13,943,454
    
Common shares issued in connection with acquisitions
        
3,428,961
    
1,601,944
    
5,067,594
    
Pro forma weighted average number of common shares
outstanding:

                              
Basic and diluted:
        
21,929,820
    
34,341,372
    
19,011,048
    
 
Item (g):  Adjustments to cash and cash equivalents are as follows:
 
       
March 31,
2011
 
       
(dollars in
thousands)
Total gross purchase price
      
$
(93,239
)
Net proceeds from notes offered hereby
        
241,000
  
Repayment under senior revolving credit facility
        
(165,000
)
Borrowings under Premex working capital facility
        
36,800
  
Cash and cash equivalents not acquired, net
        
—
  
Total adjustment to cash and cash equivalents
      
$
19,561
  
 
Item (h):  Adjustments to equipment and leasehold improvements are as follows:
 
       
March 31,
2011
 
       
(dollars in
thousands)
Book value of property, equipment and leasehold improvements acquired
      
$
(2,498
)
Fair value of property, equipment and leasehold improvements acquired
        
650
  
Net adjustments to property, equipment and leasehold improvements
      
$
(1,848
)
 
Item (i): Adjustment to record intangible assets, goodwill and the related deferred tax liability in the combined balance sheet as detailed in Note 3 — Preliminary Purchase Price Allocation.

 
 
 
 
EXAMWORKS AND ACQUIRED BUSINESSES
 
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
 
 
NOTE 4 — Pro Forma Adjustments (Continued)
 
Item (j):   Adjustments to debt are as follows:

       
March 31,
2011
 
       
(dollars in
thousands)
Gross proceeds from the notes offered hereby
      
$
250,000
  
Repayment of senior revolving credit facility
        
(165,000
)
Repayment of Premex’s pre-acquisition discount facility
        
(28,931
)
Borrowings under Premex working capital facility
        
36,800
  
Total
      
$
92,869
  
 
Item (k): Adjustment to record deferred financing costs incurred related to the senior note offering and the second amendment to the senior revolving credit facility.
 
Item (l): Adjustment to eliminate deferred revenue that will not be recognized by the Company as no future performance obligation exists
 
Item (m):  Adjustments to stockholders’ equity reflects adjustments to the following (in thousands):
 
An adjustment was made to eliminate common stock and accumulated earnings of the acquired business.
 
Adjustments to additional paid-in capital:

*  
An adjustment was made to eliminate accumulated paid in capital of the acquired business of $563,000.

*  
An adjustment of approximately $15.1 million was made to reflect acquisition consideration.
 
NOTE 5 — UK GAAP to US GAAP Adjustments
 
The following tables show reconciliations of the historical statements of operations of UKIM and Premex for the indicated periods prepared in accordance with UK GAAP and in pounds sterling, to the statements of operations under US GAAP and in U.S. Dollars included in the unaudited pro forma combined condensed statements of operations.

UK Independent Medical
UK GAAP to US GAAP Reconciliation
For the Period of January 1, 2010 to September 7, 2010
 
       
UK
Independent
Medical
 
  
UK GAAP to
US GAAP
Presentation
Adjustments
(GBP)
 
  
UK GAAP to
US GAAP
Presentation
(GBP)
 
  
UK GAAP to
US GAAP
Adjustments
(GBP)
 
  
UK
Independent
Medical
(GBP)
 
  
UK
Independent
Medical
(USD)
 
  
           
(in thousands)
  
(c)
  
Turnover
        
£7,556
      
£(7,556
)(a)
    
£ —
      
£ —
      
£ —
    
$
—
    
Net revenues
        
—
      
7,556
(a)
    
7,556
      
—
      
7,556
      
11,576
    
Costs and expenses

                                                      
Costs of revenues
        
5,388
      
—
      
5,388
      
—
      
5,388
      
8,254
    
Selling, general and administrative
        
1,691
      
(108
)(a)
    
1,583
      
—
      
1,583
      
2,425
    
Depreciation and amortization
      
—
    
108
(a)
  
108
    
(3
)(b)
  
105
    
161
    
Total costs and expenses
        
7,079
      
—
      
7,079
      
(3
)
    
7,076
      
10,840
    
Income from operations
        
477
      
—
      
477
      
3
      
480
      
736
    
Other expenses
        
498
      
—
      
498
      
—
      
498
      
763
    
 
 
 
 

EXAMWORKS AND ACQUIRED BUSINESSES
 
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements
 
 
NOTE 5 — UK GAAP to US GAAP Adjustments (Continued)

 
Income (loss) before income taxes
        
£ (21
)
  
£ —
    
£ (21
)
    
£ 3
      
£ (18
)
    
(27
)
  
Benefit for income taxes
        
(25
)
    
—
      
(25
)
  
—
    
(25
)
    
(38
)
  
Net income
        
£ 4
      
£ —
      
£ 4
      
£ 3
      
£ 7
    
$
11
    
 
(a)  
Reclassification from UKIM’s UK GAAP income statement presentation to US GAAP statements of operations presentation. This includes conforming adjustments to make UKIM’s presentation for revenues, selling, general and administrative expenses and depreciation and amortization expenses consistent with the presentation of the Company’s financial statement line items.

(b)  
Adjustment to remove amortization expense related to the amortization of goodwill as allowed by UK GAAP.

(c)  
Amounts are converted to U. S. Dollars using an exchange rate of $1.53:£1.00, the average exchange rate for the period ended September 7, 2010.


 
Premex Group
UK GAAP to US GAAP Reconciliation
For the Twelve Months Ended November 30, 2010
 
       
Premex
 
  
UK GAAP to
US GAAP
Presentation
Adjustments
(GBP)
 
  
UK GAAP to
US GAAP
Presentation
(GBP)
 
  
UK GAAP to
US GAAP
Adjustments
(GBP)
 
  
Premex
(GBP)
 
  
Premex
(USD)
 
  
           
(in thousands)

  
(e)
  
Turnover
        
£54,827
      
£(54,827
)(a)
    
£ —
      
£ —
      
£ —
            
Net revenues
        
—
      
54,827
(a)
    
54,827
      
(237
)(b)
    
54,590
    
$
84,615
    
Costs and expenses

                                                      
Costs of revenues
        
38,816
      
(4,509
)(a)
    
34,307
      
(259
)(b)
    
34,048
      
52,774
    
Selling, general and administrative
        
11,253
      
3,553
(a)
    
14,806
      
(112
)(b)
    
14,694
      
22,776
    
Depreciation and amortization
        
—
      
956
(a)
    
956
      
768
(c)
    
1,724
      
2,672
    
Total costs and expenses
        
50,069
      
—
      
50,069
      
397
      
50,466
      
78,222
    
Income (loss) from operations
        
4,758
      
—
      
4,758
      
(634
)
    
4,124
      
6,393
    
Other expenses
        
525
      
—
      
525
      
—
      
525
      
814
    
Income (loss) before income taxes
        
4,233
      
—
      
4,233
      
(634
)
    
3,599
      
5,579
    
Provision (benefit) for income taxes
        
1,361
      
—
      
1,361
      
(316
)(d)
    
1,045
      
1,620
    
Income (loss) from controlling interests
        
2,872
      
—
      
2,872
      
(318
)
    
2,554
      
3,959
    
Non-controlling interest
        
(7
)
    
—
      
(7
)
    
7
(b)
    
—
      
—
    
Loss on discontinued operations
        
—
      
—
      
—
      
(134
)(b)
    
(134
)
    
(209
)
  
Net income (loss)
        
£ 2,865
      
£ —
      
£ 2,865
      
£(445
)
    
£ 2,420
    
$
3,750
    
 
(a)  
Reclassification from Premex’s UK GAAP income statement presentation to US GAAP statements of operations presentation. This includes conforming adjustments to make Premex’s presentation for revenues, selling, general and administrative expenses and depreciation and amortization expenses consistent with the presentation of the Company’s financial statement line items.
 
 
 
 

EXAMWORKS AND ACQUIRED BUSINESSES
 
Notes to the Unaudited Pro Forma Condensed Combined Financial Statements

 
NOTE 5 — UK GAAP to US GAAP Adjustments (Continued)

(b)  
Adjustment to present the effect of discontinued operations and non-controlling interests in accordance with US GAAP.

(c)  
Adjustment to remove amortization expense related to the amortization of goodwill as allowed by UK GAAP and to record amortization expense related to intangible assets including customer lists, trade names and developed technology in accordance with US GAAP.

(d)  
Adjustment to record income tax expense on UK to US GAAP adjustments.

(e)  
Amounts are converted to U.S. Dollars using an exchange rate of $1.55:£1.00, the average exchange rate for the twelve months ended November 30, 2010.
 
NOTE 6 — Adjusted EBITDA
 
In connection with the ongoing operation of our business, our management regularly reviews Adjusted EBITDA, a non-GAAP financial measure, to assess our performance. We define Adjusted EBITDA as earnings before interest, taxes, depreciation, amortization, acquisition-related transaction costs, share-based compensation expenses, and other non-recurring costs. We believe that Adjusted EBITDA is an important measure of our operating performance because it allows management, lenders, investors and analysts to evaluate and assess our core operating results from period to period after removing the impact of changes to our capitalization structure, acquisition related costs, income tax status, and other items of a non-operational nature that affect comparability.
 
We believe that various forms of the Adjusted EBITDA metric are often used by analysts, investors and other interested parties to evaluate companies such as ours for the reasons discussed above. Additionally, Adjusted EBITDA is used to measure certain financial covenants in our credit facility. Adjusted EBITDA is also used for planning purposes and in presentations to our Board of Directors as well as in our incentive compensation programs for our employees, excluding our senior management.
 
Non-GAAP information should not be construed as an alternative to GAAP information, as the items excluded from the non-GAAP measures often have a material impact on our financial results. Management uses, and investors should use, non-GAAP measures in conjunction with our GAAP results.