<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 18, 1996
MAY & SPEH, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-27872 36-2992650
(Commission File Number) (I.R.S. Employer Identification No.)
1501 Opus Place, Downers Grove, Illinois 60515
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (630) 964-1501
(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On July 18, 1996, the Registrant completed the acquisition of all of the
outstanding capital stock of GIS Information Systems, Inc. ("GIS"), a provider
of data processing outsourcing services based in Oak Brook, Illinois. The
Registrant acquired the stock of GIS from Faneuil Inc. ("Faneuil"), a Boston
based direct marketing services company and a wholly owned subsidiary of Faneuil
ISG, Inc. ("Faneuil ISG"), pursuant to a Stock Purchase Agreement effective July
1, 1996 by and between the Registrant, Faneuil and Faneuil ISG (the
"Acquisition").
On July 24, 1996, the Registrant filed a Current Report on Form 8-K to
report the Acquisition. At that time, the financial statements of GIS and the
pro forma financial information required to be filed under Item 7 of Form 8-K
were not available. The purpose of this amendment is to file such information.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired
Report of Independent Accountants
Balance Sheets -- June 30, 1996 and December 31, 1995
Statements of Operations and Changes in Divisional Equity for the Six
Months Ended June 30, 1996, for the Year Ended December 31, 1995,
for the Period August 25, 1994 through December 31, 1994, for the
Period May 1, 1994 through August 24, 1994, and for the Year
Ended April 30, 1994
Statements of Cash Flows for the Six Months Ended June 30, 1996, for
the Year Ended December 31, 1995, for the Period August 25, 1994
through December 31, 1994, for the Period May 1, 1994 through
August 24, 1994, and for the Year Ended April 30, 1994
Notes to the Financial Statements
(b) Pro Forma Financial Information
Pro Forma Combined Statement of Operations for the Year ended
September 30, 1995
Pro Forma Combined Statement of Operations for the Nine Months Ended
June 30, 1996
Notes to Pro Forma Combined Statements of Operations
Pro Forma Combined Balance Sheet -- June 30, 1996
Notes to Pro Forma Combined Balance Sheet
(c) Exhibits
Exhibit 1* Stock Purchase Agreement dated July 1, 1996 by and between
the Registrant, Faneuil, Inc. and Faneuil ISG, Inc.,
including the following Exhibits: 2.5(a)(iii) Form of
Opinions of Seller's Counsel; 2.5(a)(iv) Form of
Disaffiliation Tax Sharing Agreement; 2.5(b)(ii) Form of
Warrant; 2.5(b)(iv) Form of Opinion of Registrant's
Counsel; 2.5(b)(v) Form of Services Agreement; 2.5(c) Form
of Employment Agreement; 2.5(d) Form of Stock Option
Agreement; 10.8 Form of Set-Off Escrow Agreement
Exhibit 2* Press release issued July 18, 1996 by the Registrant
Exhibit 3* Third Amendment to the Term Loan Agreement between the
Registrant and Harris Trust and Savings Bank, dated July
17, 1996
- ----------------
*Previously filed.
<PAGE>
[LETTERHEAD OF PRICE WATERHOUSE LLP]
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors and
Stockholders of May & Speh, Inc.
In our opinion, the accompanying balance sheets and related statements of
operations and changes in divisional equity and of cash flows present fairly, in
all material respects, the financial position of GIS Information Systems, Inc.
at December 31, 1995 and June 30, 1996, and the results of its operations and
its cash flows for the six months ended June 30, 1996, the year ended December
31, 1995, the period August 25, 1994 through December 31, 1994, the period May
1, 1994 through August 24, 1994 and the year ended April 30, 1994, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
GIS Information Systems, Inc. was a member of a group of affiliated companies
and, as disclosed in Note 5 to the financial statements, had extensive
transactions and relationships with members of the group. Because of these
relationships, it is possible that the terms of these transactions are not the
same as those that would result from transactions among wholly unrelated
parties.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
Chicago, Illinois
September 13, 1996
<PAGE>
GIS Information Systems, Inc.
Balance Sheets
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash $ 400 $ 400
Accounts receivable, trade (net) 2,478,537 2,275,916
Other current assets 192,636 157,690
Deferred taxes -- 8,000
----------- -----------
Total current assets 2,671,573 2,442,006
Property and equipment, net 801,138 650,767
Goodwill 6,499,850 6,897,800
Deferred taxes 349,000 303,000
Other assets 27,880 31,333
----------- -----------
Total assets $10,349,441 $10,324,906
=========== ===========
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities:
Accounts payable, trade $ 1,278,435 $ 1,216,174
Accrued wages and benefits 145,087 173,497
Other current liabilities 43,467 35,705
Deferred taxes 20,000 --
----------- -----------
Total current liabilities 1,486,989 1,425,376
Obligation under capital lease 32,666 --
Accrued rent 366,407 388,005
----------- -----------
Total liabilities 1,886,062 1,813,381
----------- -----------
Divisional equity 8,463,379 8,511,525
Commitments and contingencies -- --
----------- -----------
$10,349,441 $10,324,906
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
GIS Information Systems, Inc.
Statements of Operations and Changes in Divisional Equity
<TABLE>
<CAPTION>
For the period For the period
For the six For the year August 25, 1994 May 1, 1994 For the year
months ended ended through through ended April 30,
June 30, 1996 December 31, 1995 December 31, 1994 August 24, 1994 1994
------------- ------------------ ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Net revenues $6,826,750 $12,910,181 $4,377,745 $3,805,233 $11,448,245
Operating expenses:
Wages and benefits 2,362,217 4,559,634 1,443,478 1,111,960 3,686,049
Services and supplies 453,133 834,192 269,697 118,232 451,927
Rents, leases and
maintenance 2,590,964 4,697,596 1,504,798 1,385,166 3,883,600
Depreciation and
amortization 541,306 1,118,193 421,757 196,521 825,706
Other operating expenses 690,433 1,404,700 664,793 564,094 2,521,486
---------- ----------- ---------- ---------- -----------
Operating income 188,697 295,866 73,222 429,260 79,477
Other (income) expense: (3,869) 6,510 7,938 (259) 4,748
---------- ----------- ---------- ---------- -----------
Income before income taxes 192,566 289,356 65,284 429,519 74,729
Provision for income taxes 76,000 113,000 25,000 194,000 105,000
---------- ----------- ---------- ---------- -----------
Net income (loss) $ 116,566 $ 176,356 $ 40,284 $ 235,519 $ (30,271)
========== =========== ========== ========== ===========
Net income (loss) $ 116,566 $ 176,356 $ 40,284 $ 235,519 $ (30,271)
Net transfers (to) from (164,712) (1,416,433) 1,118,086 47,517 (2,060,612)
parent company
Divisional equity at
beginning of period 8,511,525 9,751,602 8,593,232 1,983,933 4,312,263
Cumulative effect of adoption
of SFAS No. 109, net of tax - - - - (237,447)
---------- ----------- ---------- ---------- -----------
Divisional equity at
end of period $8,463,379 $ 8,511,525 $9,751,602 $2,266,969 $ 1,983,933
========== =========== ========== ========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
GIS Information Systems, Inc.
Statements of Cash Flows
<TABLE>
<CAPTION>
For the period For the period
For the six For the year August 25, 1994 May 1, 1994 For the year
months ended ended through through ended April 30,
June 30, 1996 December 31, 1995 December 31, 1994 August 24, 1994 1994
------------- ----------------- ----------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 116,566 $ 176,356 $ 40,284 $ 235,519 $ (30,271)
Adjustments to reconcile net
income (loss) to cash provided
by (used in) operating activities:
Depreciation and
amortization 541,306 1,118,193 421,757 196,521 825,706
Change in deferred taxes (18,000) (72,000) 25,000 194,000 105,000
Changes in assets and
liabilities:
Accounts receivable, net (202,621) (145,247) (588,252) 119,123 (432,935)
Other current assets (34,946) 123,165 8,747 (85,346) 66,057
Accounts payable and
other current liabilities 41,613 661,648 (975,172) (578,391) 1,327,946
Other assets and liabilities 14,521 (39,428) (34,525) (8,065) 615,632
---------- ---------- ---------- ---------- -----------
Net cash provided by (used
in) operating activities 458,439 1,822,687 (1,102,161) 73,361 2,477,135
---------- ---------- ---------- ---------- -----------
Cash flows from investing activities:
Purchases of property
and equipment (280,598) (406,154) (16,025) (120,878) (416,523)
---------- ---------- ---------- ---------- -----------
Cash flows from financing activities:
Net transfers (to) from parent
company (164,712) (1,416,433) 1,118,086 47,517 (2,060,612)
Principal payments under
capital lease obligation (13,129) - - - -
---------- ---------- ---------- ---------- -----------
Net cash provided by (used
in) financing activities (177,841) (1,416,433) 1,118,086 47,517 (2,060,612)
---------- ---------- ---------- ---------- -----------
Net change in cash - 100 (100) - -
Cash:
Beginning of period 400 300 400 400 400
---------- ---------- ---------- ---------- -----------
End of period $ 400 $ 400 $ 300 $ 400 $ 400
========== ========== ========== ========== ===========
Non-cash financing/investing
activities:
Acquisition of computer
equipment under capital leases $ 45,795 $ - $ - $ - $ -
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
GIS INFORMATION SYSTEMS, INC.
NOTES TO THE FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
In July 1996, May & Speh, Inc. entered into an agreement to purchase all of the
outstanding common stock of GIS Information Systems, Inc. (GIS), a wholly owned
subsidiary of Faneuil, Inc. (Faneuil), which is a wholly owned subsidiary of
Faneuil ISG, Inc. GIS is a provider of data processing outsourcing services
primarily in the midwestern United States.
GIS was purchased by Faneuil in August 1994 from the InfoVest Corporation
(InfoVest). The financial statements presented herein for the year ended April
30, 1994 and for the period May 1, 1994 through August 24, 1994 are from
Infovest's accounting records and all subsequent periods are from Faneuil's
accounting records. Due to the change in ownership, the basis of certain assets
was adjusted at the date of purchase and GIS's fiscal year-end was changed from
April 30 to December 31.
The accompanying financial statements reflect the financial position and results
of operations of GIS as if GIS had been operating as a separate company. The
assets, liabilities and results of operations specifically related to GIS have
been included in the financial statements. Certain corporate, general and
administrative expenses of Faneuil have been allocated to GIS (see Note 5) on a
basis which in the opinion of management is reasonable. However, such expenses
are not necessarily indicative of, and it is not practical for management to
estimate the level of, expenses which might have been incurred had GIS been
operated as a separate company. Corporate, general and administrative expenses
of InfoVest were not allocated to GIS for the periods ended April 30, 1994 and
August 24, 1994.
Revenue recognition
Revenue is recognized as services are performed.
Accounts receivable
Accounts receivable consist primarily of trade balances due from third parties.
The allowance for doubtful accounts at June 30, 1996 and December 31, 1995 was
$0 and $19,300, respectively. Accounts receivable are unsecured.
Other current assets
Other current assets consist primarily of prepaid costs associated with GIS's
information management programs.
<PAGE>
Property and equipment
Property and equipment is recorded at cost. Depreciation is recorded on a
straight line basis over the estimated useful lives of the related assets,
principally five years. Amortization of leasehold improvements is provided on a
straight-line basis over the shorter of the lease term or the estimated useful
life of the asset. Expenditures for repairs and maintenance are expensed as
incurred.
Goodwill
Goodwill, which arose from Faneuil's and InfoVest's acquisition of GIS, is
amortized on a straight-line basis over ten and fifteen years, respectively.
Management evaluates the carrying value of goodwill on an ongoing basis, and if
a permanent impairment is identified, the goodwill will be written down
accordingly. In order to determine if a permanent impairment exists, management
compares the unamortized goodwill to the expected value of the net cash flow
over the remaining amortization period.
Income taxes
Effective May 1, 1993, GIS adopted SFAS No. 109, "Accounting for Income Taxes."
Adoption of this statement resulted in a reduction of retained earnings at May
1, 1993 of $237,447 and had no effect on GIS's results of operations for the
year ended April 30, 1994.
For federal and state income tax purposes, taxable income of GIS is included in
the consolidated tax returns of its parent. Income taxes have been provided
herein as if GIS had filed separate federal and state income tax returns. The
liability for current income taxes has been recognized as a component of
divisional equity in the accompanying financial statements. GIS uses the asset
and liability approach under which deferred income taxes are provided for
temporary differences between the financial reporting and income tax bases of
assets and liabilities based on enacted tax laws and rates for the periods in
which the differences are expected to affect taxable income.
Significant customers
CCC Information Services accounted for 28%, 26% and 30% of GIS's revenues for
the periods ended June 30, 1996, December 31, 1995 and December 31, 1994,
respectively. Prior to August 25, 1994, GIS and CCC Information Services were
both subsidiaries of InfoVest. There was no single customer with revenues
exceeding ten percent of total revenue for the periods ended August 24, 1994 and
April 30, 1994.
<PAGE>
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Fair value of financial instruments
The carrying amount reported in the consolidated balance sheets for cash,
accounts receivable, prepaid expenses and other current assets, accounts
payable, accrued expenses and accrued rent approximates fair value because of
the immediate or short-term maturity of these financial instruments.
Earnings per share
The historical earnings per share data is considered irrelevant and thus has not
been presented in the accompanying financial statements.
NOTE 2 - PROPERTY AND EQUIPMENT
Property and equipment are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
-------------- ------------------
<S> <C> <C>
Computer software and equipment $1,381,670 $1,087,943
Office furniture and equipment 21,251 21,251
Leasehold improvements 20,323 20,323
---------- ----------
1,423,244 1,129,517
Accumulated depreciation (622,106) (478,750)
---------- ----------
$ 801,138 $ 650,767
========== ==========
</TABLE>
NOTE 3 - GOODWILL
Goodwill arising from Faneuil's purchase of GIS in 1994 is stated net of
accumulated amortization of $1,459,150 and $1,061,200 at June 30, 1996 and
December 31, 1995, respectively.
<PAGE>
NOTE 4 - INCOME TAXES
GIS's provision for income taxes is summarized as follows:
<TABLE>
<CAPTION>
For the
period
August 25,
For the year 1994 For the period
For the six months ended through May 1, 1994 For the year
ended June 30, December December through August ended April 30,
1996 31, 1995 31, 1994 24, 1994 1994
---- -------- -------- -------- ----
<S> <C> <C> <C> <C> <C>
Current:
Federal $ 82,000 $161,000 $ - $ 60,000 $ 530,000
State 12,000 24,000 - 9,000 90,000
-------- -------- -------- ----------
94,000 185,000 - 69,000 620,000
Deferred:
Federal (16,000) (63,000) 22,000 109,000 (440,000)
State (2,000) (9,000) 3,000 16,000 (75,000)
-------- -------- ------- -------- ---------
(18,000) (72,000) 25,000 125,000 (515,000)
-------- -------- ------- -------- ---------
$ 76,000 $113,000 $25,000 $194,000 $ 105,000
======== ======== ======= ======== =========
</TABLE>
Tax effects of temporary items giving rise to GIS's deferred income tax asset
(liability) balances are summarized as follows:
<TABLE>
<CAPTION>
June 30, 1996 December 31, 1995
------------- -----------------
<S> <C> <C>
Deferred Tax Assets:
Goodwill $190,000 $138,000
Accrued Rent 159,000 165,000
Other 55,000 69,000
-------- --------
Total $404,000 $372,000
Deferred Tax Liabilities:
Prepaids 75,000 61,000
-------- --------
Total $329,000 $311,000
======== ========
</TABLE>
A reconciliation of the statutory federal income tax rate to GIS's effective tax
rate for the six month period ended June 30, 1996, the year ended December 31,
1995, the period August 25, 1994 through December 31, 1994, the period May 1,
1994 through August 24, 1994, and the year ended April 30, 1994 is as follows:
<PAGE>
<TABLE>
<CAPTION>
For the
Period For the
August 25, period May
For the six For the 1994 1, 1994
months year ended through through For the year
ended June December December August 24, ended April
30, 1996 31, 1995 31, 1994 1994 30, 1994
----------- --------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C>
Income taxes at federal
statutory rate 34.0% 34.0% 34.0% 34.0% 34.0%
State taxes, net of federal
benefit 5.0 5.0 5.0 5.0 5.0
Nondeductible goodwill - - - 6.1 111.5
Provision to return
reconciliation (5.6)
Other, net .4 .1 (.7) .1 (4.4)
---- ---- ---- ---- -----
Total 39.4% 39.1% 38.3% 45.2% 140.5%
==== ==== ==== ==== =====
</TABLE>
NOTE 5 - INTERCOMPANY EQUITY, ALLOCATIONS AND TRANSACTIONS WITH PARENT COMPANIES
Faneuil, and prior thereto, InfoVest, controlled all aspects of cash management
for GIS as well as intercompany sales, accounts receivable and accounts payable.
The net intercompany balances are reflected as a component of divisional equity.
Faneuil does not impute interest on these balances or net intercompany equity.
In addition to intercompany cash transactions, equity, as reported in the
accompanying financial statements, includes the undistributed net income of GIS.
Allocations from Faneuil consist of general and administrative costs incurred on
behalf of GIS. These charges are allocated to GIS based upon a formula which
utilizes certain measures of volume.
In the opinion of management, the expense allocations were made on a reasonable
basis; however, they are not necessarily indicative of expenses which might have
been incurred on a stand-alone basis. The amounts that would have been incurred
on a separate company basis could differ from the amounts allocated due to
economies of scale, differences in management approach, or changes in the number
of employees and related systems and expenses.
<PAGE>
Faneuil expense allocations to GIS are reflected in the accompanying financial
statements as follows:
<TABLE>
<CAPTION>
<S> <C>
For the six months ended June 30, 1996 $ 900,000
For the year ended December 31, 1995 1,810,000
For the period August 25, 1994 to
December 31, 1994 580,000
</TABLE>
Intercompany revenues with Faneuil included in GIS's net revenues reported in
the statement of operations for the periods ended June 30, 1996, December 31,
1995 and December 31, 1994 were $68,974, $245,639 and $134,981, respectively.
Intercompany revenues with InfoVest for the periods ended August 24, 1994 and
April 30, 1994 were $1,283,396 and $3,604,959, respectively. Corporate, general
and administrative expenses of InfoVest were not allocated to GIS for the
periods ended April 30, 1994 and August 24, 1994.
NOTE 6 - EMPLOYEE SAVINGS PLAN
Prior to May & Speh's acquisition of GIS, employees of GIS were eligible to
participate in an employee savings plan (the Savings Plan) sponsored by Faneuil
which qualifies as a deferred salary arrangement under section 401(k) of the
Internal Revenue Code. Under the Savings Plan, participating employees could
defer a portion of their pretax earnings, up to the annual contribution
limitation under the Internal Revenue Code. Faneuil matches 30% of employee
contributions up to a maximum of $500 per employee annually. Matching
contributions allocated to GIS for the six months ended June 30, 1996, the year
ended December 31, 1995, and the period August 25, 1994 through December 31,
1994 were $15,960, $19,202 and $2,228, respectively.
NOTE 7 - COMMITMENTS AND CONTINGENCIES
GIS leases facilities, computers, telecommunications and office equipment under
noncancellable operating leases which expire through the year 2005. The
aggregate future minimum lease commitments under these operating leases at June
30, 1996 are as follows:
<TABLE>
<CAPTION>
<S> <C>
For the period July 1, 1996 to
December 31, 1996 $1,030,622
1997 1,951,664
1998 1,502,439
1999 1,038,435
2000 327,048
Thereafter 545,011
----------
Total $6,395,219
==========
</TABLE>
Operating lease expense was $2,043,706, $3,602,045, $1,119,915, $1,035,039 and
$1,613,451 for the periods ended June 30, 1996, December 31, 1995, December 31,
1994, August 24, 1994 and April 30, 1994, respectively.
<PAGE>
May & Speh, Inc.
----------------
Pro Forma Combined Statement of Operations
For the Year Ended September 30, 1995
-------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
GIS
Information May & Pro Forma Pro Forma
Systems, Inc. Speh, Inc. Adjustments Combined
-------------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net revenues $12,712,770 $61,641,273 $ (900,000) (c) $73,454,043
----------- ----------- ----------- -----------
Operating expenses:
Wages and benefits 4,790,097 20,983,636 (1,700,000) (d) 24,073,733
Services and supplies 995,199 4,160,441 (343,900) (d) 4,811,740
Rent, leases and
maintenance 4,194,649 13,878,290 (108,600) (d) 17,964,339
Depreciation and
amortization 977,048 1,230,066 (795,900) (a) 1,820,979
409,765 (b)
Other operating
expenses 1,551,975 5,106,579 (162,900) (d) 6,495,654
ESOP principal
payments - 2,410,539 2,410,539
------------ ----------- ----------- -----------
12,508,968 47,769,551 (2,701,535) 57,576,984
------------ ----------- ----------- -----------
Operating income 203,802 13,871,722 1,801,535 15,877,059
------------ ----------- ----------- -----------
Interest and other expense:
ESOP interest - 863,809 863,809
Other, net 5,465 482,367 487,832
------------ ----------- ----------- -----------
5,465 1,346,176 1,351,641
------------ ----------- ----------- -----------
Income before income
taxes 198,337 12,525,546 1,801,535 14,525,418
Income taxes 77,000 4,665,000 703,000 5,445,000
------------ ----------- ----------- -----------
Net income $ 121,337 $ 7,860,546 $ 1,098,535 $ 9,080,418
============ =========== =========== ===========
</TABLE>
See accompanying notes to pro forma combined statements of operations.
<PAGE>
May & Speh, Inc.
----------------
Pro Forma Combined Statement of Operations
For the Nine Months Ended June 30, 1996
---------------------------------------
(Unaudited)
<TABLE>
<CAPTION>
GIS
Information May & Pro Forma Pro Forma
Systems, Inc. Speh, Inc. Adjustments Combined
------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Net revenues $10,147,563 $55,173,175 $ (675,000) (c) $64,645,738
----------- ----------- ----------- -----------
Operating expenses:
Wages and benefits 3,151,638 17,459,244 (1,325,000) (d) 19,285,882
Services and supplies 470,516 4,700,336 (256,500) (d) 4,914,352
Rent, leases and
maintenance 4,253,006 13,061,278 (81,000) (d) 17,233,284
Depreciation and
amortization 940,933 1,150,883 (397,950) (a) 1,904,301
210,435 (b)
Other operating
expenses 1,094,711 4,940,875 (197,700) (d) 5,837,886
ESOP principal
payments - 1,781,942 1,781,942
----------- ----------- ----------- -----------
9,910,804 43,094,558 (2,047,715) 50,957,647
----------- ----------- ----------- -----------
Operating income 236,759 12,078,617 1,372,715 13,688,091
----------- ----------- ----------- -----------
Interest and other expense:
ESOP interest - 477,962 477,962
Other, net 4,713 (162,472) (157,759)
----------- ----------- ----------- -----------
4,713 315,490 320,203
Income before income
taxes 232,046 11,763,127 1,372,715 13,367,888
Income taxes 90,000 4,666,000 535,000 5,291,000
----------- ----------- ----------- -----------
Net income $ 142,046 $ 7,097,127 $ 837,715 $ 8,076,888
=========== =========== =========== ===========
</TABLE>
See accompanying notes to pro forma combined statements of operations.
<PAGE>
May & Speh, Inc.
----------------
Notes To Pro Forma Combined Statements Of Operations
----------------------------------------------------
Note 1 - Basis of Presentation
- ------------------------------
The unaudited pro forma combined statements of operations give effect to the
acquisition of GIS Information Systems, Inc. (GIS) by May & Speh, Inc. in a
transaction to be accounted for as a purchase. These statements are based on the
individual statements of operations of May & Speh, Inc. and GIS and combine
their results of operations for the year ended September 30, 1995 and the nine
months ended June 30, 1996 as if the acquisition occurred as of the beginning of
the periods presented.
Note 2 - Pro Forma Adjustments
- ------------------------------
The pro forma combined statements of operations have been prepared to reflect
the acquisition of GIS by May & Speh, Inc. Pro forma adjustments have been made
to reflect:
(a) Elimination of GIS's pre-acquisition goodwill amortization.
(b) Goodwill resulting from May & Speh, Inc.'s acquisition of GIS, amortized
over 40 years.
(c) Reduction in revenue related to renegotiated contracts in conjunction with
May & Speh, Inc.'s acquisition of GIS.
(d) Elimination of certain corporate expenses, principally relating to employee
wages and fringe benefits, allocated by GIS's parent company. Such charges
will not continue after the acquisition.
<PAGE>
May & Speh, Inc.
----------------
Pro Forma Combined Balance Sheet
June 30, 1996
-------------
(Unaudited)
<TABLE>
<CAPTION>
GIS
Information May & Pro Forma Pro Forma
Systems, Inc. Speh, Inc. Adjustments Combined
------------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash
equivalents $ 400 $ 31,579,656 (16,148,513) (c) 15,431,543
Marketable securities - 18,542,827 18,542,827
Accounts receivable, net 2,478,537 18,783,664 21,262,201
Prepaid software
royalties and other
current assets 192,636 3,437,160 3,629,796
Deferred income taxes - 359,000 359,000
----------- ------------ ----------- ------------
Total current assets 2,671,573 72,702,307 (16,148,513) 59,225,367
Property, plant and
equipment 801,138 29,793,010 30,594,148
Other assets 6,876,730 5,562,229 (6,499,850) (a) 22,424,093
16,484,984 (c)
----------- ------------ ----------- ------------
Total assets $10,349,441 $108,057,546 ($6,163,379) $112,243,608
=========== ============ =========== ============
LIABILITIES
Current liabilities:
Current maturities of
long-term debt $ - $ 4,815,123 4,815,123
Accounts payable 1,278,435 3,622,112 4,900,547
Accrued payroll and
other current liabilities 208,554 5,785,534 5,994,088
----------- ------------ ----------- ------------
Total current
liabilities 1,486,989 14,222,769 15,709,758
Long-term debt and
other long-term liabilities 399,073 22,901,252 1,000,000 (c) 24,300,325
Deferred income taxes - 916,000 916,000
----------- ------------ ----------- ------------
Total liabilities 1,886,062 38,040,021 1,000,000 40,926,083
----------- ------------ ----------- ------------
Stockholders' equity 8,463,379 70,017,525 (8,463,379) (b) 71,317,525
1,300,000 (c)
----------- ------------ ----------- ------------
$10,349,441 $108,057,546 ($6,163,379) $112,243,608
=========== ============ =========== ============
</TABLE>
<PAGE>
May & Speh, Inc.
----------------
Note To Pro Forma Combined Balanced Sheet
-----------------------------------------
The unaudited pro forma combined balance sheet has been prepared to reflect the
acquisition of GIS Information Systems, Inc. (GIS) by May & Speh, Inc. for an
aggregate purchase price of $18,448,513. Pro forma adjustments have been made to
reflect:
(a) The elimination of goodwill allocated by Faneuil, Inc. to GIS,
(b) The elimination of GIS's divisional equity, and
(c) Cash paid ($16,148,513), certain deferred payments ($1,000,000) and
warrants issued ($1,300,000), at fair value, for the purchase of GIS by May
& Speh, Inc. and the recognition of the related goodwill.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
MAY & SPEH, INC.
Date: October 1, 1996 /s/ Robert C. Early
------------------------------------
By: Robert C. Early
Title: Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
<S> <C> <C>
1* Stock Purchase Agreement dated July 1, 1996 by and between the
Registrant, Faneuil, Inc. and Faneuil ISG, Inc., including the
following Exhibits: 2.5(a)(iii) Form of Opinions of Seller's Counsel;
2.5(a)(iv) Form of Disaffiliation Tax Sharing Agreement; 2.5(b)(ii)
Form of Warrant; 2.5(b)(iv) Form of Opinion of Registrant's Counsel;
2.5(b)(v) Form of Services Agreement; 2.5(c) Form of Employment
Agreement; 2.5(d) Form of Stock Option Agreement; 10.8 Form of Set-Off
Escrow Agreement
2* Press release issued July 18, 1996 by the Registrant
3* Third Amendment to the Term Loan Agreement between the
Registrant and Harris Trust and Savings Bank, dated July 17, 1996
</TABLE>
- -----------------
*Previously filed.
