UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A NO. 2
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JUNE 30, 1997
THE VINCAM GROUP, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
FLORIDA 0-28148 59-2452823
<S> <C> <C>
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification No.)
incorporation or organization)
</TABLE>
2850 DOUGLAS ROAD, CORAL GABLES, FLORIDA 33134
(Address of principal executive offices) (Zip Code)
(305) 460-2350
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address, and former fiscal year, if changed since last
report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired.
The following audited financial statements of Amstaff, Inc. are filed with this
Amendment Number 2 to the Current Report on Form 8-K:
<TABLE>
<CAPTION>
Page
Number
<S> <C>
Report of Independent Certified Public Accountants........................................... F-1
Balance Sheets as of December 31, 1995 and 1996.............................................. F-2
Consolidated Statements of Operations for the Years Ended
December 31, 1994, 1995 and 1996........................................................... F-3
Consolidated Statement of Changes in Stockholders' (Deficit) Equity for the
Years Ended December 31, 1994, 1995 and 1996............................................... F-4
Consolidated Statements of Cash Flows for the Years Ended December 31, 1994,
1995 and 1996.............................................................................. F-5
Notes to Consolidated Financial Statements................................................... F-6
</TABLE>
(b) Pro Forma Financial Information.
The following unaudited pooled combined pro forma financial information of The
Vincam Group, Inc. and Amstaff, Inc. is filed with this Amendment Number 2 to
the Current Report on Form 8-K:
<TABLE>
<CAPTION>
Page
Number
<S> <C>
Pooled Combined Pro Forma Financial Information.............................................. F-14
Pooled Combined Pro Forma Statement of Income for
the year ended December 31, 1996............................................................. F-15
Pooled Combined Pro Forma Statement of Income for
the year ended December 31, 1995............................................................. F-16
Pooled Combined Pro Forma Statement of Income for
the year ended December 31, 1994............................................................. F-17
Notes to Pooled Combined Pro Forma Financial Information..................................... F-18
</TABLE>
Pooled combined financial information for the three months and six months ended
June 30, 1997 and as of June 30, 1997 has already been filed with the Company's
Quarterly Report on Form 10-Q (File No. 0-28148) for the quarterly period ended
June 30, 1997.
(c) Exhibits
EXHIBIT
NUMBER
- -------
23 Consent of Plante & Moran, LLP
1
<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, as of 15th of September, 1997.
THE VINCAM GROUP, INC.
SEPTEMBER 15, 1997 By: /s/ STEPHEN L. WAECHTER
- ------------------ ------------------------------------------------
Date Stephen L. Waechter, Chief Financial Officer,
Senior Vice President Finance and Administration
(Principal Financial Officer)
2
<PAGE>
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Stockholders
of Amstaff, Inc.
We have audited the accompanying consolidated balance sheets of
Amstaff, Inc. and its subsidiaries as of December 31, 1996 and 1995 and the
related consolidated statements of operations, changes in stockholders' deficit
and cash flows for the three years ended December 31, 1996. These consolidated
financial statements are the responsibility of the Companies' management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the balance sheets. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Amstaff, Inc. and its subsidiaries as of December 31, 1996 and 1995 and their
consolidated results of operations and cash flows for the three years ended
December 31, 1996, in conformity with generally accepted accounting principles.
PLANTE & MORAN, LLP
Bloomfield Hills, Michigan
September 10, 1997
F-1
<PAGE>
<TABLE>
<CAPTION>
AMSTAFF, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31
------------------------------
1996 1995
--------- -------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash $ 1,147,742 $ 795,011
Accounts receivable:
Trade 219,439 388,301
Other 32,352 42,632
Accrued interest receivable 11,975 17,963
Unbilled revenue 2,028,346 807,739
Prepaid expenses and other current assets 374,148 91,137
Note receivable - Stockholder (Note 4) 57,030 57,030
Deferred tax asset (Note 11) - -
----------- -----------
Total current assets 3,871,032 2,199,813
NOTE RECEIVABLE - Stockholder (Note 4) - 57,020
PROPERTY AND EQUIPMENT (Note 3) 437,272 273,211
----------- -----------
Total assets $ 4,308,304 $ 2,530,044
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Current portion of long-term debt (Note 5) $ 46,886 $ 33,046
Accounts payable:
Trade 202,374 46,032
Related party (Note 4) 61,714 20,601
Income taxes payable 88,323 11,557
Accrued liabilities:
Salaries and payroll taxes 2,561,648 1,522,905
Reserve for claims (Note 7) 566,750 187,500
Other 2,629,825 1,436,672
Client security deposits (Note 8) 320,616 178,317
----------- -----------
Total current liabilities 6,478,136 3,436,630
RESERVE FOR CLAIMS (Note 7) 308,250 -
LONG-TERM DEBT (Note 5) 75,806 64,452
MINORITY INTEREST 10,957 4,000
STOCKHOLDERS' DEFICIT
Common stock - No par value:
Authorized - 50,000 shares
Issued and outstanding - 1,000 shares 1,000 1,000
Accumulated deficit (2,565,845) (976,038)
----------- -----------
Total stockholders' deficit (2,564,845) (975,038)
----------- -----------
Total liabilities and stockholder's deficit $ 4,308,304 $ 2,530,044
=========== ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
<PAGE>
<TABLE>
<CAPTION>
AMSTAFF, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31
1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
REVENUE $ 66,542,568 $ 43,665,424 $ 23,253,911
DIRECT COSTS
Salaries, wages and employment taxes of
worksite employees 60,019,919 38,850,232 20,215,972
Health care and workers' compensation
(Note 7) 2,816,005 2,005,605 1,600,038
State unemployment taxes and other direct
Costs 1,064,613 632,145 261,147
-------------- -------------- --------------
Total direct costs 63,900,537 41,487,982 22,077,157
-------------- -------------- --------------
GROSS PROFIT 2,642,031 2,177,442 1,176,754
-------------- -------------- --------------
OPERATING EXPENSES
Administrative personnel 2,249,161 1,579,777 762,516
Other general and administrative (Note 6) 1,033,622 550,333 407,902
Sales and marketing 442,567 297,426 132,740
Depreciation and amortization 84,589 76,718 66,385
Provision (recovery) for doubtful accounts (18,107) 89,879 12,000
-------------- -------------- --------------
Total operating expenses 3,791,832 2,594,133 1,381,543
-------------- -------------- --------------
OPERATING LOSS (1,149,801) (416,691) (204,789)
-------------- -------------- --------------
OTHER INCOME (EXPENSE)
Interest - Net 2,945 8,664 (4,631)
Loss on sale of fixed assets (85,771) - (13,865)
Other (2,435) - -
-------------- -------------- -------------
Total other (expense) income (85,261) 8,664 (18,496)
-------------- -------------- -------------
LOSS - Before taxes and minority interest (1,235,062) (408,027) (223,285)
INCOME TAXES (Note 11) (88,323) (10,089) (8,958)
MINORITY INTEREST (5,707) - -
-------------- -------------- -------------
NET LOSS $ (1,329,092) $ (418,116) $ (232,243)
============== ============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE>
<TABLE>
<CAPTION>
AMSTAFF, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
TOTAL
ACCUMULATED STOCKHOLDERS'
COMMON STOCK DEFICIT DEFICIT
------------ -------------- --------------
<S> <C> <C> <C>
BALANCE - December 31, 1993 $ 1,000 $ (268,471) $ (267,471)
Net loss - (232,243) (232,243)
BALANCE - December 31, 1994 1,000 (500,714) (499,714)
Net loss - (418,116) (418,116)
Distributions to stockholders - (57,208) (57,208)
--------- ------------ ------------
BALANCE - December 31, 1995 1,000 (976,038) (975,038)
Net loss - (1,329,092) (1,329,092)
Distributions to stockholders - (260,715) (260,715)
--------- ------------ ------------
BALANCE - December 31, 1996 $ 1,000 $ (2,565,845) $ (2,564,845)
========= ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE>
<TABLE>
<CAPTION>
AMSTAFF, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31
-----------------------------------------------------
1996 1995 1994
------------ ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (1,329,092) $ (418,116) $ (232,243)
Adjustments to reconcile net loss to net cash provided
by operating activities:
Depreciation and amortization 84,589 76,718 66,385
Minority interest 5,707 - -
Provision for doubtful accounts (18,107) 89,879 12,000
Loss on sale of fixed assets 85,771 - 13,865
Other (1,940) - (60)
(Increase) decrease in assets:
Accounts receivable 197,249 (228,200) (16,724)
Unbilled revenue (1,220,607) (351,666) (48,245)
Accrued interest receivable 5,988 (17,963) -
Prepaid expenses (281,021) (30,574) (53,146)
Other assets - 4,000 1,806
Increase (decrease) in liabilities:
Accounts payable 156,342 4,751 28,686
Accrued liabilities 2,919,336 1,347,820 304,783
Customer deposits 142,299 24,246 46,597
Taxes payable 76,766 (10,762) 21,559
------------ ------------ -----------
Net cash provided by operating activities 823,280 490,133 145,263
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (334,421) (147,428) (187,617)
Repayments of stockholder note receivable 57,030 57,030 -
------------ ------------ -----------
Net cash used in investing activities (277,391) (90,398) (187,617)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from long-term debt 61,638 30,000 100,183
Principal payments on long-term debt (36,444) (35,086) (25,968)
Distributions to stockholders (260,715) (57,208) -
Proceeds from related party advances 41,113 20,601 -
Proceeds from sale of subsidiary stock 1,250 - 1,000
------------ ------------ -----------
Net cash (used in) provided by
financing activities (193,158) (41,693) 75,215
------------ ------------ -----------
NET INCREASE IN CASH AND CASH EQUIVALENTS 352,731 358,042 32,861
CASH AND CASH EQUIVALENTS - Beginning of year 795,011 436,969 404,108
------------ ------------ -----------
CASH AND CASH EQUIVALENTS - End of year $ 1,147,742 $ 795,011 $ 436,969
============ ============ ===========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid for interest $ 9,030 $ 9,299 $ 4,631
============ ============ ===========
Cash paid for income taxes $ 26,631 $ 8,411 $ 8,958
============ ============ ===========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE>
AMSTAFF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
CHANGE IN OWNERSHIP - On June 30, 1997, Amstaff, Inc. was
acquired by a publicly held corporation. This transaction was
effected through an exchange of all outstanding shares of common
stock of the Company for 365,000 shares of the public company.
PRINCIPLES OF CONSOLIDATION - The accompanying consolidated
financial statements include the accounts of Amstaff, Inc. and
its subsidiaries, American Staffing, Inc., R.D.M., Inc., Amstaff
P.E.O., Inc., Amstaff H.R.M., Inc., Amstaff Management Services,
Inc., Amstaff HR Services, Inc., Amstaff Professional Services,
Inc., Amstaff Employer Resources, Inc., A.E. Services Group,
Staff Resources Group, Inc., Staffing Group Enterprises, Inc. and
Amstaff P.C.S. (collectively, Amstaff or the Company). A.E.
Services Group, Staff Resources Group, Inc., Staffing Group
Enterprises, Inc. and Amstaff P.C.S. were formed in 1996. Amstaff
Management Services, Inc., Amstaff HR Services, Inc., Amstaff
Professional Services, Inc. and Amstaff Employer Resources, Inc.
were formed in 1995. Intercompany transactions and balances have
been eliminated in consolidation.
NATURE OF BUSINESS - The Company was organized and incorporated
in Michigan and is principally engaged in providing a wide range
of human resources, employee benefit and payroll processing
services. The typical customer contract is for a one-year term.
This type of company is commonly referred to as a Professional
Employer Organization. The Company currently operates in Michigan
and Ohio.
The Company provides services to a variety of industries and
customers. Industry concentrations are as follows:
Clerical 25%
Retail/Wholesale 16
Service 16
Light manufacturing 14
Other 29
-------
Total 100%
=======
USE OF ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from
those estimates.
F-6
<PAGE>
AMSTAFF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
REVENUE RECOGNITION - Revenues and the related costs of wages,
salaries and employment taxes from professional employer services
related to worksite employees are recognized in the period in
which the employee performs the service. Because Amstaff is at
risk for all of its direct costs, independently of whether
payment is received from its clients, all amounts billed and
unbilled to clients for these costs are recognized as revenue by
Amstaff.
ACCOUNTS RECEIVABLE - The Company considers accounts receivable
to be fully collectible; accordingly, no allowance for doubtful
accounts has been established at December 31, 1996 or 1995.
Amounts that become uncollectible are provided for in the period
that determination is made.
UNBILLED REVENUE - Unbilled revenue represents charges earned for
worksite employees that have not yet been billed. These charges
include salaries, health care and benefit programs, applicable
taxes and administrative charges.
RESERVE FOR CLAIMS - Amstaff's workers' compensation benefits and
certain of its health care benefits are provided under large
deductible insured plans. Amstaff records reserves for workers'
compensation and health care claims costs based on calculations
using Amstaff's loss history of workers' compensation and health
care claims, respectively.
In all cases regarding workers' compensation and health care
claims, reserves are established at the time a participant files
a claim. Furthermore, Amstaff, in determining its reserves,
includes reserves for estimated claims incurred but not reported,
respectively.
At December 31, 1996 and 1995, Amstaff has classified as current
the estimated amounts of reserves established for claims expected
to be paid within one year.
Amstaff's estimates of its claims reserves, including its
estimate of incurred but not reported claims, are based primarily
on its loss history. The ultimate cost of health care and
workers' compensation claims will depend on actual costs incurred
in settling the claims and may differ from the amounts reserved
by Amstaff for those claims.
PROPERTY AND EQUIPMENT - Property and equipment are stated at
cost. Assets are depreciated over the estimated economic useful
lives of the assets, ranging from five to seven years.
F-7
<PAGE>
AMSTAFF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 1 - NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
(Continued)
INCOME TAXES - The Company has elected to be treated as an S
Corporation for federal income tax purposes. Under provisions of
the Internal Revenue Code for S corporations, taxable income is
allocated among the stockholders regardless of any amounts
actually distributed. All Amstaff, Inc. subsidiaries, as listed
in the principles of consolidation above, are C Corporations for
income tax purposes. Current taxes are provided by applying
provisions of enacted tax laws to taxable income. Deferred tax
assets and liabilities are recorded based on temporary
differences between the tax basis of assets and liabilities and
their carrying amounts for financial reporting purposes.
NOTE 2 - DISTRIBUTIONS
It is the intent of management and the stockholders of Amstaff,
Inc. to make distributions of the S Corporation taxable earnings
as cash flow permits and to make other discretionary
distributions as authorized by the stockholders.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consist of the following:
<TABLE>
<CAPTION>
1996 1995
----------- -----------
<S> <C> <C> <C>
Furniture and fixtures $ 62,358 $ 100,355
Office equipment 183,109 166,517
Leasehold improvements 204,737 89,771
Automobiles 178,819 115,182
---------- ----------
Total cost 629,023 471,825
Less accumulated depreciation (191,751) (198,614)
---------- ----------
Net carrying amount $ 437,272 $ 273,211
========== ==========
</TABLE>
NOTE 4 - RELATED PARTY TRANSACTIONS
Amstaff ASMK, LLC is a real estate holding company related to
Amstaff through common ownership. At December 31, 1995, Amstaff
was renting an office facility from this related party at a rate
of $9,000 per month. Rent expense under this arrangement totaled
$72,000 and $108,000 for 1996 and 1995, respectively (see Note
10).
F-8
<PAGE>
AMSTAFF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 4 - RELATED PARTY TRANSACTIONS (Continued)
Amounts owed to this affiliate totaled $61,714 and $20,601 at
December 31, 1996 and 1995, respectively.
At December 31, 1996, Amstaff was renting office space from a
third party and in January 1997 resumed renting from its
affiliate (see Note 10).
A stockholder note receivable of $57,030 and $114,050 at December
31, 1996 and 1995, respectively, bears interest at the rate of
10.5 percent and is payable in one remaining annual installment.
NOTE 5 - DEBT
DEMAND NOTES
The Company has a demand credit facility with the bank to borrow
up to $200,000 for working capital. Amounts borrowed bear
interest at the bank's prime rate plus 1.5 percent and are
collateralized by accounts receivable. This agreement expired on
May 31, 1997. At December 31, 1996 and 1995, there were no
amounts outstanding under this facility.
LONG-TERM DEBT
Long-term debt is comprised of the following:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C> <C>
Bank notes payable, bearing interest at rates ranging from 7.49%
to 10.75%, payable in monthly installments ranging from $926 to $ 122,692 $ 97,498
$246, collateralized by the underlying equipment
Less current portion 46,886 33,046
--------- ---------
Long-term debt $ 75,806 $ 64,452
========= =========
</TABLE>
F-9
<PAGE>
AMSTAFF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 5 - DEBT (Continued)
Future payments under the above notes payable are as follows:
1997 $ 46,886
1998 36,167
1999 22,411
2000 15,285
2001 1,943
Total $ 122,692
==========
The Company also has a credit arrangement to facilitate the
purchase of equipment. This arrangement allows for $150,000 of
equipment financing over 60 months at 1.75 percent over the
bank's prime rate. This agreement expires on May 31, 1997. At
December 31, 1996 and 1995, there were no amounts outstanding
under this facility.
Interest expense totaled $9,030, $9,299 and $4,631 for 1996, 1995
and 1994, respectively.
NOTE 6 - DEFINED CONTRIBUTION PLAN
The Company has a 401(k) deferred savings plan for all employees.
Employer contributions are equal to the lesser of 20 percent of
employee deferrals or 1 percent of the employee gross wages.
Employer contributions to the plan approximated $108,000, $73,000
and $35,000 for 1996, 1995 and 1994, respectively.
NOTE 7 - RESERVE FOR CLAIMS
HEALTH CARE BENEFITS
The Company offers a self-funded health insurance plan in
addition to several fully insured programs for employees who work
at least 30 hours per week. Benefits are funded by contributions
from the Company and employees. The Company has obtained stop
loss insurance covering individual claims in excess of $35,000
and annual aggregate claims in excess of $798,000 per plan year.
The reserve for known claims and claims incurred but not reported
totaled $190,000 and $130,000 at December 31, 1996 and 1995,
respectively.
F-10
<PAGE>
AMSTAFF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 7 - RESERVE FOR CLAIMS (Continued)
WORKERS' COMPENSATION BENEFITS
On September 1, 1995, all of the Companies, except for Amstaff
HR Services, Inc., Amstaff Professional Services and A.E.
Services Group (which use fully-insured plans), entered into a
high-deductible workers' compensation agreement with an
insurance company. The agreement provides for a deductible
amount of $200,000 per occurrence with an annual aggregate claim
exposure limit of $720,000. At December 31, 1996 and 1995, the
unfunded reserve for known claims and claims incurred but not
reported totaled $685,000 and $57,500, respectively.
NOTE 8 - CLIENT SECURITY DEPOSITS
Client security deposits are obtained to mitigate credit risk.
Such deposits are obtained at the inception of client contracts
and are refundable at the end of those contracts.
NOTE 9 - STOCK REPURCHASE AGREEMENTS
Each company has a stock repurchase agreement with its
employee-stockholders. These agreements specify that in the
event of a stockholder's death, disability, termination of
employment or the desire to sell their stock interest, the
applicable company shall purchase the shares at an agreed-upon
fair value. This value is determined annually by both parties
involved. Subsequent to December 31, 1996 and in connection with
the change in ownership discussed in Note 1, stock held by such
employee-stockholders was redeemed for 162 shares of common
stock of the publicly held corporation that acquired Amstaff.
NOTE 10 - LEASE COMMITMENTS
Amstaff began renting its operating facilities from an affiliate
in January 1997. The lease calls for monthly payments of
$21,969. This lease expires in January 2018.
In addition, Amstaff leases various office equipment and
automobiles under operating lease agreements expiring at various
dates through 2002.
F-11
<PAGE>
AMSTAFF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 10 - LEASE COMMITMENTS (Continued)
For financial reporting purposes, these leases are recorded as
operating leases. Future minimum lease payments under these
leases are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31 RELATED PARTY OTHER TOTAL
----------- ------------- --------- -----------
<S> <C> <C> <C> <C>
1997 $ 263,628 $ 108,264 $ 371,892
1998 263,628 90,913 354,541
1999 263,628 64,259 327,887
2000 263,628 47,888 311,516
2001 263,628 31,900 295,528
Thereafter 4,218,048 20,805 4,238,853
</TABLE>
The aggregate lease expense for facilities, equipment and
automobiles for the years ended December 31, 1996, 1995 and 1994
was $211,135, $123,275 and $68,217, respectively.
NOTE 11 - INCOME TAXES
Deferred taxes are provided for the temporary differences
between financial reporting bases and the tax bases of the
Company's assets and liabilities. The Company's deferred tax
asset results from certain accrued expenses not currently
deductible.
These temporary differences approximate $2,360,000. Given the
uncertainty of the ability of the Company to utilize the benefit
of these temporary differences when they become deductible, a
valuation allowance equal to the asset generated has been
established.
The provision for income taxes reflected in the statement of
operations for the years ended December 31, 1996, 1995 and 1994
consists of the following:
<TABLE>
<CAPTION>
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C> <C>
Current expense $ 88,323 $ 10,089 $ 8,958
Deferred tax benefit (369,115) (165,088) (116,149)
Valuation allowance (369,115) 165,088 116,149
---------- ---------- ----------
Total income tax expense $ 88,323 $ 10,089 $ 8,958
========== ========== ==========
</TABLE>
F-12
<PAGE>
AMSTAFF, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
NOTE 11 - INCOME TAXES (Continued)
The gross amounts of deferred tax assets recorded in the
accompanying consolidated balance sheets at December 31, 1996
and 1995 are as follows:
<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Reserves for workers' compensation claims $ 69,199 $ -
Single business tax 299,916 190,604
--------- ---------
369,115 190,604
Less valuation allowance (369,115) (190,604)
--------- ---------
Net deferred tax asset $ - $ -
========= =========
</TABLE>
Total income tax expense differs from amounts computed by
applying the statutory federal income tax rate to income before
income taxes due to the structure of the consolidated entities
and the tax treatment of the S Corporation income discussed in
Note 1.
NOTE 12 - CONTINGENCIES
In June 1995, the National Labor Relations Board ("Board") filed
a complaint charging Amstaff with a refusal to bargain with
respect to a collective bargaining agreement, under which a now
former client's employees were employed, in violation of the
National Labor Relations Act. The charge was initially dismissed
by a Detroit office of the Board, but has since been reinstated
following a union appeal to the general counsel for the Board.
If the Board rules against Amstaff, Amstaff could be held liable
for lost wages and benefits of such employees for a period of
almost four years. Any award would be reduced by any earnings
that the employees received, or which reasonably could have been
received, from other employment during the relevant time period.
Amstaff is also a party to litigation matters and claims that
are normal in the course of its operations, and while the
results of litigation and claims cannot be predicted with
certainty, management believes, based on advice of counsel, the
final outcome of such matters will not have a materially adverse
effect on the consolidated financial position.
* * * * * *
F-13
<PAGE>
POOLED COMBINED PRO FORMA FINANCIAL INFORMATION (UNAUDITED):
The following unaudited pro forma financial information and explanatory notes
are presented to reflect the effect of the merger (the "Merger") of Amstaff,
Inc. ("Amstaff") with a wholly owned subsidiary of The Vincam Group, Inc.
("Vincam" or the "Company"), which acquisition has been accounted for as a
pooling of interests. The pro forma statements of income for each of the three
years ended December 31, 1996 assume that the Merger was consummated on January
1, 1994. The pro forma financial information is presented for informational
purposes only and is not necessarily indicative of the results that actually
would have occurred had the Merger been consummated on the date indicated or
that may be obtained in the future.
The pro forma financial information is derived from and should be read in
conjunction with the historical financial statements of Amstaff and the notes
thereto included on Pages F-1 to F-13, and the financial statements of Vincam as
incorporated herein by reference. The pro forma statements of income combine
Vincam's statements of income for the years ended December 31, 1994, 1995 and
1996 (as included in Vincam's Current Report on Form 8-K (File No. 0-28148)
dated May 8, 1997, which is incorporated herein by reference) with Amstaff's
historical statements of operations for the years ended December 31, 1994, 1995
and 1996, included on pages F-1 to F-13.
F-14
<PAGE>
<TABLE>
<CAPTION>
THE VINCAM GROUP, INC.
POOLED COMBINED CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1996
--------------------------------------------------------------------
POOLED
COMBINED
PRO FORMA PRO FORMA
VINCAM AMSTAFF ADJUSTMENTS INCOME STATEMENT
-------------- -------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues..................................... $ 473,595,457 $ 66,542,568 $ 540,138,025
-------------- -------------- -------------
Direct costs:
Salaries, wages and employment
taxes of worksite employees............ 417,718,271 60,019,919 477,738,190
Health care and workers' compensation.... 22,861,174 2,816,005 25,677,179
State unemployment taxes and other....... 4,220,633 1,064,613 5,285,246
-------------- -------------- -------------
Total direct costs................. 444,800,078 63,900,537 508,700,615
-------------- -------------- -------------
Gross profit................................. 28,795,379 2,642,031 31,437,410
-------------- -------------- -------------
Operating expenses:
Administrative personnel................. 13,041,095 2,249,161 15,290,256
Other general and administrative......... 6,668,151 1,127,535 7,795,686
Sales and marketing...................... 4,534,114 442,567 4,976,681
Provision for doubtful accounts.......... 434,300 (18,107) 416,193
Depreciation and amortization............ 805,331 84,589 889,920
-------------- -------------- -------------
Total operating expenses........... 25,482,991 3,885,745 29,368,736
-------------- -------------- -------------
Operating income (loss)...................... 3,312,388 (1,243,714) 2,068,674
Interest income (expense), net............... 696,707 2,945 699,652
-------------- -------------- -------------
Income before taxes.......................... 4,009,095 (1,240,769) 2,768,326
Provision for income taxes................... (1,316,313) (88,323) 458,320 A (877,117)
-------------- -------------- ------- -------------
Net income................................... $ 2,692,782 $ (1,329,092) 399,550 $ 1,891,209
============== ============== ======= =============
Net income per common and common
equivalent share......................... $ 0.32 $ 0.22
============== =============
Weighted average number of shares
outstanding used in earnings per
share calculation........................ 8,330,811 8,695,973
============== =============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-15
<PAGE>
<TABLE>
<CAPTION>
THE VINCAM GROUP, INC.
POOLED COMBINED CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------------
POOLED
COMBINED
PRO FORMA PRO FORMA
VINCAM AMSTAFF ADJUSTMENTS INCOME STATEMENT
--------------- --------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues..................................... $ 295,231,926 $ 43,665,424 $ 338,897,350
-------------- --------------- --------------
Direct costs:
Salaries, wages and employment
taxes of worksite employees............ 262,186,958 38,850,232 301,037,190
Health care and workers' compensation.... 15,330,888 2,005,605 17,336,493
State unemployment taxes and other....... 2,056,824 632,145 2,688,969
-------------- --------------- --------------
Total direct costs................. 279,574,670 41,487,982 321,062,652
-------------- --------------- --------------
Gross profit................................. 15,657,256 2,177,442 17,834,698
-------------- --------------- --------------
Operating expenses:
Administrative personnel................. 7,571,833 1,579,777 9,151,610
Other general and administrative......... 4,730,293 550,333 5,280,626
Sales and marketing...................... 2,441,590 297,426 2,739,016
Provision for doubtful accounts.......... 189,090 89,879 278,969
Depreciation and amortization............ 375,078 76,718 451,796
-------------- --------------- --------------
Total operating expenses........... 15,307,884 2,594,133 17,902,017
-------------- --------------- --------------
Operating income (loss)...................... 349,372 (416,691) (67,319)
Interest (expense) income, net............... 142,834 8,664 151,498
-------------- --------------- --------------
Income before taxes.......................... 492,206 (408,027) 84,179
Provision for income taxes................... (239,417) (10,089) 190,604 A (58,902)
-------------- --------------- ------- --------------
Net income (loss)............................ $ 252,789 $ (418,116) 190,604 $ 25,277
============== =============== ======= ==============
Net income per common and common
equivalent share......................... $ 0.04 $ 0.00
============== ==============
Weighted average number of shares
outstanding used in earnings per
share calculation........................ 6,994,018 7,359,180
============== ==============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-16
<PAGE>
<TABLE>
<CAPTION>
THE VINCAM GROUP, INC.
POOLED COMBINED CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED DECEMBER 31, 1994
--------------------------------------------------------------------
POOLED
COMBINED
PRO FORMA PRO FORMA
VINCAM AMSTAFF ADJUSTMENTS INCOME STATEMENT
--------------- --------------- ----------- ----------------
<S> <C> <C> <C> <C>
Revenues..................................... $ 224,843,043 $ 23,253,911 $ 248,096,954
------------- -------------- -------------
Direct costs:
Salaries, wages and employment
taxes of worksite employees............ 198,162,489 20,215,972 218,378,461
Health care and workers' compensation.... 12,212,883 1,600,038 13,812,921
State unemployment taxes and other....... 1,911,734 261,147 2,172,881
------------- -------------- -------------
Total direct costs................. 212,287,106 22,077,157 234,364,263
------------- -------------- -------------
Gross profit................................. 12,555,937 1,176,754 13,732,691
------------- -------------- -------------
Operating expenses:
Administrative personnel................. 4,663,598 762,516 5,426,114
Other general and administrative......... 3,157,671 421,767 3,579,438
Sales and marketing...................... 1,650,685 132,740 1,783,425
Provision for doubtful accounts.......... 40,000 12,000 52,000
Depreciation and amortization............ 217,977 66,385 284,362
------------- -------------- -------------
Total operating expenses........... 9,729,931 1,395,408 11,125,339
------------- -------------- -------------
Operating income (loss)...................... 2,826,006 (218,654) 2,607,352
Interest (expense) income, net............... 911 (4,631) (3,720)
-------------- -------------- ---------------
Income before taxes.......................... 2,826,917 (223,285) 2,603,632
Provision for income taxes................... (972,881) (8,958) 119,952 A (861,887)
------------- -------------- -------- -------------
Net income................................... $ 1,854,036 $ (232,243) $119,952 $ 1,741,745
============= ============== ======== =============
Net income per common and common
equivalent share......................... $ 0.26 $ 0.23
============= =============
Weighted average number of shares
outstanding used in earnings per
share calculation........................ 7,229,657 7,594,819
============= =============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-17
<PAGE>
NOTES TO UNAUDITED POOLED COMBINED PRO FORMA FINANCIAL INFORMATION
A Prior to June 30, 1997, Amstaff was taxed under the Sub-Chapter S
provisions of the Internal Revenue Code ("IRC") whereby its profits and
losses flowed directly to its former shareholders for U.S. federal income
tax purposes. Upon the merger of Amstaff with the Company on June 30,
1997, Amstaff no longer qualified under the Sub-Chapter S provisions of
the IRC and became a taxable entity. In connection with the change in tax
status, the Company recorded $458,320, $190,604 and $119,952 during the
years ended December 31, 1996, 1995 and 1994, respectively, in deferred
tax assets primarily related to accrual expenses not currently deductible
such as workers' compensation claims and single business tax reserves.
F-18
<PAGE>
THE VINCAM GROUP, INC.
EXHIBIT INDEX
EXHIBIT NO.
- ----------
23 Consent of Plante & Moran, LLP
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (File No. 333-08003) and the Registration Statement on
Form S-3 (File No. 333-26929) of The Vincam Group, Inc. of our report dated
September 10, 1997, which appears on page F-1 of The Vincam Group, Inc.'s
Amendment No. 2 to the Current Report on Form 8-K dated June 30, 1997,
(Commission File No. 0-28148), relating to the financial statements of Amstaff,
Inc. for each of the three years in the period ended December 31, 1996.
/s/ PLANTE & MORAN, LLP
Bloomfield Hills, Michigan
September 11, 1997
