UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended September 30, 1996
--------------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
For the transition period ended from to
----------- -----------
Commission file number 0-28148
---------
THE VINCAM GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 59-2452823
------------------------------ ----------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2850 Douglas Road, Miami FL 33134 (305) 460-2350
------------------------------------ -------------------------------
(Registrant's address) (Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class of common stock Outstanding as of November 14, 1996
----------------------- -------------------------------------
$.001 par value 7,999,999
Page 1 of 28
<PAGE>
THE VINCAM GROUP, INC.
INDEX
Page
------
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of December 31,
1995, and September 30, 1996 (Unaudited)........ 3
Unaudited Consolidated Statements of Income
for the three and the nine months ended
September 30, 1995 and 1996..................... 5
Unaudited Consolidated Statement of Changes
in Stockholders' (Deficit) Equity for the
nine months ended September 30, 1996............ 6
Unaudited Consolidated Statements of Cash
Flows for the nine months ended September 30,
1995 and 1996................................... 7
Notes to Consolidated Financial Statements
(Unaudited)..................................... 10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations................................. 17
Part II. OTHER INFORMATION
Item 1. Legal Proceedings.......................... 26
Item 5. Other Information.......................... 26
Item 6. Exhibits and Reports on Form 8-K .......... 26
SIGNATURES.......................................... 28
Page 2 of 28
<PAGE>
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE VINCAM GROUP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(Audited) (Unaudited)
------------- -------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 912,272 $ 21,237,943
Restricted cash 4,064,040 5,314,040
Accounts receivable, net of allowance
for doubtful accounts of $184,591 and
$370,833 in 1995 and 1996, respectively 8,289,556 12,874,936
Due from affiliates 101,095 105,787
Deferred taxes 774,783 1,013,604
Prepaid expenses and other
current assets 378,686 1,006,736
------------- -------------
Total current assets 14,520,432 41,553,046
Property and equipment, net 2,507,025 3,306,435
Deferred taxes 451,529 676,566
Contract acquisition costs and
other assets 339,805 325,652
Goodwill, net of accumulated
amortization of $20,603 -- 6,096,461
------------- -------------
$ 17,818,791 $ 51,958,160
============= =============
</TABLE>
Page 3 of 28
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1995 1996
(Audited) (Unaudited)
------------- -------------
<S> <C> <C>
Liabilities and Stockholders'
(Deficit) Equity
Current liabilities:
Accounts payable and accrued
expenses $ 1,302,665 $ 2,016,912
Accrued salaries, wages and
payroll taxes 6,618,291 8,009,193
Promissory notes and other payables -- 2,623,437
Reserve for claims 2,137,149 3,170,644
Income taxes payable 141,987 1,697,981
Current portion of long term
borrowings 1,305,362 50,004
Distribution payable 700,000 --
Deferred compensation 263,000 242,013
------------- -------------
Total current liabilities 12,468,454 17,810,184
Long term borrowings, less
current portion 1,100,972 808,225
Reserve for claims 1,010,792 1,628,139
Income taxes payable 1,386,323 672,818
Deferred compensation 294,300 41,200
Other liabilities 45,338 45,338
------------- -------------
Total liabilities 16,306,179 21,005,904
------------- -------------
Commitments and contingencies (Note 11) -- --
------------- -------------
Preferred stock, $.01 par value,
20,000,000 shares authorized 6,263,610 --
------------- -------------
Stockholders'(deficit) equity:
Common stock, $.001 par value,
60,000,000 shares authorized,
7,999,999 shares issued and
outstanding 4,956 8,000
Additional paid in capital -- 33,301,881
Accumulated deficit (4,755,954) (2,357,625)
------------- -------------
Total stockholders' (deficit) equity (4,750,998) 30,952,256
------------- -------------
$ 17,818,791 $ 51,958,160
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 4 of 28
<PAGE>
THE VINCAM GROUP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- -----------------------------
1995 1996 1995 1996
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 58,383,091 $ 99,459,425 $170,859,711 $268,529,624
------------- ------------- ------------- -------------
Direct costs:
Salaries, wages and employment taxes
of worksite employees 51,547,189 86,698,547 151,099,401 235,469,000
Health care and workers' compensation 3,451,152 5,022,144 9,214,644 12,866,577
State unemployment taxes and other 346,420 946,625 1,297,811 2,611,773
------------- ------------- ------------- -------------
Total direct costs 55,344,761 92,667,316 161,611,856 250,947,350
------------- ------------- ------------- -------------
Gross profit 3,038,330 6,792,109 9,247,855 17,582,274
------------- ------------- ------------- -------------
Operating expenses:
Administrative personnel 1,566,825 3,148,502 4,554,541 7,944,154
Other general and administrative 682,536 1,181,149 2,208,097 3,385,698
Sales and marketing 480,828 929,598 1,319,531 2,206,922
Provision for doubtful accounts 45,000 97,300 130,000 310,300
Depreciation and amortization 90,138 186,316 230,928 445,506
------------- ------------- ------------- -------------
Total operating expenses 2,865,327 5,542,865 8,443,097 14,292,580
------------- ------------- ------------- -------------
Operating income 173,003 1,249,244 804,758 3,289,694
Interest income (expense), net 10,014 294,811 19,977 456,635
------------- ------------- ------------- -------------
Income before taxes 183,017 1,544,055 824,735 3,746,329
Provision for income taxes (67,180) (555,000) (302,989) (1,348,000)
------------- ------------- ------------- -------------
Net income $ 115,837 $ 989,055 $ 521,746 $ 2,398,329
============= ============= ============= =============
Net income per common and common
equivalent share $ 0.02 $ 0.12 $ 0.08 $ 0.32
============= ============= ============= =============
Weighted average number of shares
outstanding used in earnings per
share calculation 6,462,207 8,534,698 6,480,474 7,563,886
============= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
Page 5 of 28
<PAGE>
THE VINCAM GROUP, INC.
CONSOLIDATED STATEMENT OF CHANGES IN
STOCKHOLDERS' (DEFICIT) EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional Accumulated
Common Stock paid in (deficit)
Shares Par value capital equity Total
------------ --------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1995 4,956,066 $ 4,956 $ (4,755,954) $ (4,750,998)
Issuance of common stock, net
of transaction costs of
$2,958,685 charged to paid
in capital 2,000,000 2,000 $ 27,039,315 -- 27,041,315
Conversion of preferred stock
into common stock 1,043,933 1,044 6,262,566 -- 6,263,610
Net income for the period -- -- -- 2,398,329 2,398,329
------------ --------- ------------- ------------- -------------
Balance at September 30, 1996 7,999,999 $ 8,000 $ 33,301,881 $ (2,357,625) $ 30,952,256
============ ========= ============= ============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Page 6 of 28
<PAGE>
THE VINCAM GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
-----------------------------
1995 1996
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 521,746 $ 2,398,329
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 230,928 445,506
Provision for doubtful accounts 130,000 310,300
Deferred income tax benefit -- (463,858)
Changes in assets and liabilities:
Decrease in restricted cash 186,918 --
Decrease (increase) in accounts receivable 565,314 (4,012,493)
Increase in due from affiliates (3,550) (4,692)
Increase in prepaid expenses and
other current assets (33,309) (626,094)
Decrease (increase) in other assets 75,272 (159,095)
(Decrease) increase in accounts payable and
accrued expenses (122,642) 352,026
Increase in accrued salaries, wages, and
payroll taxes 165,955 166,114
Increase in reserve for claims 238,324 1,220,372
(Decrease) increase in income taxes payable (452,866) 842,489
Decrease in deferred compensation -- (274,087)
------------- -------------
Net cash provided by operating activities 1,502,090 194,817
------------- -------------
Cash flows from investing activities:
Purchases of property and equipment (157,641) (1,192,790)
Collection of notes receivable from stockholders 123,078 --
Cash placed in escrow -- (1,250,000)
Cash paid in acquisition of SMG, net of cash
acquired of $137,748 -- (2,219,566)
------------- -------------
Net cash used in investing activities (34,563) (4,662,356)
------------- -------------
Cash flows from financing activities:
Principal payments on borrowings (53,636) (1,548,105)
Recapitalization costs (445,150) --
Cash paid in connection with acquisition of stock (300,000) --
Issuance of common stock, net of transaction
costs of $2,958,685 -- 27,041,315
Payment of distribution payable -- (700,000)
------------- -------------
Net cash (used in) provided by financing activities (798,786) 24,793,210
------------- -------------
Net increase in cash and cash equivalents 668,741 20,325,671
Cash and cash equivalents, beginning of period 736,420 912,272
------------- -------------
Cash and cash equivalents, end of period $ 1,405,161 $ 21,237,943
============= =============
</TABLE>
Page 7 of 28
<PAGE>
THE VINCAM GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(CONTINUED)
Supplemental disclosure of non-cash investing activities:
- ---------------------------------------------------------
Acquisition of assets of The Stone Mountain Group, Inc.
- -------------------------------------------------------
Fair Value of net assets acquired:
Accounts receivable $ 883,187
Prepaid expenses and other assets 10,231
------------
Total non-cash assets 893,418
------------
Accounts payable and accrued expenses 362,221
Accrued salaries, wages and payroll taxes 1,224,788
Reserve for claims 430,470
------------
Total liabilities assumed 2,017,479
------------
Net non-cash liabilities assumed 1,124,061
Cash acquired 137,748
------------
Net liabilities assumed $ 986,313
============
Promissory notes payable to SMG shareholders $ 1,373,437
Cash placed in escrow 1,250,000
Cash paid for acquisition of SMG 2,357,314
------------
Purchase price $ 4,980,751
============
The following is a reconciliation of the purchase price to the excess of
costs associated with the acquisition over the estimated fair value of net
assets acquired allocated to goodwill:
Purchase price $ 4,980,751
Net liabilities assumed 986,313
Costs associated with the acquisition 150,000
------------
Amount allocated to goodwill $ 6,117,064
============
In connection with the acquisition of assets of The Stone Mountain
Group, Inc., the Company issued promissory notes for $1,373,437 due in 1997
and placed in escrow $1,250,000, in accordance with an escrow agreement
for potential purchase price adjustments in the event that, among other
things, client retention fails to meet certain targets.
Page 8 of 28
<PAGE>
THE VINCAM GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(CONTINUED)
Supplemental disclosure of non-cash financing activities:
- ---------------------------------------------------------
In January 1995, the Company issued a subordinated note payable for $1,200,000
as partial consideration for shares reacquired by the Company.
During February 1995, the Company and its stockholders entered into an
Agreement and Plan of Recapitalization whereby the Company's stockholders
exchanged a portion of their shares of common stock for approximately 166
shares of mandatorily redeemable Series A Participating Convertible Preferred
Stock valued at approximately $6,264,000.
In May 1996, the Company's mandatorily redeemable Series A Participating
Convertible Preferred Stock was converted into 1,043,933 shares of the
Company's common stock.
The accompanying notes are an integral part of these consolidated financial
statements.
Page 9 of 28
<PAGE>
THE VINCAM GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND SEPTEMBER 30, 1996
(Unaudited)
NOTE 1 - BASIS FOR PRESENTATION OF CONSOLIDATED FINANCIAL STATEMENTS
The accompanying unaudited consolidated financial statements of The Vincam
Group, Inc. have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions for Form 10-Q and Rule 10-01 of Regulation S-X. They do not
include all information and notes required by generally accepted accounting
principles for complete financial statements and should be read in conjunction
with the audited consolidated financial statements and notes thereto for the
year ended December 31, 1995 included in the Company's Registration Statement
on Form S-1 (File No. 333-1594), as amended. The financial information
furnished reflects all adjustments, consisting only of normal recurring
accruals, which are, in the opinion of management, necessary for a fair
presentation of the financial position, results of operations and of cash
flows for the interim periods presented. The results of operations for the
periods presented are not necessarily indicative of the results for the entire
year.
Certain reclassifications have been made to the consolidated financial
statements of prior periods to conform to the current period presentation.
The accompanying unaudited financial statements include the accounts of The
Vincam Group, Inc. and its subsidiaries (the "Company"). All material
intercompany balances and transactions have been eliminated.
NOTE 2 - ACQUISITION
On August 30, 1996, the Company acquired substantially all of the assets of
The Stone Mountain Group, Inc. ("SMG"), a professional employer organization
("PEO"), headquartered in Snellville, Georgia for approximately $5 million in
cash and notes (the "Acquisition"). Of the approximately $5 million purchase
price, $2.4 million was paid in cash, $1.4 million will be payable in 1997,
and $1.2 million was placed in escrow in accordance with an escrow agreement for
potential purchase price adjustmentsin the event that, among other
things, client retention fails to meet certain targets. The Acquisition was
accounted for by the Company using the purchase method of accounting. The excess
of costs associated with the Acquisition over the estimated fair value
of net assets acquired was allocated to goodwill. Certain information
necessary to determine the final purchase price of the Acquisition is not yet
available; management does not expect the completion of the valuation process
will have a significant effect on the accompanying financial statements. The
most significant adjustments to the balance sheet resulting from the Acquisition
are disclosed in the supplemental disclosure of non-cash investing and financing
activities in the accompanying statement of cash flows.
Page 10 of 28
<PAGE>
The following information presents the unaudited pro forma consolidated results
of operations for the nine months ended September 30, 1995 and 1996 of the
Company as if the Acquisition had occurred at the beginning of the periods
presented, after giving effect to certain adjustments, including amortization of
goodwill and the related provision for taxes.
(In Thousands, Except Per Share Data)
SEPTEMBER 30, SEPTEMBER 30,
1995 1996
-------------- --------------
Revenues $ 201,267,104 $ 296,245,469
============== ==============
Net Income $ 620,550 $ 2,321,305
============== ==============
Net income per common and common
equivalent share $ 0.10 $ 0.31
============== ==============
These results are presented for informational purposes only and are not
necessarily indicative of the future results of operations or financial
position of the Company or the results of operations or financial position of
the Company that would have been achieved had the Acquisition occurred at
the beginning of each of the periods presented.
NOTE 3 - INITIAL PUBLIC OFFERING
In May 1996, the Company completed its initial public offering and received
proceeds of approximately $27,900,000, net of $2,100,000 underwriting
discounts and commissions, from the sale of 2,000,000 shares of common stock
of the Company. The Company used a portion of the proceeds to retire a
subordinated promissory note in the amount of $1,200,000 (see Note 7) and to
pay a $700,000 distribution payable related to the Company's repurchase of an
option to purchase the Company's headquarters. In addition, the Company
incurred approximately $860,000 in other costs in connection with the
offering. Simultaneously with the completion of the initial public offering,
the Company's mandatorily redeemable Series A Participating Convertible
Preferred Stock (the "Series A Preferred Stock") was converted into 1,043,933
shares of the Company's common stock (see Note 8).
Also in connection with the completion of the Company's initial public
offering, the Company amended and restated its Articles of Incorporation to
increase the authorized number of shares of the Company's common stock from
39,500,000 to 60,000,000, and to increase the authorized number of shares of
preferred stock from 500,000 to 20,000,000.
NOTE 4 - RESTRICTED CASH
The Company had cash deposits at December 31, 1995 and September 30, 1996 in the
amount of $4,000,000 which serve as collateral on certain standby letters of
credit issued in connection with the Company's workers' compensation insurance
plan. These cash deposits have been classified as restricted cash in the
accompanying consolidated balance sheets.
Page 11 of 28
<PAGE>
At December 31, 1995 and September 30, 1996, the Company had deposited in escrow
$64,040 as collateral to guarantee the payment of workers' compensation claims
under its prior workers' compensation insurance plan and has classified these
amounts as restricted cash in the accompanying balance sheets.
In connection with the Acquisition, the Company placed in an escrow account
$1,250,000. This amount has been classified as restricted cash in the
accompanying balance sheet at September 30, 1996 (see Note 2).
NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
Estimated
DECEMBER 31, SEPTEMBER 30, useful lives
1995 1996 (in years)
------------ ------------ ------------
Land $ 284,374 $ 284,374
Building 775,158 775,158 30
Building improvements 510,232 510,232 7
Furniture and fixtures 308,924 577,258 5
Office and computer equipment 1,353,926 2,278,381 3-5
Vehicles 20,249 20,249 3
------------ ------------
3,252,863 4,445,652
Less: accumulated depreciation
and amortization (745,838) (1,139,217)
------------ ------------
$ 2,507,025 $ 3,306,435
============ ============
At December 31, 1995 gross fixed assets included $346,690 of office and
computer equipment under capital lease obligations (see Note 7).
NOTE 6 - RESERVE FOR CLAIMS
The Company's reserves for claims costs consist of the following:
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ ------------
Accrued workers' compensation claims $ 2,197,374 $ 3,539,433
Accrued health care claims 654,182 714,070
Reserve for behavioral health care claims 296,385 545,280
------------ ------------
3,147,941 4,798,783
Less: workers' compensation claims
expected to be settled in more than
one year (1,010,792) (1,628,139)
------------ ------------
Reserve for claims - current $ 2,137,149 $ 3,170,644
============ ============
Page 12 of 28
<PAGE>
NOTE 7 - BORROWINGS
Borrowings are summarized as follows:
DECEMBER 31, SEPTEMBER 30,
1995 1996
------------ ------------
Subordinated note payable, repaid in May 1996
(see Note 3) $ 1,200,000 $ --
Note payable to bank, original amount of
$1 million, repayable in monthly installments
of $4,167, plus interest at 8.5% per annum,
through November 1998 when a balloon
payment of $750,000 is due, secured by land
and building and the personal guarantees of
the Company's principal stockholders 895,732 858,229
Capital lease obligation for computer hardware
and software, repaid in August 1996 310,602 --
------------ ------------
2,406,334 858,229
Less: current portion (1,305,362) (50,004)
------------ ------------
$ 1,100,972 $ 808,225
============ ============
The Company completed an initial public offering during May 1996 and used a
portion of the net proceeds to repay the subordinated note payable of
$1,200,000. Accordingly, this obligation has been classified as current in the
accompanying balance sheet at December 31, 1995.
In December 1995, the Company entered into a credit agreement with a bank,
which was amended on June 5, 1996, furher amended on September 30, 1996.
(the "Credit Agreement"). The Credit Agreement provides for a revolving credit
facility with a sublimit of $8,000,000 to fund working capital advances and
standby letters of credit. Working capital advances under the revolving credit
facility are limited to the lesser of $1,000,000 or the Borrowing Base,
primarily composed of current accounts receivable from unrelated parties.
Amounts outstanding under the revolving credit facility mature June 5, 1997.
The Credit Agreement also has an acquisition loan facility with a sublimit of
$5,000,000. Draws under the acquisition loan facility are available through
June 5, 1998 and are repayable in 36 equal monthly installments commencing on
June 5, 1998. The Company is charged a commitment fee ranging from .25% to
.375% per annum, depending on certain financial ratios, on the unused portion
of the revolving credit facility and the acquisition loan facility.
The Credit Agreement is collateralized by substantially all of the assets of
the Company, excluding the Company's headquarters building. In addition the
standby letters of credit are collateralized with $4,000,000. The Credit
Agreement contains customary events of default and covenants which prohibit
the Company from, among other things, incurring additional indebtedness in
Page 13 of 28
<PAGE>
excess of a specified amount, paying dividends, creating liens and engaging in
certain mergers or combinations without the prior written consent of the
lender. The Credit Agreement also contains certain financial covenants relating
to debt and interest coverage, net worth and other financial ratios.
Interest under the Credit Agreement accrues at rates based on the prime rate
("Prime") plus a margin of as much as .25%, or the Eurodollar rate (as defined
in the Credit Agreement), plus a margin ranging from 1.50% to 2.00%, depending
on certain financial ratios, at the Company's option.
Under the revolving credit facility, the Company had outstanding approximately
$4,981,000 in standby letters of credit at September 30, 1996 which guarantee
the payment of claims to the Company's workers' compensation insurance carrier.
As of that date, there were no amounts outstanding for working capital
advances or under the acquisition loan facility, and all amounts under these
facilities were available at September 30, 1996.
NOTE 8 - MANDATORILY REDEEMABLE PREFERRED STOCK
During February 1995, the Company and its stockholders entered into an
Agreement and Plan of Recapitalization whereby the Company's stockholders
exchanged 1,043,933 shares of common stock for 165.376 shares of Series A
Preferred Stock. As a result of the Company's initial public offering in
May 1996, the Series A Preferred Stock was automatically converted into
1,043,933 shares of common stock (see Note 3).
NOTE 9 - EARNINGS PER SHARE
Net income per common and common equivalent share has been computed based on
the weighted average number of shares of common stock and common stock
equivalents outstanding during each of the periods presented. For purposes of
the calculation of net income per common and common equivalent share, the
mandatorily redeemable preferred stock is also considered a common stock
equivalent.
NOTE 10 - INCOME TAXES
The Company records income tax expense using the liability method of
accounting for deferred income taxes. Under the liability method, deferred tax
assets and liabilities are recognized for the expected future tax consequences
of temporary differences between the financial statement and income tax bases
of the Company's assets and liabilities. An allowance is recorded when it is
more likely than not that any or all of a deferred tax asset will not be
realized. The provision for income taxes includes taxes currently payable plus
the net change during the year in deferred tax assets and liabilities recorded
by the Company.
The Company is subject to certain state taxes based on gross receipts, payroll
and before tax income within that state. Taxes based on gross receipts and
payroll are included as salaries, wages and employment taxes of worksite
employees in the accompanying consolidated statements of income, while taxes
based on income are included within the provision for income taxes.
Page 14 of 28
<PAGE>
Subsequent to December 31, 1994, the Company requested and obtained a change,
for income tax purposes, in the method of accounting for its workers'
compensation loss reserves. As a result, the Company recorded a deferred tax
asset relating to the reserves and an increase in income taxes payable of
approximately $1,386,000. Under the provisions of the Internal Revenue Code
("IRC"), the Company can amortize over three years the payment of taxes due for
changes of accounting methods resulting in taxable income and can recognize
currently deductions resulting from the change in method. The Company has
classified as long term those taxes resulting from this change which it
expects to pay in more than one year.
Realization of the amounts recorded as deferred tax assets is dependent on
generating sufficient taxable income in the future to offset the deductible
temporary differences generating the deferred tax assets. Although realization
is not assured, management believes that it is more likely than not that all
of the deferred tax assets will be realized. The amount of the deferred tax
asset considered realizable, however, could be reduced if estimates of future
taxable income are reduced.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
The Company is a defendant in a lawsuit related to a wrongful death and
premises liability claim involving a worksite employee. The plaintiff's
original complaint sought damages in excess of $10,000,000; however, such
complaint was dismissed in part and amended to seek damages in excess of
$15,000. The court has sustained plaintiff's amended complaint alleging
premises liability against both the Company and its client as a result of a
worksite accident at client's premises. The Company is asserting that its
liability under this claim, if any, should be limited to $100,000 due to the
immunity provisions of the Florida workers' compensation statute involving
worksite accidents. Discovery in the proceeding continues. While there can be
no assurance that the ultimate outcome of this lawsuit will not have a material
adverse effect on the Company's financial condition or results of operations,
management believes, based on consultations with the Company's counsel, that
the ultimate outcome of this lawsuit should not have such an effect.
The Company is a defendant in a lawsuit brought in Dade County Circuit Court
in November 1995 by an individual who alleges that he was injured by an
employee of the Company assigned to work for a client of the Company, which
client owns and operates a hotel and is a co-defendant in the litigation. The
plaintiff alleges that the employee, while he was working as a valet parking
attendant, was negligent in a motor vehicle collision and severely and
permanently injured the plaintiff. The plaintiff alleged damages in excess of
$50,000 in his amended complaint for, among other things, bodily injury, medical
costs, pain and suffering, and lost ability to earn income. Based on
consultations with the Company's counsel, management of the Company believes
that it has meritorious defenses to the plaintiff's claims and that if the
lawsuit is adversely determined, the Company will be entitled to indemnification
from its client and/or its liability insurance carrier. Although management
believes that the Company's ultimate liability in this matter should not be
material, there can be no assurance that the Company will prevail in the
litigation, in a related claim for indemnification, or that the liability of the
Company, if any, would not have a material adverse effect on the Company's
financial condition and results of operations.
Page 15 of 28
<PAGE>
The Company has received a notice of assessment in the amount of approximately
$72,000 from The Treasurer of the State of Florida-Department of Insurance as
Receiver of United States Employer Consumer Self Insurance Fund of Florida,
a workers compensation insurance fund which was declared insolvent (the "Fund").
The Company had certain worksite employees covered by the Fund during fiscal
years ended December 31, 1992, 1993 and 1994. Under the notice of assessment,
the Company may be subject to joint and several liability for other Fund
members which may not have the ability to pay their respective share of the
assessment. The Company believes that there are approximately 700 members
to the Fund which have been assessed in the aggregate $37.0 million.
Although the amount of the potential exposure, if any, under the joint and
several liability is not yet determinable, management believes that the
Company has meritorious defenses to the assessment and that its ultimate
liability in this matter will not have a material adverse effect on the
Company's financial condition or results of operations. There cannot, however,
be any assurance that any such liability will not have such material adverse
effect.
* * * * *
Page 16 of 28
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
This discussion should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto contained herein and Management's Discussion
and Analysis of Financial Condition and Results of Operations appearing in the
Company's Registration Statement on Form S-1, as amended. The results of
operations for an interim period are not necessarily indicative of the results
for the entire year.
Certain statements in this Form 10-Q constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
For this purpose, any statements contained herein that are not statements of
historical facts may be deemed to be forward-looking statements. Without
limiting the foregoing, the words "believes," "anticipates," "plans,"
"expects," "intends" and similar expressions are intended to identify
forward-looking statements. Such forward-looking statements involve known and
unknown risks, uncertainties and other factors, which may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
such forward-looking statements. Such known and unknown risks, uncertainties
and other factors include, among others, the following: (i) potential for
unfavorable interpretation of government regulations relating to labor, taxes,
insurance, employment matters and the provision of managed care services;
(ii) the Company's ability to obtain or maintain all required licenses or
certifications required to further expand the range of specialized managed
care services offered by the Company; (iii) potential increases in the
Company's costs, such as health care costs, that the Company may not be able
to reflect immediately in its service fees; (iv) the Company's ability to
offer its services to prospective clients in additional states where
it has less or no market penetration; (v) higher than expected workers'
compensation claims under the Company's large deductible workers' compensation
insurance policies; (vi) the level of acquisition opportunities available
to the Company; (vii) the financial condition of the Company's clients;
(viii) additional regulatory requirements affecting the Company; (ix) the
impact of competition from existing and new PEO companies; and (x) other factors
which are described in further detail in the Company's filings with the
Securities and Exchange Commission.
OVERVIEW
Vincam, one of the largest professional employer organizations ("PEOs") in the
industry, provides businesses with an outsourcing solution to the complexities
and costs related to employment and human resources. The Company's continuum
of integrated employment-related services consists of human resource
administration, employment regulatory compliance management, workers'
compensation coverage, health care and other employee benefits.
The Company establishes a co-employer relationship with its clients
and contractually assumes substantial employer responsibilities with respect
to worksite employees. In addition, the Company offers certain specialty
managed care services on a stand-alone basis to health and workers'
compensation insurance companies, HMOs, managed care providers and large,
self-insured employers.
Page 17 of 28
<PAGE>
The Company's revenues include all amounts billed to clients for gross
salaries and wages, related employment taxes, and health care and workers'
compensation coverage of worksite employees. The Company is obligated
to pay the gross salaries and wages, related employment taxes and
health care and workers' compensation costs of its worksite employees whether
or not the Company's clients pay the Company on a timely basis or at all.
The Company believes that including such amounts as revenues appropriately
reflects the responsibility which the Company bears for such amounts and is
consistent with industry practice. In addition, the Company's revenues are
subject to fluctuations because of (i) changes in the volume of
worksite employees serviced by the Company; (ii) changes in the wage
base and employment tax rates of worksite employees; and (iii) changes
in the mark-up charged by the Company for its services.
The Company's primary direct costs are (i) salaries, wages, the employer's
portion of social security ("FICA-O"), Medicare premiums ("FICA-M"), federal
unemployment taxes ("FUTA") and the Michigan Single Business Tax, (ii) health
care and workers' compensation costs, and (iii) state unemployment taxes and
other direct costs. The Company can significantly impact its gross profit
margin by actively managing the direct costs described in clauses (ii)
and (iii). The Company manages these direct costs through its use of (i) its
proprietary managed care system, which includes provider networks, utilization
review and case management, (ii) educational programs designed to reduce the
severity and frequency of workplace accidents, and (iii) a variety of other
techniques, including drug-free workplace programs, involvement in hiring,
disciplinary and termination decisions, adjudication of unemployment claims,
and reassignment of laid off workers.
The Company's health care costs consist of medical insurance premiums, payments
of and reserves for claims subject to deductibles and the costs of vision
care, disability, employee assistance and other similar benefit plans. Workers'
compensation costs include medical costs and indemnity payments for lost wages,
administrative costs and insurance premiums related to the Company's workers'
compensation coverage, as well as reserves for claims which have been incurred
but not reported and for anticipated loss development. The Company maintains
reserves for worker's compensation, medical and behavioral health claims which
reserves are estimates based on periodic rewiews of open claims, past claims
experience and other factors deemed relevant by management. See Note 5 of
the Notes to Consolidated Financial Statements set forth in Part I, Item 1.
While the Company believes that such reserves are adequate, the Company cannot
predict with certainty the ultimate liability associated with health care
costs and workers' compensation claims, and past claims experience may not be
indicative of future results. Accordingly, if estimated reserve amounts prove
to be less than the ultimate liability with respect to such claims, the
Company's financial condition, results of operations and liquidity could be
materially adversely affected.
The Company's primary operating expenses are administrative personnel
expenses, other general and administrative expenses, and sales and marketing
expenses. Administrative personnel expenses include compensation, fringe
benefits and other personnel expenses related to internal administrative
employees. Other general and administrative expenses include rent, office
supplies and expenses, legal and accounting fees, insurance and other
operating expenses. Sales and marketing expenses include compensation of sales
executives and the marketing staff, as well as marketing and advertising
expenses.
Page 18 of 28
<PAGE>
RESULTS OF OPERATIONS
The following table sets forth statements of operations data expressed as a
percentage of total revenues:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------- ----------------------
1995 1996 1995 1996
------ ------ ------ ------
<S> <C> <C> <C> <C>
Revenues 100.0% 100.0% 100.0% 100.0%
Direct costs:
Salaries, wages and employment taxes
of worksite employees 88.3% 87.2% 88.4% 87.7%
Health care and workers' compensation 5.9% 5.0% 5.4% 4.8%
State unemployment taxes and other 0.6% 1.0% 0.8% 1.0%
------ ------ ------ ------
Total direct costs 94.8% 93.2% 94.6% 93.5%
------ ------ ------ ------
Gross profit 5.2% 6.8% 5.4% 6.5%
------ ------ ------ ------
Operating expenses:
Administrative personnel 2.7% 3.1% 2.7% 3.0%
Other general and administrative 1.2% 1.3% 1.3% 1.3%
Sales and marketing 0.8% 0.9% 0.8% 0.8%
Depreciation and amortization 0.2% 0.2% 0.1% 0.2%
------ ------ ------ ------
Total operating expenses 4.9% 5.5% 4.9% 5.3%
------ ------ ------ ------
Operating income 0.3% 1.3% 0.5% 1.2%
Interest (expense) income 0.0% 0.3% 0.0% 0.2%
------ ------ ------ ------
Income before taxes 0.3% 1.6% 0.5% 1.4%
Provision for income taxes 0.1% 0.6% 0.2% 0.5%
------ ------ ------ ------
Net income 0.2% 1.0% 0.3% 0.9%
====== ====== ====== ======
</TABLE>
Nine Months Ended September 30, 1996 compared to Nine Months Ended
- ------------------------------------------------------------------
September 30, 1995
- ------------------
The Company's revenues for the nine months ended September 30, 1996, were
$268.5 million, of which $3.7 million were derived from the operations of SMG,
compared to $170.9 million for the same period in 1995, representing an increase
of $97.7 million, or 57.2%. This increase was due primarily to an increased
number of PEO clients and worksite employees. At September 30, 1996, the number
of PEO clients was approximately 575, of which 137 were acquired from SMG,
compared to approximately 300 on the same date last year, representing an
increase of 275, or 91.7%. The number of worksite employees at September 30,
Page 19 of 28
<PAGE>
1996, was approximately 17,220, of which 1,987 were acquired from SMG, compared
to approximately 9,952 on the same date last year, representing an increase of
7,268, or 73.0%. In addition, the Company earned approximately $2.4 million of
revenues from its workers' compensation managed care services during the
nine months ended September 30, 1996, compared to $0.4 million during the
comparable period of 1995. This increase in workers' compensation managed
care service revenues from period to period resulted from an increased number
of workers' compensation managed care service clients.
Salaries, wages and employment taxes of worksite employees were $235.5 million
for the nine months ended September 30, 1996, compared to $151.1 million for the
same period in 1995, representing an increase of $84.4 million, or 55.8%.
Salaries, wages and employment taxes of worksite employees were 87.2% of
revenues for the nine months ended September 30, 1996, compared to 88.4% for the
same period in 1995. The decrease of salaries, wages and employment taxes of
worksite employees as a percentage of revenues was due mainly to incremental
revenues from the Company's workers' compensation managed care services.
Health care and workers' compensation costs were $12.9 million for the nine
months ended September 30, 1996, compared to $9.2 million for the same period in
1995, representing an increase of $3.7 million, or 39.6%. This increase was
due mainly to the higher volume of health care and workers' compensation
claims paid and/or reserved during the 1996 period which was a direct function
of the increase of PEO clients and worksite employees. Health care and
workers' compensation costs were 4.8% of revenues for the nine months ended
September 30, 1996, compared to 5.4% for the same period in 1995. The decrease
of health care and workers' compensation costs as a percentage of revenues was
due mainly to incremental revenues from the Company's workers' compensation
managed care services.
State unemployment taxes and other direct costs were $2.6 million for the
nine months ended September 30, 1996, compared to $1.3 million for the same
period in 1995, representing an increase of $1.3 million or 101.2%.
This increase was due mainly to the higher volume of salaries and wages paid
during the period which was a direct function of the increase of PEO clients
and worksite employees, an increased number of client companies using other
services and products (e.g., 401(k), the drug free workplace program, etc.), as
well as an increase in other direct costs related to the Company's managed
behavioral care services. State unemployment taxes and other direct costs were
1.0% of revenues for the nine months ended September 30, 1996, compared to 0.8%
for the same period in 1995.
Gross profit was $17.6 million for the nine months ended September 30, 1996,
compared to $9.3 million for the same period in 1995, representing an increase
of $8.3 million, or 90.1%. Gross profit was 6.5% of revenues for the nine
months ended September 30, 1996, compared to 5.4% for the same period in 1995.
This increase was due mainly to the increase in revenues resulting from an
increase of PEO clients and worksite employees, and from the increase in
revenues from the Company's workers' compensation managed care services which
carry a higher margin than the Company's PEO services.
Administrative personnel expenses were $7.9 million for the nine months ended
September 30, 1996, compared to $4.6 million for the same period in 1995,
representing an increase of $3.3 million, or 74.4%. This increase was
primarily attributable to increased staffing to support the Company's growth.
Administrative personnel expenses were 3.0% of revenues for the nine months
Page 20 of 28
<PAGE>
ended September 30, 1996, compared to 2.7% for the same period in 1995.
Other general and administrative expenses, including the provision for
doubtful accounts, were $3.7 million for the nine months ended September 30,
1996, compared to $2.3 million for the same period in 1995, representing an
increase of $1.4 million, or 58.1%. This increase in other general and
administrative expenses was primarily attributable to the growth of the
Company's business and the addition of workers' compensation managed care
services, which the Company made available to external clients for
the first time in 1995. Other general and administrative expenses, including
the provision for doubtful accounts, were 1.3% of revenues for the nine months
ended September 30, 1996, compared to 1.3% for the same period in 1995.
Sales and marketing costs were $2.2 million for the nine months ended
September 30, 1996, compared to $1.3 million for the same period in 1995,
representing an increase of $0.9 million, or 67.3%, but as a percentage of
revenue remained at 0.8%. The increase reflects the addition of sales
executives and marketing personnel, consistent with the Company's
strategy to increase its client base in its existing markets.
Three Months Ended September 30, 1996 compared to Three Months Ended
- --------------------------------------------------------------------
September 30, 1995
- ------------------
The Company's revenues for the three months ended September 30, 1996, were
$99.5 million, of which $3.7 million were derived from the operations of SMG,
compared to $58.4 million for the same period in 1995, representing an
increase of $41.1 million, or 70.4%. This increase was due primarily to an
increased number of PEO clients and worksite employees. At September 30, 1996,
the number of PEO clients was approximately 575, of which 137 were acquired from
SMG, compared to approximately 300 on the same date last year, representing an
increase of 275, or 91.7%. The number of worksite employees at September 30,
1996, was approximately 17,220, of which 1,987 were acquired from SMG, compared
to approximately 9,952 on the same date last year, representing an increase of
7,268, or 73.0%. In addition, the Company earned approximately $0.8 million of
revenues from its workers' compensation managed care services during the three
months ended September 30, 1996, compared to $0.1 million during the comparable
period of 1995. This increase in workers' compensation managed care service
revenues from period to period resulted from an increased number of workers'
compensation managed care service clients.
Salaries, wages and employment taxes of worksite employees were $86.7 million
for the three months ended September 30, 1996, compared to $51.5 million for the
same period in 1995, representing an increase of $35.2 million, or 68.2%.
Salaries, wages and employment taxes of worksite employees were 87.2% of
revenues for the three months ended September 30, 1996, compared to 88.3% for
the same period in 1995. The decrease of salaries, wages and employment taxes of
worksite employees as a percentage of revenues was due mainly to incremental
revenues from the Company's workers' compensation managed care services.
Health care and workers' compensation costs were $5.0 million for the three
months ended September 30, 1996, compared to $3.5 million for the same period in
1995, representing an increase of $1.5 million, or 45.5%. This increase was
due mainly to the higher volume of health care and workers' compensation
Page 21 of 28
<PAGE>
claims paid and/or reserved during the 1996 period which was a direct function
of the increase of PEO clients and worksite employees. Health care and
workers' compensation costs were 5.0% of revenues for the three months ended
September 30, 1996, compared to 5.9% for the same period in 1995. The decrease
of health care and workers' compensation costs as a percentage of revenues was
due mainly to incremental revenues from the Company's workers' compensation
managed care services.
State unemployment taxes and other direct costs were $0.9 million for the
three months ended September 30, 1996, compared to $0.3 million for the same
period in 1995, representing an increase of $0.6 million or 173.3%. This
increase was due mainly to the higher volume of salaries and wages paid during
the period which was a direct function of the increase of PEO clients
and worksite employees, an increased number of client companies using other
services and products (e.g., 401(k), the drug free workplace program , etc.), as
well as an increase in other direct costs related to the Company's managed
behavioral care services. State unemployment taxes and other direct costs were
1.0% of revenues for the three months ended September 30, 1996, compared to 0.6%
for the same period in 1995.
Gross profit was $6.8 million for the three months ended September 30, 1996,
compared to $3.0 million for the same period in 1995, representing an increase
of $3.8 million, or 123.5%. Gross profit was 6.8% of revenues for the three
months ended September 30, 1996, compared to 5.2% for the same period in 1995.
This increase was due mainly to the increase in revenues resulting from an
increase of PEO clients and worksite employees, and from the increase in
revenues from the Company's workers' compensation managed care services which
carry a higher margin than the Company's PEO services.
Administrative personnel expenses were $3.2 million for the three months ended
September 30, 1996, compared to $1.6 million for the same period in 1995,
representing an increase of $1.6 million, or 100.9%. This increase was
primarily attributable to increased staffing to support the Company's growth.
Administrative personnel expenses were 3.1% of revenues for the three months
ended September 30, 1996, compared to 2.7% for the same period in 1995.
Other general and administrative expenses, including the provision for
doubtful accounts, were $1.3 million for the three months ended September 30,
1996, compared to $0.7 million for the same period in 1995, representing an
increase of $0.6 million, or 75.7%. This increase in other general and
administrative expenses was primarily attributable to the growth of the
Company's business and the addition of workers' compensation managed care
services, which the Company made available to external clients for
the first time in 1995. Other general and administrative expenses, including
the provision for doubtful accounts, were 1.3% of revenues for the three
months ended September 30, 1996, compared to 1.2% for the same period in 1995.
Sales and marketing costs were $0.9 million for the three months ended
September 30, 1996, compared to $0.5 million for the same period in 1995,
representing an increase of $0.4 million, or 73.1%. The increase reflects the
addition of sales executives and marketing personnel, consistent with
the Company's strategy to increase its client base in its existing markets.
Sales and marketing costs were 0.9% of revenues for the three months ended
September 30, 1996, compared to 0.8% for the same period in 1995.
Page 22 of 28
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
Liquidity Requirements and/or Commitments
- -----------------------------------------
The Company intends to expand in current markets, enter selected new
markets, and introduce new products and services. In this regard, the
Company may from time to time evaluate potential acquisitions which, if
consummated, could require a significant capital commitment by the Company.
The Company's primary short-term liquidity requirements relate to the
Company's letter of credit requirements under its workers' compensation
policies, acquisition of office and computer equipment to support its growth,
and the payment of current tax obligations. The Company had $4.1 million in
cash at September 30, 1996 which was restricted under the terms of the Company's
revolving credit facility and letters of credit thereunder (which letters of
credit secure payment of workers' compensation claims) or escrowed in
connection with the Company's workers' compensation insurance policy. The
Company has no significant long-term debt repayment requirements.
On August 30, 1996, the Company acquired substantially all of the assets of
SMG for approximately $5.0 million in cash and notes. Of the approximately
$5 million purchase price, $2.4 million was paid in cash, $1.4 million will
be payable in 1997, and $1.2 million was placed in escrow in accordance with
an escrow agreement for potential purchase price adjustments in the event
that client retention fails to meet certain targets. The Company funded the
acquisition using a portion of the proceeds from its initial public offering.
Although the Company currently has no significant capital commitments, except
for the amounts due to SMG shareholders in connection with the Acquisition, the
Company currently anticipates increased capital expenditures for the fourth
quarter of 1996 and early part of 1997 of approximately $0.5 million, primarily
for computer and office equipment. The Company's long-term liquidity needs are
currently limited to debt service on the Company's outstanding long-term
obligations, and income taxes.
Sources and Uses of Cash
- ------------------------
Net cash provided by operating activities was $0.2 million for the nine
months ended September 30, 1996, compared to cash provided by operating
activities of $1.5 million for the same period in 1995. This decrease of
approximately $1.3 million was due mainly to increases in accounts receivable,
prepaid expenses and other current assets partially off-set by an increase
in reserve for claims and an increase in accrued salaries, wages, and
payroll taxes during the nine months ended September 30, 1996 when compared to
the same period in 1995. The increase in accounts receivable resulted from
both a higher number of PEO clients and worksite employees served during the
nine months ended September 30, 1996, and the timing of the payroll cycle.
The Company's accounts receivable and accrued salaries, wages,
and payroll taxes are subject to fluctuations depending on the proximity of
the closing date of the reporting period to that of the payroll cycle. The
increase in prepaid expenses and other current assets was due mainly to the
Page 23 of 28
<PAGE>
prepayment of various insurance policies and to an increase in prepaid marketing
expenses.
The collateral requirements of the Company's workers' compensation policies
are an integral part of the Company's liquidity from operating activities.
Under the terms of its revolving credit facility, the Company was able to
obtain an additional $3.0 million of letters of credit without an additional
cash collateral requirement. This contributed to a small decrease in
restricted cash of $0.2 million during the nine months ended September 30, 1995,
increasing cash provided by operations during such period.
Net cash used in investing activities was $4.7 million for the nine months
ended September 30, 1996, compared to $34,563 for the same period in
1995. During the nine months ended September 30, 1995, the Company collected
$123,078 from notes receivable from stockholders. In August 1996, the Company
acquired substantially all of the business of SMG for approximately
$5.0 million in cash and notes. Of the approximately $5 million, $2.4 million
was paid in cash on the closing date, $1.4 million will be payable in 1997,
and $1.2 million was placed in escrow in accordance with an escrow agreement
for potential purchase price adjustmentsin the event that, among other things,
client retention fails to meet certain targets.
Net cash provided by financing activities was $24.8 million for the nine months
ended September 30, 1996, compared to $0.8 million used in financing activities
for the same period in 1995. In May 1996, the Company completed its initial
public offering and received proceeds of $27.9 million, net of $2.1 million of
underwriting discounts and commissions, from the sale of 2,000,000 shares of
common stock of the Company. The Company used a portion of its proceeds to
retire a subordinated promissory note in the amount of $1.2 million
(see Note 7 of Notes to Consolidated Financial Statements) and to pay a
$700,000 distribution payable related to the Company's repurchase of an
option to purchase the Company's headquarters. In addition the Company
incurred approximately $860,000 in other costs in connection with the
offering. Management of the Company expects to use the remaining proceeds for
working capital, general corporate purposes, and expansion of the Company's
operations including potential acquisitions. Pending completion of such uses,
the Company has invested the net proceeds of the offering in high-quality
short-term, interest bearing investment-grade debt securities, certificates of
deposit or direct or guaranteed obligations of the United States.
During February 1995, the Company and its stockholders entered into an
Agreement and Plan of Recapitalization whereby the Company's stockholders
exchanged a portion of their shares of common stock for Series A Preferred
Stock, incurring $445,150 of transaction costs. In January 1995, the Company
also acquired 249,342 shares of its common stock from a minority shareholder
through a cash payment of $300,000 and the issuance of a $1.2 million
subordinated promissory note, which was subsequently paid in May 1996 with a
portion of the proceeds from the Company's initial public offering.
Page 24 of 28
<PAGE>
Funding Sources
- ---------------
After the completion of the Company's initial public offering and pursuant to
a commitment from Fleet National Bank ("Fleet Bank"), the Company entered into
an Amended and Restated Credit Agreement providing for a $13.0 million
revolving line of credit of which (i) an aggregate of $8.0 million is
available for standby letters of credit and revolving credit loans for working
capital purposes (which working capital loans are limited to the lesser of
$1.0 million or the Borrowing Base, primarily composed of current accounts
receivable from unrelated parties) and (ii) $5.0 million is available to
finance acquisitions. The Company uses letters of credit primarily to secure
its obligations to reimburse its workers' compensation insurance carrier for
workers' compensation payments subject to the policy deductible. Borrowings
bear interest at rates based on Fleet Bank's Prime Rate plus a margin of as
much as .25% or its Eurodollar Rate (as defined in the Amended and Restated
Credit Agreement) plus a margin of 1.50% to 2.00%, depending on certain
financial covenants, at the Company's option. The facility is secured by
substantially all of the Company's assets other than the Company's
headquarters building. Revolving credit loans and standby letters of credit
mature September 5, 1997 and acquisition loans are repayable in 36 equal monthly
installments commencing September 5, 1998. Draws against the acquisition line of
credit can be made through September 5, 1998 and mature not later than
September 5, 2001. The credit facility contains covenants that, among other
things, limit the amount of total consolidated debt and liens, require the
maintenance of certain consolidated financial ratios, prohibit dividends and
similar payments, and restrict capital expenditures, mergers, dispositions of
assets and certain business acquisitions. The Company is required to pay an
unused facility fee ranging from .25% to .375% per annum on the facilities,
depending on certain financial ratios. Under the revolving credit facility, the
Company had outstanding approximately $4,981,000 in standby letters of credit at
September 30, 1996 which guarantee the payment of claims to the Company's
workers' compensation insurance carrier. As of that date there were no amounts
outstanding for working capital advances or under the acquisition loan
facility, and all amounts under these facilities were available at
September 30, 1996.
The Company anticipates that the proceeds from the initial public
offering, cash flows from operations and borrowing availability under the
Amended and Restated Credit Agreement will be sufficient to satisfy the
Company's liquidity and working capital requirements for the foreseeable
future. To the extent that the Company should require or choose to fund future
capital commitments from sources other than operating cash or from borrowings
under its revolving line of credit or its acquisition loan facility, the
Company believes that it will be able to secure such financing through
alternate sources, such as financing from banks, or through the offering of
equity and/or debt securities in the public or private markets, or from banks.
Page 25 of 28
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Refer to the description of pending legal proceedings found in Note 11 of the
Notes to Consolidated Financial Statements under Part I, Item 1, which
description is incorporated herein by reference.
Item 5. Other Information
On November 7, 1996, The Vincam Group, Inc. announced that it has signed a
letter of intent to acquire Staff Administrator, Inc., a privately-held
professional employer organization headquartered in Denver, Colorado, with
approximately 3,600 worksite employees.
The non-binding letter of intent outlines a proposed business combination, to be
accounted for as a pooling of interests, subject to due diligence, execution of
a definitive agreement and regulatory approvals.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
No.
- ---------
3.1 Articles of Incorporation of the Company.
3.2 Bylaws of the Company.
10 Amendment to Section 10.5 dated September 30, 1996, to the Amended and
Restated Credit Agreement, dated June 5, 1996 among The Vincam Group,
Inc., its subsidiaries and Fleet National Bank of Massachusetts filed
as part of the Company's Report on Form 10-Q for the quarterly period
ended March 31, 1996 (Commission File No. 0-28148).
11 Statement re Computation of Per Share Earnings.
27 Financial Data Schedule.
(b) Reports on Form 8-K
On August 23, 1996, the Company filed a current report on Form 8-K dated
August 21, 1996 with the Securities and Exchange Commission (the "Commission")
reporting information under Item 5, Other Events.
Page 26 of 28
<PAGE>
On September 16, 1996, the Company filed a current report on Form 8-K dated
August 30, 1996 with the Commission reporting information under Item 2,
Acquisitions and Dispositions of Assets.
On November 8, 1996, the Company filed Amendment No. 1 to current report on
Form 8-K dated August 30, 1996 with the Commission reporting information under
Item 7, Financial Statements, Pro Forma Financial Information and Exhibits.
Page 27 of 28
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE VINCAM GROUP, INC.
----------------------
Registrant
Dated: November 14, 1996 BY /s/ STEPHEN L. WAECHTER
-----------------------------
Stephen L. Waechter
Chief Financial Officer
Dated: November 14, 1996 BY /s/ MARTINIANO J. PEREZ
-----------------------------
Martiniano J. Perez
Vice President and
Controller
Page 28 of 28
<PAGE>
THE VINCAM GROUP, INC.
INDEX TO PART II, ITEM 6(a)
EXHIBITS
Exhibit
No.
- ---------
3.1 Articles of Incorporation of the Company.
3.2 Bylaws of the Company.
10 Amendment to Section 10.5 dated September 30, 1996, to the Amended and
Restated Credit Agreement, dated June 5, 1996 among The Vincam Group,
Inc., its subsidiaries and Fleet National Bank of Massachusetts
filed as part of the Company's Report on Form 10-Q for the quarterly
period ended March 31, 1996 (Commission File No. 0-28148).
11 Statement re Computation of Per Share Earnings.
27 Financial Data Schedule.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
THE VINCAM GROUP, INC.
ARTICLE I
NAME
The name of this corporation shall be THE VINCAM GROUP, INC. (hereinafter
the "Corporation").
ARTICLE II
PURPOSES
The Corporation may engage in any activity or business permitted under the
laws of the United States and of the State of Florida.
ARTICLE III
AUTHORIZED SHARES
The total number of shares of all classes of stock which the Corporation
shall have authority to issue is 80,000,000, consisting of (i) 60,000,000
shares of Common Stock, $.001 par value per share ("Common Stock"), and
(ii) 20,000,000 shares of Preferred Stock, $.01 par value per share ("Preferred
Stock").
Unless otherwise provided hereinafter or in any articles of amendment providing
for the determination of a class or series of stock, shares of capital stock of
the Corporation that have been issued and which are subsequently acquired by the
Corporation shall constitute issued but not outstanding shares of the same class
and series, until canceled or disposed of (whether by resale or otherwise) by
the Corporation, and upon cancellation, the canceled shares shall constitute
authorized and unissued shares of the same class and shall be undesignated as
to series.
For purposes of determining funds lawfully available for any dividends or
other distribution upon shares of stock, amounts needed to satisfy the rights of
shareholders upon dissolution who have preferential rights superior to those of
shareholders of the stock receiving such dividend or distribution shall not be
deducted from the Corporation s total assets.
The following is a statement of the designations and the powers, privileges and
rights, and the qualifications, limitations or restrictions thereof in respect
of each class of capital stock of the Corporation.
A. COMMON STOCK.
1. General. The voting, dividend and liquidation rights of the holders
of the Common Stock are subject to and qualified by the rights of the holders of
the Preferred Stock of any series as may be designated by the Board of Directors
upon any issuance of the Preferred Stock of any series.
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2. Voting. The holders of the Common Stock are entitled to one vote
for each share held at all meetings of shareholders. There shall be no
cumulative voting.
3. Dividends. Dividends may be declared and paid on the Common Stock
from funds lawfully available therefor as and when determined by the Board of
Directors and subject to any preferential dividend rights of any then
outstanding Preferred Stock.
4. Liquidation. Upon the dissolution or liquidation of the
Corporation, whether voluntary or involuntary, holders of Common Stock will be
entitled to receive all assets of the Corporation available for distribution to
its shareholders, subject to any preferential rights of any then outstanding
Preferred Stock.
B. PREFERRED STOCK.
Preferred Stock may be issued from time to time in one or more series, each
of such series to have such terms as stated or expressed herein and in the
resolution or resolutions providing for the issue of such series adopted by the
Board of Directors of the Corporation as hereinafter provided. Any shares of
Preferred Stock which may be redeemed, purchased or acquired by the Corporation
may be reissued except as otherwise provided by law. Different series of
Preferred Stock shall not be construed to constitute different classes of shares
for the purposes of voting by classes unless expressly provided.
Authority is hereby expressly granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and in connection
with the creation of any such series, by resolution or resolutions providing for
the issue of the shares thereof, to determine and fix such voting powers, full
or limited, or no voting powers, and such designations, preferences and relative
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof, including without limitation thereof, dividend rights,
special voting rights, conversion rights, redemption privileges and liquidation
preferences, as shall be stated and expressed in such resolutions, all to the
full extent now or hereafter permitted by the corporate law of Florida. Without
limiting the generality of the foregoing, the resolutions providing for issuance
of any series of Preferred Stock may provide that such series shall be superior
or rank equally or be junior to the Preferred Stock of any other series to the
extent permitted by law. Except as otherwise specifically provided in a
resolution establishing a series of Preferred Stock, no vote of the holders of
the Preferred Stock or Common Stock shall be a prerequisite to the issuance of
any shares of any series of the Preferred Stock authorized by and complying with
the conditions of these Articles of Incorporation, the right to have such vote
being expressly waived by all present and future holders of the capital stock of
the Corporation.
ARTICLE IV
REGISTERED AGENT AND OFFICE
The registered agent of this Corporation and his address is as follows:
William F. Cueto, 2850 Douglas Road, Coral Gables, Florida 33134.
ARTICLE V
PRINCIPAL OFFICE
The Corporation shall maintain its principal office at 2850 Douglas Road,
Coral Gables, Florida 33134, or at such other place as the Board of Directors
may designate from time to time.
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ARTICLE VI
BOARD OF DIRECTORS
The Corporation shall have at least one director, but the Bylaws may
provide for the increase or decrease in the number of directors, provided that
the number of directors shall never be less than one.
ARTICLE VII
REMOVAL OF DIRECTORS
Any or all directors of the Corporation may be removed from office at any
time, but only for cause and by the affirmative vote of the holders of eighty
percent (80%) of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote generally for the election of directors, taken at
a duly called annual or special meeting of the shareholders.
ARTICLE VIII
SHAREHOLDER ACTION
Any action required or permitted to be taken by the shareholders of the
Corporation must be effected at a duly called annual or special meeting of
shareholders of the Corporation and may not be effected by any consent in
writing by such shareholders.
ARTICLE IX
SPECIAL MEETINGS OF SHAREHOLDERS
Special meetings of the shareholders of the Corporation, for any purpose or
purposes, may be called by the Board of Directors, Chairman of the Board or
President, and shall be called by the Chairman of the Board or Secretary, upon
the written request of the holders of not less than fifty percent (50%) of the
issued and outstanding shares of the capital stock of the Corporation entitled
to vote on each issue proposed to be considered at such meeting.
ARTICLE X
AMENDMENT OF THE BYLAWS
In furtherance and not in limitation of the powers conferred by the laws of
the State of Florida, the Board of Directors of the Corporation is expressly
authorized to adopt, amend, alter and repeal the bylaws of the Corporation.
Shareholders may adopt, amend, repeal or alter the bylaws of the Corporation,
including bylaws adopted by the Board of Directors, without approval of the
Board of Directors only if such adoption, amendment, repeal or alteration is
approved by the affirmative vote of the holders of at least eighty percent (80%)
of the issued and outstanding shares of the capital stock of the Corporation
entitled to vote on such matters.
ARTICLE XII
INDEMNIFICATION
Section 1. Indemnification.
(a) The Corporation (and any successor to the Corporation by merger or
otherwise) shall, and does hereby, indemnify, to the fullest extent permitted or
authorized by current or future legislation (specifically including the full
extent of indemnification permitted by 607.0850(7) Fla. Stat. (1994), or
current or future
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judicial or administrative decisions (but, in the case of any such future
legislation or decisions, only to the extent that it permits the Corporation
to provide broader indemnification rights than permitted prior to such
legislation or decision), each person (including the heirs, personal
representatives, executors, administrators and estate of the person) who was
or is a party, or is threatened to be made a party, or was or is a witness, to
any threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative and any appeal therefrom
(collectively, a "Proceeding"), against all liability (which for purposes of
this Article includes all judgments, settlements, penalties, fines and taxes
under the Employee Retirement Income Security Act of 1974, as amended) and
costs, charges, and expenses (including attorneys' fees) asserted against him
or incurred by him by reason of the fact that the person is or was (i) a
director, or (ii) an officer or an employee of the Corporation who is
specifically granted the indemnification rights provided hereby by the Board
of Directors, or (iii) serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise (including serving as a fiduciary of an employee
benefit plan) and as to whom the Board has granted the right to indemnification
provided hereby (each an Indemnified Person ).
(b) Notwithstanding the foregoing, except with respect to the
indemnification specified in the third sentence of Section 3 of this Article,
the Corporation shall indemnify an Indemnified Person in connection with a
Proceeding (or part thereof) initiated by an Indemnified Person only if
authorization for the Proceeding (or part thereof) was not denied by the Board
of Directors of the Corporation, acting in its sole discretion, within 60 days
after receipt of notice thereof from the Indemnified Person.
Section 2. Advance of Costs, Charges and Expenses. Costs, charges and expenses
(including attorneys' fees) incurred by an Indemnified Person in defending a
Proceeding shall be paid by the Corporation to the fullest extent permitted or
authorized by current or future legislation or current or future judicial or
administrative decisions (but, in the case of any future legislation or
decisions, only to the extent that it permits the Corporation to provide broader
rights to advance costs, charges and expenses than permitted prior to the
legislation or decisions) in advance of the final disposition of the Proceeding,
upon receipt of an undertaking reasonably satisfactory to the Board of Directors
(the "Undertaking") by or on behalf of the Indemnified Person to repay all
amounts so advanced if it is ultimately determined that such person is not
entitled to be indemnified by the Corporation as authorized in this Article;
provided that, in connection with a Proceeding (or part thereof) initiated by
such Indemnified Person (except a Proceeding authorized by the second sentence
of Section 3 of this Article), the Corporation shall pay the costs, charges and
expenses in advance of the final disposition of the Proceeding only if
authorization for the Proceeding (or part thereof) was not denied by the Board
of Directors of the Corporation, acting in its sole discretion, within 60 days
after receipt of a request for advancement accompanied by an Undertaking. A
person to whom costs, charges and expenses are advanced pursuant to this Article
shall not be obligated to repay pursuant to the Undertaking until the final
determination of (a) the pending Proceeding in a court of competent jurisdiction
concerning the right of that person to be indemnified or (b) the obligation of
the person to repay pursuant to the Undertaking.
The Board of Directors may, upon approval of the Indemnified Person,
authorize the Corporation's counsel to represent the Indemnified Person in any
action, suit or proceeding, whether or not the Corporation is a party to the
action, suit or proceeding. In the event that the Corporation s counsel is
representing the
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Indemnified Person and subject to any limitations imposed by law or any
insurance policy referred to in Section 5 of this Article XI, any Indemnified
Person shall have the right to retain separate counsel and to have the fees and
expenses of such counsel paid as incurred as provided herein in the event such
person reasonably believes that there is an actual or potential conflict in
interest between the Corporation and such person or in the event the Corporation
or its insurer shall have failed to assume the defense and employ counsel
acceptable to such person within a reasonable period of time after commencement
of any action.
Section 3. Procedure For Indemnification. Any indemnification or advance under
this Article shall be made promptly, and in any event within 60 days after
delivery of the written request of the Indemnified Person. The right to
indemnification or advances as granted by this Article shall be enforceable by
an Indemnified Person in any court of competent jurisdiction if the Corporation
denies the request under this Article in whole or in part, or if no disposition
of the request is made within the 60-day period after delivery of the request.
The requesting person's costs and expenses incurred in connection with
successfully establishing his right to indemnification, in whole or in part, in
any action shall also be indemnified by the Corporation. It shall be a defense
available to the Corporation to assert in the action that indemnification is
prohibited by law or that the claimant has not met the standard of conduct, if
any, required by current or future legislation or by current or future
judicial or administrative decisions for indemnification (but, in the case of
future legislation or decision, only to the extent that the legislation does not
impose a more stringent standard of conduct than permitted prior to the
legislation or decisions). The burden of proving this defense shall be on the
Corporation. Neither (a) the failure of the Corporation (including its Board
of Directors or any committee thereof, its independent legal counsel, and its
shareholders) to have made a determination (prior to the commencement of the
action) that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct, if any, nor (b) the fact
that there has been an actual determination by the Corporation (including its
Board of Directors or any committee thereof, its independent legal counsel, and
its shareholders) that the claimant has not met the applicable standard of
conduct, shall be a defense to the action or create a presumption that the
claimant has not met the applicable standard of conduct.
Section 4. Survival of Indemnification. The indemnification provided by this
Article shall not be deemed exclusive of any other rights to which those
indemnified may now or hereafter be entitled under any by-law, statute,
agreement, vote of shareholders or disinterested directors or recommendation of
counsel or otherwise, both as to actions in the person's capacity as a director,
officer or employee and as to actions in another capacity while still a
director, officer or employee, and shall continue as to an Indemnified Person
who has ceased to be a director or officer or employee and shall inure to the
benefit of the estate, heirs, personal representatives, beneficiaries, executors
and administrators of such a person. All rights to indemnification and advances
under this Article shall be deemed to be a contract between the Corporation and
each Indemnified Person who is an Indemnified Person at any time while this
Article is in effect. Any repeal or modification of this Article or any repeal
or modification of relevant provisions of the Florida Business Corporation Act
or any other applicable laws shall not in any way diminish the rights to
indemnification of such Indemnified Person or the obligations of the Corporation
arising hereunder for claims relating to matters occurring prior to the repeal
or modification. The Board of Directors of the Corporation shall have the
authority, by resolution, to provide for indemnification of officers, employees
or agents of the Corporation and for such other indemnification of Indemnified
Persons as it deems appropriate.
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Section 5. Insurance. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director or officer of the Corporation, or
is or was serving at the request of the Corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise (including serving as a fiduciary of an employee benefit plan),
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the Corporation
would have the power to indemnify him against such liability under the
provisions of this Article or the applicable provisions of the Florida Business
Corporation Act.
Section 6. Savings Clause. If this Article or any portion is invalidated or
held to be unenforceable on any ground by a court of competent jurisdiction,
the Corporation shall nevertheless indemnify each Indemnified Person described
in Section 1 of this Article to the fullest extent permitted by all applicable
portions of this Article that have not been invalidated or adjudicated
unenforceable, and as permitted by applicable law.
ARTICLE XII
AMENDMENT OF ARTICLES
The Corporation reserves the right to amend, alter, change or repeal any
provision contained in these Articles of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred on shareholders herein
are granted subject to this reservation. Notwithstanding the foregoing, the
provisions of this Article XII and the provisions of Articles VII, IX and X of
these Amended and Restated Articles of Incorporation may not be altered, amended
or repealed in any respect unless such alteration, amendment or repeal is
approved by the affirmative vote of the holders of at least eighty percent (80%)
of the issued and outstanding shares of capital stock of the Corporation
entitled to vote on such matter, voting together as a single class; provided,
however, that such eighty percent (80%) vote shall not be required for any
alteration, amendment or repeal unanimously recommended by the Board of
Directors.
* * *
These Amended and Restated Articles of Incorporation were duly adopted
pursuant to Sections 607.1003 and 607.1007 of the Florida Business Corporation
Act by the Board of Directors of the Corporation on February 19, 1996 and by the
written consent of the holders of the issued and outstanding shares of the
Common Stock and Series A Participating Preferred Stock dated as of April 30,
1996. The number of votes cast in favor of these Amended and Restated Articles
of Incorporation voting together as a class, was sufficient for the approval by
such holders.
IN WITNESS WHEREOF, the Corporation has caused these Amended and Restated
Articles of Incorporation to be executed by its President and Secretary on
May 15, 1996.
THE VINCAM GROUP, INC.
By: /s/ CARLOS A. SALADRIGAS
Carlos A. Saladrigas, President
By: /s/ MARTINIANO J. PEREZ
Martiniano J. Perez, Secretary
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EXHIBIT 3.2
AMENDED AND RESTATED BYLAWS
OF
THE VINCAM GROUP, INC.
ARTICLE I
Section l. Registered Office. The registered office of The Vincam Group, Inc.,
a Florida corporation (the "Corporation"), shall be located in the State of
Florida.
Section 2. Other Offices. The Corporation may also have offices at such other
places, either within or without the State of Florida, as the Board of Directors
of the Corporation (the "Board of Directors") may from time to time determine or
as the business of the Corporation may require.
ARTICLE II
Meetings of Shareholders
Section l. Annual Meetings. All annual meetings of the shareholders of the
Corporation for the election of directors and for such other business as may
properly come before the meeting shall be held on such date and at such time as
may be fixed, from time to time, by the Board of Directors, and at such place,
within or without the State of Florida, as may be designated by the Board of
Directors and stated in the notice of meeting or in a duly executed waiver of
notice thereof.
Section 2. Business at Annual Meeting. At an annual meeting of the shareholders,
only such business shall be conducted as shall have been properly brought before
the meeting. To be properly brought before an annual meeting, business must be
(a) specified in the notice of meeting (or any supplement thereto) given by or
at the direction of the Board of Directors, (b) otherwise properly brought
before the meeting by or at the direction of the Board of Directors, or
(c) otherwise properly brought before an annual meeting by a shareholder.
For business to be properly brought before an annual meeting by a shareholder,
the shareholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a shareholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than 50 days nor more than 90 days prior to the meeting;
provided, however, that in the event that less than 60 days notice or prior
public disclosure of the date of the meeting is given or made to the
shareholders, notice by the shareholder to be timely must be so received not
later than the close of business on the 10th day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made. A shareholder s notice to the Secretary shall set forth as to each
matter the shareholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name and
address, as they appear on the Corporation s books, of the shareholder proposing
such business, (c) the class and number of shares of the Corporation which are
owned of record and beneficially by the shareholder, and (d) any material
interest of the shareholder in such business. No later than the 15th day
following the date of receipt of a shareholder notice pursuant to this
Section 2, the Chairman of the Board of Directors of the Corporation shall, if
the facts warrant, determine and notify in writing the shareholder submitting
such notice that such
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notice was not made in accordance with the time limits and/or other procedures
prescribed by the Bylaws. If no such notification is mailed to such shareholder
within such 15-day period, such shareholder notice containing a matter of
business shall be deemed to have been made in accordance with the provisions of
this Section 2. Notwithstanding anything in these Bylaws to the contrary, no
business shall be conducted at an annual meeting except in accordance with the
procedures set forth in this Section 2. Notwithstanding the foregoing
provisions of this Section, a shareholder shall also comply with all applicable
requirements of the Securities Exchange Act of 1934, as amended (the Exchange
Act ), and the rules and regulations promulgated thereunder, with respect to the
matters set forth in this Section. Nothing in this Section shall be deemed to
affect any rights of shareholders to request inclusion of proposals in the
Corporation s proxy statement pursuant to the applicable rules under the
Exchange Act.
Section 3. Special Meetings. (a) Special meetings of the shareholders may be
called by the Board of Directors, the Chairman of the Board or the President,
and shall be called by the Chairman of the Board or Secretary upon the request
of the holders of not less than fifty percent (50%) of the issued and
outstanding shares of the capital stock of the Corporation entitled to vote on
each issue proposed to be considered at such meeting. Before a shareholder may
request or demand that a special meeting of the shareholders be held for any
purpose, the following procedure must be satisfied:
(A) Each shareholder seeking to request or demand, or to have the
shareholders request or demand, a special meeting shall first, by written notice
to the Secretary of the Corporation, request the Board of Directors to fix a
record date, pursuant to Section 6 of Article II of these Bylaws, for the
purpose of determining the shareholders entitled to request the special meeting.
The Board of Directors shall promptly, but in all events within 15 days after
the date upon which such a request is received, fix such a record date. Every
request to fix a record date for determining the shareholders entitled to
request a special meeting shall be in writing and shall set forth (i) a brief
description of the business desired to be brought before a special meeting and
the reasons for conducting such business at a special meeting, (ii) the name and
address, as they appear on the Corporation s books, of the shareholder making
such request, (iii) the class and number of shares of the Corporation which are
owned of record and beneficially by the shareholder, (iv) any material interest
of the shareholder in the business and (v) shall bear the signature
and date of signature of the shareholder.
In the event of the delivery to the Corporation of any request(s) or
demand(s) by shareholders with respect to a special meeting, and/or any related
revocation or revocations, the Corporation shall engage nationally recognized
independent inspectors of elections for the purpose of performing a prompt
ministerial review of the validity of the requests, demands and/or revocations.
(B) No request or demand with respect to calling a special meeting of
shareholders shall constitute a valid and effective shareholder request or
demand for a special meeting (i) unless (x) within 60 days of the record date
established in accordance with paragraph (A) of this Section 3(a), written
requests or demands signed by shareholders of record representing a sufficient
number of shares as of such record date to request or demand a special meeting
pursuant to this Section are delivered to the Secretary of the Corporation and
(y) each request or demand is made in accordance with and contains the
information required by paragraph (A) of this Section 3(a) and (ii) until such
date as the independent inspectors engaged in accordance with this Section 3(a)
certify to the Corporation that the requests or demands delivered to the
Corporation in accordance with clause (i) of this paragraph (B) represent at
least the
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minimum number of shares that would be necessary to request such a meeting
pursuant to this Section.
(C) If the Corporation determines that a shareholder or shareholders have
satisfied the notice, information and other requirements specified in this
Section 3, then the Board of Directors shall adopt a resolution calling a
special meeting of the shareholders and fixing a record date, pursuant to
Section 6 of this Article II, for the purposes of determining the shareholders
entitled to notice of and to vote at such special meeting. Notice of such
special meeting shall be provided in accordance with Section 4 of this
Article II, provided that such notice shall be given within 60 days (or such
longer period as from time to time may be permitted by law) after the date
the request(s) or demand(s) for such special meeting is(are) delivered to the
Corporation in accordance with this Section.
(b) Subject to the foregoing, special meetings of shareholders may be
held at such time and date, and at such place, within or without the State of
Florida, as shall be designated by the Board of Directors or the Chairman and
set forth in the notice of meeting required pursuant to Section 4 of this
Article. In fixing a meeting date for a special meeting of shareholders, the
Board of directors may consider such factors as it deems relevant within the
good faith exercise of its business judgment, including, without limitation, the
nature of the action proposed to be taken, the facts and circumstances
surrounding the request, and any plan of the Board of Directors to call a
special or annual meeting of shareholders for the conduct of related business,
provided that such meeting date shall be within 120 days (or such longer period
as may from time to time be permitted by law) after the date the request(s) or
demand(s) for such special meeting is(are) delivered to the Corporation
in accordance with this Section. Only business within the purpose or purposes
described in the notice required pursuant to Section 4 of this Article may be
conducted at a special meeting of shareholders.
(c) Notwithstanding the foregoing provisions of this Section, a
shareholder shall also comply with all applicable requirements of the Exchange
Act, and the rules and regulations promulgated thereunder, with respect to the
matters set forth in this Section. Nothing contained in this Section shall in
any way be construed to suggest or imply that the Board of Directors or any
shareholder shall not be entitled to contest the validity of any request or
demand or revocation thereof, or to take any other action (including, without
limitation, the commencement, prosecution or defense of any litigation with
respect thereto).
Section 4. Notice. A written notice of each meeting of shareholders shall be
given to each shareholder entitled to vote at the meeting at the address as it
appears on the stock transfer records of the Corporation, not less than 10 nor
more than 60 days before the date of the meeting, by or at the direction of the
Chairman, the Board of Directors, the President or the Secretary. If the notice
is mailed at least 30 days before the date of the meeting, it may be done by a
class of United States mail other than first class. The notice so given shall
state the date, time and place of the meeting and, in the case of a special
shareholders' meeting, the purpose or purposes for which the meeting is called.
If mailed, notice shall be deemed to be delivered when deposited in the United
States mail addressed to the shareholder at his address as it appears on the
stock transfer books of the Corporation, with postage thereon prepaid. If a
shareholders' meeting is adjourned to a different date, time or place, notice
need not be given of the new date, time or place if the new date, time or place
is announced at the meeting before an adjournment is taken. At such an
adjourned meeting any business may be transacted that might have been transacted
on the original date of the meeting. If, however, after the adjournment, the
Board of Directors fixes
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a new record date for the adjourned meeting, a notice of the adjourned meeting will be
given on the new record date as provided in this Article to each shareholder of record
entitled to vote at such meeting.
Section 5. Waiver of Notice. Shareholders may waive notice of any meeting before or
after the date and time specified in the written notice of meeting. Any such waiver
of notice must be in writing, be signed by the shareholder entitled to the notice and
be delivered to the Corporation for inclusion in the appropriate corporate records.
Neither the business to be transacted at, nor the purpose of, any shareholders'
meeting need be specified in any written waiver of notice. Attendance of a person at
a shareholders' meeting shall constitute a waiver of notice of such meeting, unless
the shareholder at the beginning of the meeting objects to holding the meeting or
transacting business at the meeting.
Section 6. Record Date. For the purpose of determining shareholders entitled to
notice of or to vote at a shareholders' meeting, to demand a special meeting, or to
take any other action, the Board of Directors may fix in advance a date as the record
date for any such determination of shareholders, such date in any case to be not more
than 70 days nor, in the case of a shareholders' meeting, less than 10 days, prior to
the date on which the particular action requiring such determination of shareholders
is to be taken. If no record date is fixed for the determination of shareholders
entitled to notice of or to vote at a shareholders' meeting, then the record date for
such meeting shall be the close of business on the day before the first notice is
delivered to shareholders. A determination of shareholders entitled to notice of or
to vote at a shareholders' meeting is effective for any adjournment of the meeting
unless the Board of Directors fixes a new record date for the adjourned meeting, which
it must do if the meeting is adjourned to a date more than 120 days after the date
fixed for the original meeting.
Section 7. Quorum. A majority of the shares entitled to vote on a matter,
represented in person or by proxy, shall constitute a quorum for action on that
matter at a meeting of shareholders. If a quorum is not present or represented at a
meeting of shareholders, the holders of a majority of the shares represented, and who
would be entitled to vote at a meeting if a quorum were present, may adjourn the
meeting from time to time. Once a quorum has been established at a shareholders'
meeting, the subsequent withdrawal of shareholders, so as to reduce the number of
shares entitled to vote at the meeting below the number required for a quorum, shall
not affect the validity of any action taken at the meeting or any adjournment thereof.
Section 8. Voting. If a quorum is present, action on a matter, other than the
election of directors, shall be approved if the votes cast by the shareholders
represented at the meeting and entitled to vote on the subject matter favoring the
action exceeds the votes cast opposing the action, unless a different number of
affirmative votes or voting by classes is required by Florida law or by the Articles
of Incorporation or these bylaws. Directors shall be elected in accordance with
Article III, Section 3, of these Bylaws. Each outstanding share shall be entitled to
vote at a meeting of shareholders as provided under the Articles of Incorporation or
any amendment thereof or under Florida law. An alphabetical list of shareholders
entitled to notice of a shareholder's meeting shall be available for inspection by any
shareholder for a period of 10 days prior to the meeting or such shorter time as
exists between the record date and the meeting and continuing through the meeting at a
place as permitted by Section 607.0720 of the Florida Business Corporation Act.
Section 9. Shareholder Actions. Any action required or permitted to be taken by the
shareholders may be taken only at an annual or special meeting of shareholders.
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Section 10. Proxies. A shareholder entitled to vote at any meeting of shareholders
or any adjournment thereof may vote in person or by proxy. A shareholder may appoint
a proxy to vote or otherwise act for him by signing an appointment form, either
personally or by his attorney-in-fact. An appointment of proxy is effective when
received by the Secretary or other officer or agent authorized to tabulate votes. If
an appointment form designates two or more persons to act as proxies, a majority of
these persons present at the meeting, or if only one is present, that one, has all of
the powers conferred by the instrument upon all the persons designated unless the
instrument provides otherwise. No appointment shall be valid for more than 11 months
after the date of its execution unless a longer period is expressly provided in the
appointment form.
ARTICLE III
Directors
Section l. Powers. All corporate powers shall be exercised by or under the authority
of, and the business and affairs of the Corporation shall be managed under the
direction of the Board of Directors. Directors must be natural persons who are at
least 18 years of age but need not be residents of Florida or shareholders of the
Corporation.
Section 2. Compensation. Unless specifically authorized by a resolution of the Board
of Directors, the directors shall serve in such capacity without compensation. The
directors may be paid their expenses, if any, of attendance at each meeting of the
Board of Directors. No such payments shall preclude any director from serving in any
other capacity and receiving compensation therefor.
Section 3. Number, Election and Term. The number of directors which shall constitute
the whole board shall be such number as is determined from time to time by resolutions
of the Board of Directors, but not less than one. Any decrease in the number of
directors shall not shorten the term of an incumbent director. Directors shall be
elected annually, at the annual meeting of shareholders of the Corporation, by a
plurality of the votes cast by the shares entitled to vote in the election at a
meeting at which a quorum is present. The terms of all directors expire at the next
annual shareholders' meeting following their election and when their successors are
elected and shall qualify, or upon their earlier resignation, removal from office or
death. The Chairman of the Board of Directors shall preside at all meetings of
directors and of shareholders.
Section 4. Nominating Committee. Only persons who are nominated in accordance with
the procedures set forth in this Section 4 shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of the
Corporation may be made at a meeting of shareholders by or at the direction of the
Board of Directors or by any shareholder of the Corporation entitled to vote for the
election of directors at the meeting who complies with the notice procedures set forth
in this Section 4. Such nominations, other than those made by or at the direction of
the Board of Directors, shall be made pursuant to timely notice in writing to the
Secretary of the Corporation. To be timely, a shareholder s notice shall be delivered
to or mailed and received at the principal executive offices of the Corporation not
less than 50 days nor more than 90 days prior to the meeting; provided, however, that
in the event that less than 60 days notice or prior public disclosure of the date of
the meeting is given or made to shareholders, notice by the shareholder to be timely
must be so received not later than the close of business on the 10th day following the
day on which such notice of the date of the meeting was mailed or such public
disclosure was made. Such shareholder s notice shall set forth (a) as to each person
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whom the shareholder proposes to nominate for election or re-election as a director,
(i) the name, age, business address and residence address of such person, (ii) the
principal occupation or employment of such person, (iii) the class and number of
shares of the Corporation which are beneficially owned by such person, and (iv) any
other information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise required, in each
case pursuant to Regulation 14A under the Exchange Act (including without limitation
such person s written consent to being named in the proxy statement as a nominee and
to serving as a director if elected); and (b) as to the shareholder giving the notice
(i) the name and address, as they appear on the Corporation s books, of such
shareholder and (ii) the class and number of shares of the Corporation which are
beneficially owned by such shareholder. At the request of the Board of Directors, any
person nominated by the Board of Directors for election as a director shall furnish to
the Secretary of the Corporation that information required to be set forth in a
shareholder s notice of nomination which pertains to the nominee. No later than the
15th day following the date of receipt of a shareholder nomination submitted pursuant
to this Section 4, the Chairman of the Board of Directors of the Corporation shall, if
the facts warrant, determine and notify in writing the shareholder making such
nomination that such nomination was not made in accordance with the time limits and/or
other procedures prescribed by the Bylaws. If no such notification is mailed to such
shareholder within such 15-day period, such nomination shall be deemed to have been
made in accordance with the provisions of this Section 4. No person shall be eligible
for election as a director of the Corporation unless nominated in accordance with the
procedures set forth in this Section 4.
Section 5. Vacancies. Any vacancy occurring in the Board of Directors, including a
vacancy created by an increase in the number of directors, may be filled by the
affirmative vote of a majority of the remaining directors though less than a quorum of
the Board of Directors. A director elected to fill a vacancy shall hold office only
until the next shareholders' meeting at which directors are elected.
Section 6. Removal of Directors. The shareholders may remove one or more directors
at any time, but only for cause and by the affirmative vote of the holders of eighty
percent (80%) of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote generally for the election of directors. A director may
be removed for cause by the shareholders at a meeting of shareholders, provided the
notice of the meeting states that the purpose, or one of the purposes, of the meeting
is the removal of the director.
Section 7. Quorum and Voting. A majority of the number of directors fixed by or in
accordance with these Bylaws shall constitute a quorum for the transaction of business
at any meeting of directors. If a quorum is present when a vote is taken, the
affirmative vote of a majority of the directors present shall be the act of the Board
of Directors.
Section 8. Deemed Assent. A director who is present at a meeting of the Board of
Directors or a committee of the Board of Directors when corporate action is taken is
deemed to have assented to the action taken unless (i) the director objects at the
beginning of the meeting (or promptly upon his arrival) to the holding of the meeting
or transacting specified business at the meeting, or (ii) the director votes against
or abstains from the action taken.
Section 9. Committees. The Board of Directors, by resolution adopted by a majority
of the full Board of Directors, may designate from among its members an executive
committee and one or more other committees each of which must have at least two
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members and, to the extent provided in the designating resolution, shall have and may
exercise all the authority of the Board of Directors, except such authority as may be
reserved to the Board of Directors under Florida law.
Section 10. Meetings. Regular and special meetings of the Board of Directors shall
be held at the principal place of business of the Corporation or at any other place,
within or without the State of Florida, designated by the person or persons entitled
to give notice of or otherwise call the meeting. Meetings of the Board of Directors
may be called by the Chairman of the Board, by the President or any two directors. A
majority of the directors present, whether or not a quorum exists, may adjourn any
meeting of the Board of Directors to another time and place. Notice of an adjourned
meeting shall be given to the directors who were not present at the time of the
adjournment and, unless the time and place of the adjourned meeting are announced at
the time of the adjournment, to the directors who were present. Members of the Board
of Directors (and any committee of the Board) may participate in a meeting of the
Board (or any committee of the Board) by means of a telephone conference or similar
communications equipment through which all persons participating may simultaneously
hear each other during the meeting; participation by these means constitutes presence
in person at the meeting.
Section 11. Notice of Meetings. Regular meetings of the Board of Directors may be
held without notice of the date, time, place or purpose of the meeting, so long as the
date, time and place of such meetings are fixed generally by the Board of Directors.
Special meetings of the Board of Directors must be preceded by at least two days'
written notice of the date, time and place of the meeting. The notice need not
describe either the business to be transacted at or the purpose of the special
meeting.
Section 12. Waiver of Notice. Notice of a meeting of the Board of Directors need not
be given to a director who signs a waiver of notice either before or after the
meeting. Attendance of a director at a meeting shall constitute a waiver of notice of
that meeting and a waiver of any and all objections to the place of the meeting, the
time of the meeting and the manner in which it has been called or convened, except
when a director states, at the beginning of the meeting or promptly upon arrival at
the meeting, any objection to the transaction of business because the meeting is not
lawfully called or convened. The waiver of notice need not describe either the
business to be transacted at or the purpose of the special meeting.
Section 13. Director Action Without a Meeting. Any action required or permitted to
be taken at a meeting of the Board of Directors (or a committee of the Board) may be
taken without a meeting if the action is taken by the written consent of all members
of the Board of Directors (or of the committee of the Board). The action must be
evidenced by one or more written consents describing the action to be taken and signed
by each director (or committee member), which consent(s) shall be filed in the minutes
of the proceedings of the Board. The action taken shall be deemed effective when the
last director signs the consent, unless the consent specifies otherwise.
ARTICLE IV
Officers
Section l. Officers. The Corporation shall have a President, one or more Vice
Presidents, a Secretary and a Treasurer, each of whom shall be appointed by the Board
of Directors. Such other officers and assistant officers and agents as may be deemed
necessary or desirable may be appointed by the Board of Directors from time to time.
Any two or more offices may be held by the same person.
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Section 2. Duties. The officers of the Corporation shall have the following duties:
The President shall be the chief executive officer of the Corporation and shall
have general and active management of the business and affairs of the Corporation
subject to the direction of the Board of Directors. The President shall see to it
that all orders and resolutions of the Board are carried into effect. The President
shall preside at all meetings of the shareholders and the Board of Directors, unless
the Board of Directors shall have elected a Chairman other than the President.
Each Vice President shall perform such duties as the Board of Directors may from
time to time prescribe.
The Secretary shall have custody of and shall maintain all of the corporate
records (except the financial records), shall record the minutes of all meetings of
the shareholders and the Board of Directors, shall authenticate records of the
Corporation, shall send all notices of meetings and shall perform such other duties as
are prescribed by the Board of Directors.
The Treasurer shall have custody of all corporate funds, securities and financial
records, shall keep full and accurate accounts of receipts and disbursements in books
belonging to the Corporation and shall deposit all moneys and other valuable effects
in the name and to the credit of the Corporation in such depositaries as may be
designated by the Board of Directors. He shall disburse the funds of the Corporation
as may be ordered by the Board of Directors, taking proper vouchers for such
disbursements, and shall render an account of all his transactions as treasurer and of
the financial condition of the Corporation at regular meetings of the Board or when
the Board of Directors so requests. The Treasurer shall also perform such other
duties as are prescribed by the Board of Directors.
Each other officer and assistant officer, if any, shall be appointed by the Board
of Directors and shall have such powers and shall perform such duties as shall be
assigned by them by the Board of Directors.
Section 3. Resignation of Officer. An officer may resign at any time by delivering
notice to the Corporation. The resignation shall be effective upon receipt, unless
the notice specifies a later effective date. If the resignation is effective at a
later date and the Corporation accepts the future effective date, the Board of
Directors may fill the pending vacancy before the effective date provided the Board of
Directors provides that the successor officer does not take office until the future
effective date.
Section 4. Removal of Officer. The Board of Directors may remove any officer at any
time with or without cause. Any officer or assistant officer, if appointed by another
officer, may be removed by the appointing officer.
Section 5. Compensation. The compensation of officers shall be fixed from time to
time at the discretion of the Board of Directors. The Corporation may enter into
employment agreements with any officer of the Corporation.
ARTICLE V
Stock Certificates
Section 1. Issuance. Every holder of shares in this Corporation shall be entitled to
have a certificate representing all shares to which he is entitled. No certificate
shall be issued for any share until the consideration therefor has been fully paid.
</TABLE>
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Section 2. Form. Certificates representing shares in this Corporation shall be
signed by the President and the Secretary or any Assistant Secretary of the
Corporation, or by any other two officers designated by the Board of Directors.
Section 3. Registered Shareholders. The Corporation shall be entitled to treat the
holder of record of shares as the holder in fact and, except as otherwise provided by
the laws of Florida, shall not be bound to recognize any equitable or other claim to
or interest in the shares.
Section 4. Transfer of Shares. Shares of the Corporation shall be transferred on its
books only after the surrender to the Corporation or the transfer agent of the share
certificates duly endorsed by the holder of record or attorney-in-fact. If the
surrendered certificates are canceled, new certificates shall be issued to the person
entitled to them, and the transaction recorded on the books of the Corporation.
Section 5. Lost, Stolen or Destroyed Certificates. If a shareholder claims that one
or more of his certificates for shares issued by the Corporation have been lost,
stolen or destroyed, a new certificate shall be issued upon delivery to the
Corporation of an affidavit of that fact by the person claiming the certificate of
stock to be lost, stolen or destroyed, and, at the discretion of the Board of
Directors, upon the deposit of a bond or other indemnity as the Board reasonably
requires.
ARTICLE VI
Distributions
The Board of Directors may from time to time authorize and declare, and the
Corporation may pay, distributions (including but not limited to dividends on, and
redemptions and other acquisitions of shares of the Corporation's stock) on its
outstanding shares in cash, property, or its own shares, provided any such
distribution is in compliance with the applicable restrictions and other provisions of
Florida law.
ARTICLE VII
Corporate Records; Financial Information
Section l. Corporate Records.
(A) The Corporation shall keep as permanent records minutes of all meetings of
its shareholders and Board of Directors, a record of all actions taken by the
shareholders or Board of Directors without a meeting, and a record of all actions
taken by a committee of the Board of Directors in place of the Board of Directors on
behalf of the Corporation.
(B) The Corporation or its agent shall maintain accurate accounting records
and a record of its shareholders in a form that permits preparation of a list of the
names and addresses of all shareholders in alphabetical order by class of shares
showing the number and series of shares held by each.
(C) The Corporation shall keep a copy of: its articles or restated articles
of incorporation and all amendments to them currently in effect; its Bylaws or
restated Bylaws and all amendments currently in effect; resolutions adopted by the
Board of Directors creating one or more classes or series of shares and fixing their
relative rights, preferences, and limitations, if shares issued pursuant to those
resolutions are outstanding; the minutes of all shareholders' meetings and records of
all actions taken by shareholders without a meeting for the past three years; written
</TABLE>
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<PAGE>
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communications to all shareholders generally or all shareholders of a class or series
within the past three years, including the financial statements furnished for the
past three years; a list of names and business street addresses of its current
directors and officers; and its most recent annual report delivered to the Department
of State.
(D) The Corporation shall maintain its records in written form or in another
form capable of conversion into written form within a reasonable time.
Section 2. Financial Statements for Shareholders.
(A) Unless modified by resolution of the shareholders within 120 days after the
close of each fiscal year, the Corporation shall furnish its shareholders with annual
financial statements which may be consolidated or combined statements of the
Corporation and one or more of its subsidiaries, as appropriate, that include a
balance sheet as of the end of the fiscal year, an income statement for that year, and
a statement of cash flows for that year. If financial statements are prepared for the
Corporation on the basis of generally accepted accounting principles, the annual
financial statements must also be prepared on that basis.
(B) If the annual financial statements are reported upon by a public accountant,
his report must accompany them. If not, the statements must be accompanied by a
statement of the President, the Treasurer or the person responsible for the
Corporation's accounting records stating his reasonable belief whether the statements
were prepared on the basis of generally accepted accounting principles and, if not,
describing the basis of preparation and describing any respects in which the
statements were not prepared on a basis of accounting consistent with the statements
prepared for the preceding year.
(C) The Corporation shall mail the annual financial statements to each
shareholder within 120 days after the close of each fiscal year or within such
additional time thereafter as is reasonably necessary to enable the Corporation to
prepare its financial statements if, for reasons beyond the Corporation's control, it
is unable to prepare its financial statements within the prescribed period.
Thereafter, on written request from a shareholder who was not mailed the statements,
the Corporation shall mail him the latest annual financial statements.
Section 3. Other Reports to Shareholders.
(A) If the Corporation indemnifies or advances expenses to any director,
officer, employee or agent otherwise than by court order or action by the shareholders
or by an insurance carrier pursuant to insurance maintained by the Corporation, the
Corporation shall report the indemnification or advance in writing to the shareholders
with or before the notice of the next shareholders' meeting, or prior to the meeting
if the indemnification or advance occurs after the giving of the notice but prior to
the time the meeting is held. This report shall include a statement specifying the
persons paid, the amounts paid, and the nature and status at the time of such payment
of the litigation or threatened litigation.
(B) If the Corporation issues or authorizes the issuance of shares for promises
to render services in the future, the Corporation shall report in writing to the
shareholders the number of shares authorized or issued, and the consideration received
by the Corporation, with or before the notice of the next shareholders' meeting;
provided, however, that the failure to provide such notice to the shareholders shall
not affect the validity of any shares so issued or authorized to be issued.
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ARTICLE VIII
Indemnification
Indemnification of certain persons by the Corporation shall be as specified in or
determined pursuant to the Articles of Incorporation of the Corporation as in effect
from time to time.
ARTICLE IX
Miscellaneous
Section 1. Corporate Seal. The corporate seal of the Corporation shall be circular
in form and shall include the name and jurisdiction of incorporation of the
Corporation.
Section 2. Fiscal Year. The fiscal year of the Corporation shall end on December
31st of each calendar year, unless otherwise fixed by resolution of the Board of
Directors.
Section 3. Checks. All checks, drafts or other orders for the payment of money,
notes or other evidences of indebtedness issued in the name of the Corporation shall
be signed by the President, the Treasurer or such other officer(s) or agent(s) of the
Corporation as shall be determined from time to time by resolution of the Board of
Directors.
ARTICLE X
Amendment
These bylaws may be altered, amended and/or repealed and new bylaws may be
adopted by the Board of Directors. Shareholders may adopt, amend repeal or alter the
bylaws of the corporation, including bylaws adopted by the Board of Directors, without
approval of the Board of Directors only if such adoption, amendment, repeal or
alteration is approved by the affirmative vote of the holders of at least eighty
percent (80%) of the issued and outstanding shares of the capital stock of the
Corporation entitled to vote on such matter, voting together as a single class.
The undersigned, the Secretary of the Corporation, hereby certifies that the
foregoing amended and restated bylaws were adopted by resolution of the Board of
Directors during a duly called meeting of the Board of Directors held on February 19,
1996 and are effective as of May 15, 1996.
By:/s/ MARTINIANO J. PEREZ
Martiniano J. Perez, Secretary
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<PAGE>
EXHIBIT 10
AMENDMENT TO SECTION 10.5 TO THE AMENDED AND RESTATED CREDIT AGREEMENT
September 30, 1996
Mr. Carlos A. Saladrigas
Chief Executive Officer
The Vincam Group, Inc.
2850 Douglas Road
Coral Gables, FL 33134
Re: Amendment to Section 10.5 of the Amended and Restated Credit Agreement dated
June 5, 1996
Dear Carlos:
Effective September 30, 1996, Fleet National Bank hereby amends Section 10.5 of
the Amended and Restated Credit Agreement dated June 5, 1996, among The Vincam
Group, Inc. and Fleet National Bank to increase the capital expenditure
limitation for the fiscal year ending December 31, 1996, from $1,000,000 to
$1,500,000. All other terms and conditions of the Credit Agreement remain
unchanged.
Fleet will also review and amend the capital expenditure limitation for future
years in conjunction with the renewal of Vincam's line of credit.
Please fell free to call me at (617) 346-1647 if you have any questions on the
above amendment.
Sincerely,
By: /s/ GINGER STOLZENTHALER
- ----------------------------
Ginger Stolzenthaler
Vice President
<PAGE>
EXHIBIT 11
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
THE VINCAM GROUP, INC.
CALCULATION OF NET INCOME PER COMMON
AND COMMON EQUIVALENT SHARE
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------
1995 1996
------------ ------------
<S> <C> <C>
Net income $ 521,746 $ 2,398,329
============ ============
Weighted average number of common shares
outstanding during the period 5,131,114 6,458,089
Assumed exercise of stock options, net of
treasury shares acquired 462,208 501,616
Issuance of mandatorily redeemable preferred
stock deemed a common stock equivalent 887,152 604,181
------------ ------------
Weighted average number of shares used in
earnings per share calculation 6,480,474 7,563,886
============ ============
Net income per common and common
equivalent share $ .08 $ .32
============ ============
Fully diluted net income per common
and common equivalent share * $ .08 $ .32
============ ============
</TABLE>
- ------------------------------
* In accordance with the provisions of the Accounting Principles Board Opinion
No. 15, Earnings per Share, fully diluted net income per common and common
equivalent share is not presented in the Company's consolidated statements
of income due to the fact that the aggregated dilution from the Company's
common stock equivalents outstanding during each of the periods presented
is less than 3%.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF THE VINCAM GROUP, INC. FOR THE NINE
MONTHS ENDED SEPTEMBER 30, 1996 INCLUDED IN FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 26,551,983
<SECURITIES> 0
<RECEIVABLES> 13,245,769
<ALLOWANCES> 370,833
<INVENTORY> 0
<CURRENT-ASSETS> 41,553,046
<PP&E> 4,445,652
<DEPRECIATION> 1,139,217
<TOTAL-ASSETS> 51,958,160
<CURRENT-LIABILITIES> 17,810,184
<BONDS> 0
0
0
<COMMON> 8,000
<OTHER-SE> 30,944,256
<TOTAL-LIABILITY-AND-EQUITY> 51,958,160
<SALES> 268,529,624
<TOTAL-REVENUES> 268,529,624
<CGS> 0
<TOTAL-COSTS> 250,947,350
<OTHER-EXPENSES> 14,292,580
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 115,249
<INCOME-PRETAX> 3,746,329
<INCOME-TAX> 1,348,000
<INCOME-CONTINUING> 2,398,329
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,398,329
<EPS-PRIMARY> 0.32
<EPS-DILUTED> 0.32
</TABLE>
