P R O S P E C T U S
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THE VINCAM GROUP, INC.
234,982 SHARES OF COMMON STOCK
PAR VALUE $.001 PER SHARE
This Prospectus relates to up to 234,982 shares of common stock (the
"Offered Shares") of The Vincam Group, Inc., a Florida corporation ("Vincam" or
the "Company"), which may be offered from time to time by the selling
shareholders named herein (the "Selling Shareholders"). Vincam will not receive
any of the proceeds from the sale of the Offered Shares. Vincam will bear the
costs relating to the registration of the Offered Shares, estimated to be
approximately $23,000.
The Offered Shares are being registered as a result of (a) a January
1998 transaction pursuant to which Vincam acquired Corporate Staff Services,
Inc., a Connecticut corporation (the "CSS Acquisition") for aggregate
consideration of 150,000 shares of common stock, par value $.001, of the Company
(the "Common Stock") and (b) a June 1997 transaction pursuant to which Vincam
acquired Amstaff, Inc., a Michigan corporation, and its subsidiaries (the
"Amstaff Acquisition") for aggregate consideration of 547,743 shares of Common
Stock (as adjusted to reflect the three-for-two stock split effected by way of a
stock dividend declared by the Company on November 6, 1997 and paid on December
10, 1997 to shareholders of record on November 21, 1997). Vincam agreed to
register for resale (i) the shares issued in connection with the CSS Acquisition
in four installments, of which the shares being offered hereunder by the CSS
Selling Shareholders (as defined herein) represent the first installment and
(ii) the shares issued to the Amstaff Selling Shareholder (as defined herein) in
connection with the Amstaff Acquisition in three installments of which the
shares being offered hereunder by the Amstaff Selling Shareholder represent the
second installment.
Vincam has been advised by each Selling Shareholder that such Selling
Shareholder expects to offer the Offered Shares to or through brokers and
dealers and underwriters to be selected by the Selling Shareholder from time to
time. In addition, the Offered Shares may be offered for sale through the Nasdaq
Stock Market, in the over-the-counter market, through a market maker, in one or
more private transactions, or a combination of such methods of sale, at prices
and on terms then prevailing, at prices related to such prices, or at negotiated
prices. The Selling Shareholders may pledge all or a portion of the Offered
Shares owned as collateral for margin accounts or in loan transactions, and the
Offered Shares may be resold pursuant to the terms of such pledges, accounts or
loan transactions. Upon default by such Selling Shareholders, the pledgee in
such loan transaction would have the same rights of sale as the Selling
Shareholders under this Prospectus. The Selling Shareholders also may enter into
exchange traded listed option transactions which require the delivery of the
Offered Shares listed hereunder. The Selling Shareholders may also transfer
Offered Shares owned in other ways not involving market makers or established
trading markets, including directly by gift, distribution, or other transfer
without consideration, and upon any such transfer the transferee would have the
same rights of sale as such Selling Shareholders under this Prospectus. In
addition, any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 of the Securities Act of 1933, as amended (the "1933 Act"),
may be sold under Rule 144 rather than pursuant to this Prospectus. See "Plan of
Distribution." Finally, the Selling Shareholders and any brokers and dealers
through whom sales of the Offered Shares are made may be deemed to be
"underwriters" within the meaning of the 1933 Act, and the commissions or
discounts and other compensation paid to such persons may be regarded as
underwriters' compensation. See "Risk Factors -- Possible Lack of Financial
Resources of Selling Shareholders."
The Common Stock is traded on the Nasdaq National Market under the
symbol VCAM. The average of the high and low prices of the Common Stock as
reported on the Nasdaq Stock Market on May 6, 1998 was approximately $23.91 per
share.
SEE "RISK FACTORS" STARTING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE OFFERED
SHARES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
All of the securities to be registered hereby are to be offered for the
accounts of the Selling Shareholders.
THE DATE OF THIS PROSPECTUS IS MAY 19, 1998.
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AVAILABLE INFORMATION
Vincam is subject to the reporting requirements of the Securities
Exchange Act of 1934 (the "1934 Act") and files reports and other information
with the Securities and Exchange Commission (the "Commission") in accordance
therewith. Such reports, proxy statements, and other information filed by Vincam
are available for inspection and copying at the public reference facilities of
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices located at 7 World Trade Center, Suite 1300, New
York, New York 10048, and at Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. Copies of such material may be obtained by
mail from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549, at prescribed rates. The Commission maintains a
World Wide Web site on the Internet at http://www.sec.gov that contains reports,
proxy and information statements and other information regarding registrants,
including Vincam, that file electronically with the Commission. The Company's
Common Stock is traded as a "National Market Security" on the Nasdaq National
Market. Materials filed by Vincam can be inspected at the offices of the
National Association of Securities Dealers, Inc., Reports Section, 1735 K
Street, N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed by Vincam with the Commission are
incorporated by reference in this Prospectus:
1. Vincam's Annual Report on Form 10-K for the year ended
December 31, 1997 (Commission File No. 0-28148).
2. Vincam's 10-K/A No. 1 for the year ended December 31, 1997
(Commission File No. 0-28148).
3. Vincam's Amendment No. 1 to its Current Report on Form 8-K
dated December 1, 1997 (Commission File No. 0-28148).
4. Vincam's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1998 (Commission File No. 0-28148).
5. Vincam's Proxy Statement dated April 22, 1998 (Commission
File No. 0-28148).
6. The description of the Common Stock of Vincam which is
contained in the Registration Statement of Vincam filed on
Form 8-A, dated April 4, 1996 (Commission File No. 0-28148).
All documents filed by Vincam pursuant to Sections 13(a), 13(c), 14, or
15(d) of the 1934 Act subsequent to the effectiveness of the Registration
Statement of which this Prospectus is a part and prior to the termination of the
offering of the Offered Shares offered hereby shall be deemed to be incorporated
by reference into this Prospectus and to be a part hereof. A statement contained
herein, in a prospectus supplement or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained in a
prospectus supplement or in any subsequently filed document which is
incorporated or deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statements so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
Vincam hereby undertakes to provide without charge to each person to
whom this Prospectus has been delivered, upon the written or oral request of any
such person, a copy of any and all of the foregoing documents incorporated
herein by reference (other than exhibits to such documents which are not
specifically incorporated by reference into the information that this Prospectus
incorporates). Written or telephone requests should be directed to The Vincam
Group, Inc., Investor Relations Department, 2850 Douglas Road, Coral Gables,
Florida 33134; telephone number (305) 460-2350.
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This Prospectus constitutes a part of a Registration Statement which
Vincam has filed with the Commission under the 1933 Act with respect to the
Offered Shares. This Prospectus omits certain of the information contained in
the Registration Statement, and reference is hereby made to the Registration
Statement and related Exhibits thereto for further information with respect to
Vincam and the securities offered hereby. Such additional information can be
obtained from the Commission's office in Washington, D.C. Any statements
contained herein concerning the provisions of any documents are not necessarily
complete, and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
THE COMPANY
Vincam, one of the ten largest professional employer organizations
("PEO") in the industry based on 1996 revenues (according to Staffing Industry
Analysts, Inc.), provides small and medium-sized 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. The Company believes its services assist business owners in:
(i) managing costs associated with workers' compensation, health insurance
coverage, workplace safety programs, and employee-related litigation, (ii)
providing employees with competitive health care and related benefits that are
more characteristic of large employers, and (iii) reducing the time and effort
required by business owners and executives to deal with the increasingly complex
legal and regulatory environment affecting employment. As of March 31, 1998, the
Company provided professional employer services to approximately 2,074 client
organizations with over 42,500 worksite employees, primarily in Florida,
Georgia, Colorado, Michigan and New England. Vincam was incorporated in Florida
in September 1984 as "Human Power Resources, Inc.," and changed its name to "The
Vincam Group, Inc." in 1989. The Company's corporate headquarters are located at
2850 Douglas Road, Coral Gables, Florida 33134, and its telephone number is
(305) 460-2350.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In connection with the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Company is hereby
providing cautionary statements identifying important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements (as such term is defined in the Reform Act) made by
or on behalf of the Company herein or in documents incorporated herein by
reference. Any statements that express, or involve discussions as to,
expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or phrases such as
"will result," "are expected to," "will continue," "is anticipated," "believes,"
"estimated," "intends," "plans," "projection" and "outlook") are not historical
facts and may be forward-looking and, accordingly, such statements involve
estimates, assumptions, and uncertainties which could cause actual results to
differ materially from those expressed in the forward-looking statements.
Accordingly, any such statements are qualified in their entirety by reference
to, and are accompanied by, the factors discussed throughout this Prospectus,
and particularly the risk factors set forth herein under "Risk Factors." Among
the key factors that have a direct bearing on the Company's results of
operations and the PEO industry in which it operates are the effects of various
governmental regulations, the fluctuation of the Company's direct costs and the
effectiveness of the Company's acquisition strategy. These and other factors are
discussed below under "Risk Factors."
The Company cautions that the risk factors described herein could cause
actual results or outcomes to differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company and that
investors should not place undue reliance on any such forward-looking
statements. Any forward-looking statement speaks only as of the date on which
such statement is made, and the Company undertakes no obligation to update any
forward-looking statement or statements to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for management to predict all of such factors. Further, management
cannot assess the impact
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of each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
RISK FACTORS
SET FORTH BELOW IS A DISCUSSION ADDRESSING THE MATERIAL RISK FACTORS
RELATING TO AN INVESTMENT IN THE COMPANY. PROSPECTIVE INVESTORS SHOULD CONSIDER
CAREFULLY THE FACTORS SET FORTH BELOW, AS WELL AS THE OTHER INFORMATION PROVIDED
ELSEWHERE IN THIS PROSPECTUS, IN EVALUATING AN INVESTMENT IN THE OFFERED SHARES.
POTENTIAL FOR UNFAVORABLE INTERPRETATION OF GOVERNMENT REGULATIONS
The Company's operations are affected by numerous federal, state and
local laws relating to labor, tax, insurance and employment matters and the
provision of managed care services. By contracting with client companies to form
an employment relationship with employees who work at client company locations
("worksite employees"), the Company assumes certain obligations and
responsibilities of an employer under these laws. Many of the laws related to
the employment relationship were enacted prior to the development of alternative
employment arrangements, such as those provided by PEOs and other staffing
businesses. These laws do not specifically address the obligations and
responsibilities of non-traditional employers. Interpretive issues concerning
such relationships have arisen and remain unsettled. Uncertainties arising under
the Internal Revenue Code of 1986, as amended (the "Code"), include, but are not
limited to, the qualified tax status and favorable tax status of certain benefit
plans provided by the Company and other alternative employers. The unfavorable
resolution of these unsettled issues could have a material adverse effect on the
Company's results of operations, financial condition and liquidity.
In addition, there can be no assurance that existing laws and
regulations which are not currently applicable to the Company will not be
interpreted more broadly in the future so as to apply to the Company's existing
activities or that new laws and regulations will not be enacted with respect to
the Company's activities, either of which could have a material adverse effect
on the Company's business, financial condition, results of operations and
liquidity.
FAILURE TO MANAGE INTERNAL GROWTH OR TO INTEGRATE ACQUISITIONS
The Company has experienced significant internal growth and growth
through acquisitions. The Company intends to continue to pursue an acquisition
strategy. The Company's growth may place a significant strain on the Company's
management, financial, operating and technical resources. In addition,
acquisitions may result in potentially dilutive issuances of equity securities,
significant transaction expenses, increased interest and amortization expense,
increased depreciation expense and decreased operating income, any of which
could have a material adverse effect on the Company's operating results.
Acquisitions also involve other risks, including increases in costs due to
competition for acquisition targets, difficulties in integrating the acquired
operations, diversion of management resources and the risks associated with
entry into new markets. Although the Company has acquired five PEOs since July
1996, there can be no assurance that other suitable acquisition candidates will
be found in the future, that the Company will have or be able to obtain the
necessary financing to consummate acquisitions, that acquisitions can be
consummated on favorable terms or that any acquired companies can be
successfully integrated into the Company's operations. There can be no assurance
that the management skills, personnel, information systems and other resources
and systems currently in place will be adequate to implement the Company's
acquisition strategy or to accommodate the Company's internal growth. The
failure to manage growth effectively or to implement its strategy could have a
material adverse effect on the Company's results of operations, financial
condition and liquidity.
NEED FOR LICENSES AND CERTIFICATIONS
The managed health care industry is subject to extensive state and
federal regulation. Certain of the Company's arrangements with respect to the
provision of specialty managed care services or the establishment of health care
provider networks require the Company to satisfy operating, licensing or
certification requirements,
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and further expansion of the range of specialty managed care services offered by
the Company is likely to subject the Company to additional licensing and
regulatory requirements. There can be no assurance that the Company will be able
to obtain or maintain all required licenses or certifications. The failure to
obtain or maintain any required licenses or certifications could have a material
adverse effect on the Company's results of operations, financial condition and
liquidity.
UNCERTAINTY OF IMPACT OF HEALTH CARE OR WORKERS' COMPENSATION REFORM
Regulation in the health care and workers' compensation fields
continues to evolve, and the Company is unable to predict what additional
government regulations, if any, affecting its business may be adopted in the
future. In addition, health care reform and/or specific changes in laws or
regulations may impact demand for the Company's services, require the Company to
develop new or modified services to meet the demands of the marketplace or
modify the fees that the Company may charge for its services. For example,
Colorado has enacted health care insurance legislation which may reduce certain
cost advantages that the Company can offer to small business clients in that
state. Similar legislation is being considered in at least one other state.
Although the Company is not in a position to determine the full cost of
compliance with Colorado's small business health care legislation, the Company
anticipates that such costs will be significant. Such legislation has adversely
affected the Company's ability to attract and retain clients in Colorado. The
Company is not, however, currently in a position to make any further
determination regarding, or to quantify, the impact of such legislation or
whether it will ultimately be material to the Company's results of operations.
RISKS ASSOCIATED WITH EXPANSION INTO ADDITIONAL STATES
The Company operates primarily in Florida, Colorado, Michigan, Georgia
and New England, with operations in such areas accounting for (i) approximately
47%, 9%, 21%, 9% and 12%, respectively, of the Company's revenues for the year
ended December 31, 1997 and (ii) approximately 50%, 8%, 21%, 8% and 11%,
respectively, of the Company's revenues for the three months ended March 31,
1998. Future growth of the Company's operations depends, in part, on its ability
to offer its services to prospective clients in additional states. In order to
operate effectively in a new state, the Company must obtain all necessary
regulatory approvals, achieve acceptance in the local market, adapt its
procedures to that state's regulatory requirements and local market conditions
and establish internal controls that enable it to conduct operations in several
locations. While many states do not explicitly regulate PEOs, approximately
one-third of the states (including Florida and New Hampshire where the Company
conducts business) have laws with respect to licensing or registration
requirements for PEOs. Several additional states (including Georgia and
Michigan, where the Company conducts business) have considered such regulation.
Such laws vary from state to state but generally provide for monitoring the
fiscal responsibility of PEOs and specify the employer responsibilities assumed
by PEOs. Although the Company believes that it is in material compliance with
the licensing and registration requirements of those jurisdictions which
currently impose such requirements, there can be no assurance that the Company
will be able to comply with any new or additional regulations which may be
imposed upon it in the future. The length of time required to obtain regulatory
approval to begin operations varies from state to state. There can be no
assurance that the Company will be able to satisfy licensing requirements or
other applicable regulations of any particular state in which it is not
currently operating, that it will be able to provide the full range of services
currently offered in Florida in another state, or that it will be able to
operate profitably within the regulatory environment of any state in which it
does obtain regulatory approval. The absence of required licenses would require
the Company to restrict the services it offers. Moreover, as the Company expands
into additional states, there can be no assurance that the Company will be able
to duplicate in other markets the revenue growth and operating results
experienced in its Florida market.
GEOGRAPHIC MARKET CONCENTRATION
The Company's South Florida market (Dade, Broward and Palm Beach
counties) accounted for (i) approximately 47% of the Company's revenues for the
year ended December 31, 1997 and (ii) approximately 50% of the Company's
revenues for the three months ended March 31, 1998. For the foreseeable future,
a significant portion of the Company's revenues will be subject to economic
conditions prevailing in South Florida. Economic
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conditions in South Florida may be affected by the strength of Latin American
economies and trade and the effects of natural disasters, such as hurricanes and
tornadoes.
ADEQUACY OF RESERVES
The Company participates in a fully insured health insurance plan in
most states, a minimum premium health insurance plan, as well as a fully insured
health insurance plan, in Florida and a self-insured health insurance program in
other states, with third party insurers providing insurance to the extent claims
under such minimum premium and self-insured health insurance plans exceed
certain levels ("stop loss coverage"). This results in the Company's payment of
a portion of the medical claims of its worksite employees. In addition, in
certain cases the Company provides specialty managed care services on a
capitated, risk-bearing basis. To the extent that the Company is not successful
in managing the severity and frequency of medical claims, the costs incurred by
the Company will increase and may have a material adverse effect on the
Company's financial condition, results of operations and liquidity. In addition,
to the extent an insurer delays or denies the payment of a claim for stop loss
coverage, or the amount of stop loss coverage proves to be inadequate, the
Company's financial condition, results of operations and liquidity could be
materially adversely affected. The Company maintains reserves for medical and
behavioral health claims based on periodic reviews of open claims, past claims
experience and other factors deemed relevant by management. While the Company
believes such reserves are adequate, the Company cannot predict with certainty
the ultimate liability associated with open 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 these
claims, the Company's financial condition, results of operations and liquidity
could be materially adversely affected.
INCREASES IN HEALTH CARE AND WORKERS' COMPENSATION INSURANCE COSTS
Health care costs and insurance premiums are significant to the
Company's operating results. Accordingly, the Company uses managed care
procedures in an attempt to control health care costs and the cost of insurance
premiums. Health care reform has recently been the subject of debate at both the
federal and state government levels. Laws and regulations relating to health
care are subject to change by action of the U.S. Congress, various state
legislatures or both. If such reforms result in an increase in the Company's
health care costs, the Company's ability to incorporate such increases into
service fees to clients may be constrained by contractual arrangements with
clients, which may cause delays before such increases can be reflected in
service fees. As a result, any such increases in health care costs could have a
material adverse effect on the Company's financial condition, results of
operations and liquidity.
The cost of workers' compensation insurance coverage is significant to
the Company's operating results. Accordingly, the Company uses extensive managed
care procedures in an attempt to control workers' compensation costs and related
insurance premiums. Changes to existing workers' compensation rating systems,
which could result in increased insurance premiums, and other increases in
workers' compensation costs and related insurance premiums could have a material
adverse effect on the Company's financial condition, results of operations and
liquidity.
QUARTERLY FLUCTUATIONS IN OPERATING RESULTS
Historically, the Company's quarterly operating results have fluctuated
significantly as a result of a number of factors, including the timing of new
contracts and terminations of existing contracts, the effect of employment tax
limits and delivery of health care services, none of which can be predicted with
any degree of certainty.
DEPENDENCE UPON KEY PERSONNEL
The Company is dependent to a substantial extent upon the continuing
efforts and abilities of certain key management personnel, including Carlos A.
Saladrigas (the Company's Chairman and Chief Executive Officer) and Jose M.
Sanchez (the Company's Vice Chairman and Area President--South Florida). The
Company does not have employment agreements with any of its executive officers.
The loss of services of certain of the
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Company's executive officers could have a material adverse effect upon the
Company's financial condition, results of operations and liquidity.
FINANCIAL CONDITION OF CLIENTS
The Company is obligated to pay the wages and salaries of its worksite
employees regardless of whether the Company's clients pay the Company on a
timely basis or at all. To the extent that any client experiences financial
difficulty, or is otherwise unable to meet its obligations as they become due,
the Company's financial condition, results of operations and liquidity could be
materially adversely affected.
SHORT TERM NATURE OF PEO SERVICES AGREEMENTS
The Company's standard PEO services agreement provides for an initial
one-year term, subject to termination by the Company or the client at any time
during the first year upon 30 days' prior written notice. Thereafter, the
contract may be terminated upon 30 days' written notice given prior to the
expiration of the renewal term or immediately for cause. Client contracts
acquired in acquisitions may be terminable with shorter notice, or under
different terms, than under the Company's standard PEO services agreements. A
significant number of terminations could have a material adverse effect on the
Company's financial condition, results of operations and liquidity.
RISK OF LOSS OF QUALIFIED STATUS FOR CERTAIN TAX PURPOSES
The Internal Revenue Service (the "IRS") has established an Employee
Leasing Market Segment Group (the "Market Segment Group") for the purpose of
identifying specific compliance issues prevalent in certain segments of the PEO
industry. Approximately 70 PEOs, not including Vincam, have been randomly
selected by the IRS for audit pursuant to this program. One issue that has
arisen in the course of these audits is whether PEOs, such as the Company, are
the employers of worksite employees under Code provisions applicable to employee
benefit plans and consequently able to offer to worksite employees benefit plans
that qualify for favorable tax treatment. The Market Segment Group is also
examining whether client company owners are employees of PEOs under Code
provisions applicable to employee benefit plans. The Company understands that
these issues have been referred to the IRS National Office. The Company is
unable to predict the timing or nature of the findings of the Market Segment
Group.
If the IRS concludes that PEOs are not employers of worksite employees
for purposes of the Code, the tax qualified status of the Company's 401(k) plan
could be revoked and its cafeteria plan may lose its favorable tax status.
Worksite employees could not continue to participate in such plans or in certain
other employee benefit plans of the Company. In addition, the Company may no
longer be able to assume the client company's federal employment tax withholding
obligations. If such a conclusion were applied retroactively, employees' vested
account balances would become taxable immediately, the Company would lose its
tax deduction to the extent contributions were not vested, the plan trust would
become a taxable trust and penalties and additional taxes for prior periods
could be assessed. In such a scenario, the Company would face the risk of client
dissatisfaction as well as potential litigation, and its financial condition,
results of operations and liquidity could be materially adversely affected. In
addition, if the Company is required to report and pay employment taxes for the
separate accounts of its clients rather than for its own account as a single
employer, the Company would incur increased administrative burdens.
RISK OF MULTIPLE-EMPLOYER PLAN TREATMENT
The U.S. Department of Labor has issued a few advisory opinions to PEOs
advising such PEOs that their respective health plans, which covered worksite
employees, were multiple-employer plans, rather than single employer plans. The
Company believes it is a co-employer of worksite employees and, as such, views
its group health plan, which also covers worksite employees, to be a single
employer plan. If these Department of Labor opinions were applied to the
Company's health plan, or to the Company's other employee benefit plans, the
Department of Labor could assess penalties against the Company for having
incorrectly filed annual reports treating such plan(s) as a single employer
plan. The Department of Labor could also assess penalties against the
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Company's clients for failure to file annual reports. In such a scenario, the
Company would face the risk of client dissatisfaction as well as potential
litigation, and its financial condition, results of operations and liquidity
would be materially adversely affected.
LIABILITIES FOR CLIENT AND EMPLOYEE ACTIONS
A number of legal issues remain unresolved with respect to the
co-employment arrangements among PEOs, their clients and worksite employees,
including questions concerning the ultimate liability for violations of
employment and discrimination laws. The Company's standard client service
agreement establishes a contractual division of responsibilities between the
Company and each client for various human resource matters, including compliance
with and liability under various governmental regulations. However, as a result
of the Company's status as a co-employer, the Company may be subject to
liability for violations of these or other laws despite these contractual
provisions and even if it does not participate in such violations. Although such
client service agreements generally provide that the client is to indemnify the
Company for any liability attributable to the client's failure to comply with
its contractual obligations and the requirements imposed by law, the Company may
not be able to collect on such a contractual indemnification claim and thus may
be responsible for satisfying such liabilities. In addition, worksite employees
may be deemed to be agents of the Company, subjecting the Company to liability
for the actions of such worksite employees.
POTENTIAL LEGAL LIABILITY
The management and administration of the delivery of health care and
other services entail inherent risks of liability. The Company may, from time to
time, in the ordinary course of its business, be subject to various claims,
suits and complaints relating to the provision of medical care, including those
related to denial of benefits to worksite employees and negligence in
credentialing of providers. In addition, as an employer, the Company may also be
subject to a wide variety of employment-related claims such as claims for
injuries, wrongful deaths, discrimination, wage and hours violations and other
matters. More specifically, the Company's financial condition and results of
operations are subject to several contingencies including the conclusions that
may be reached by the IRS Market Segment Group and the resolutions of certain
pending legal proceedings, each of which may have a material adverse effect on
the Company's operations or financial condition. For more information regarding
such pending legal proceedings, reference should be made to the Company's
disclosures contained in Item 3 "Legal Proceedings" of the Company's Annual
Report on Form 10-K for the year ended December 31, 1997, as amended by Form
10-K/A No.1 (collectively, the "1997 Form 10-K") and Note 13 of the Notes to
Consolidated Financial Statements in the 1997 Form 10-K, which 1997 Form 10-K is
incorporated by reference into this Prospectus.
RISK OF INADEQUATE INSURANCE
Although the Company carries professional and general liability
insurance, there can be no assurance that any such insurance carried by the
Company or its providers will be sufficient to cover any judgments, settlements
or costs relating to any present or future claims, suits or complaints or that
sufficient insurance will be available to the Company or such providers in the
future on satisfactory terms, if at all. If the insurance carried by the Company
or its providers is not sufficient to cover any judgments, settlements or costs
relating to any present or future claims, suits or complaints, the Company's
business, financial condition, results of operations and liquidity could be
materially adversely affected.
COMPETITION
The PEO industry is highly fragmented, with approximately 2,000 PEOs in
operation, according to the National Association of Professional Employer
Organizations. The Company encounters competition from other PEOs and from
single-service and "fee for service" companies such as payroll processing firms,
insurance companies and human resource consultants. Many of these companies have
limited operations and fewer than 1,000 worksite employees, but there are
several industry participants which are comparable in size to the Company. The
Company also competes directly with independent local and national entities that
offer managed behavioral health or workers' compensation services as well as
with insurance carriers and other provider groups
8
<PAGE>
that have managed care capabilities. In addition, the Company may encounter
substantial competition from new market entrants. Some of the Company's current
and future competitors may be significantly larger, have greater name
recognition and have greater financial, marketing and other resources than the
Company. There can be no assurance that the Company will be able to compete
effectively against such competitors in the future.
LOSS OF BENEFIT PLANS
The maintenance of health and workers' compensation insurance plans
that cover worksite employees is a significant part of the Company's business.
The Company's current health and workers' compensation contracts are provided on
terms that the Company believes to be favorable. While the Company believes that
replacement contracts could be secured on competitive terms without causing
significant disruption to the Company's business, there can be no assurance in
this regard.
CONCENTRATION OF COMMON STOCK OWNERSHIP
As of April 15, 1998, the executive officers and directors of the
Company beneficially owned an aggregate of approximately 5,477,245 of the
outstanding shares of Common Stock of the Company, constituting approximately
35% of the outstanding shares of Common Stock of the Company. Accordingly, such
persons will be in a position to influence significantly the Company's affairs
and operations, including the election of directors.
POTENTIAL VOLATILITY OF STOCK PRICE
The market price of the Company's Common Stock could be highly
volatile, fluctuating in response to factors such as changes in the economy or
the financial markets, variations in the Company's operating results, failure to
achieve earnings consistent with analysts' estimates, announcements of new
services, acquisitions or market expansions by the Company or its competitors,
and developments relating to regulatory or other issues affecting the PEO or
managed care industries. In addition, the Nasdaq National Market generally has
experienced, and is likely to experience in the future, significant price and
volume fluctuations which could adversely affect the market price of the
Company's Common Stock without regard to the Company's operating performance.
SHARES ELIGIBLE FOR FUTURE SALE
Sales of substantial amounts of the Common Stock in the public market
could have an adverse effect on prevailing market prices of the Common Stock and
adversely affect the Company's ability to raise capital in the capital markets
at a time and on terms favorable to the Company. After this offering,
approximately 8,981,740 shares will be freely tradeable without restriction,
while approximately 5,093,033 additional shares of the Company's Common Stock
will be eligible for sale pursuant to Rule 144 under the 1933 Act, subject to
certain volume and other limitations. In addition, certain holders of Common
Stock will have registration rights for an aggregate of up to approximately
6,488,468 shares of Common Stock.
ANTI-TAKEOVER EFFECT
Certain Florida legislation applicable to the Company may deter or
frustrate takeovers of the Company. Certain provisions of the Articles of
Incorporation and Bylaws of the Company may also deter takeovers of the Company.
In addition, the Company is authorized to issue 20,000,000 shares of preferred
stock in one or more series, having terms fixed by the Board of Directors
without shareholder vote, including voting, dividend or liquidation rights that
could be greater than or senior to the rights of holders of Common Stock.
Issuance of these shares could also be used as an anti-takeover device. The
Company has no current intentions or plans to issue any such preferred stock.
POSSIBLE LACK OF FINANCIAL RESOURCES OF SELLING SHAREHOLDERS
The Selling Shareholders may be deemed to be underwriters pursuant to
the 1933 Act, and in that regard may become liable to the purchasers of the
Offered Shares pursuant to the terms of the 1933 Act if certain
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<PAGE>
provisions of the 1933 Act are not complied with by them. There can be no
assurance that any of the Selling Shareholders has the financial resources to
discharge any such liability.
SELLING SHAREHOLDERS
All of the Offered Shares are being sold by the Selling Shareholders
named below, consisting of the CSS Selling Shareholders and the Amstaff Selling
Shareholder. The Company will not receive any proceeds from the sale of the
Offered Shares.
All of the Offered Shares were acquired by the CSS Selling Shareholders
and the Amstaff Selling Shareholder from the Company in connection with the CSS
Acquisition and the Amstaff Acquisition, respectively. The shares issued
pursuant to such acquisitions were exempt from the registration provisions of
the 1933 Act. An aggregate of 150,000 and 547,743 shares of Common Stock were
issued in connection with the CSS Acquisition and the Amstaff Acquisition,
respectively.
To the best of the Company's knowledge, the following table sets forth
certain information with respect to the CSS Selling Shareholders and the Amstaff
Selling Shareholder as of April 15, 1998. The Company believes that all persons
named in the table below have sole voting power and investment power with
respect to all shares of Common Stock beneficially owned by them.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO OFFERING NUMBER OF SHARES OWNED AFTER OFFERING
CSS SELLING SHAREHOLDERS(1) NUMBER PERCENT BEING OFFERED NUMBER PERCENT
- --------------------------- ------ ------- ---------------- ------ -------
<S> <C> <C> <C> <C> <C>
Willard Finkle 75,000 * 26,250 48,750 *
John J. Piscioniere 75,000 * 26,250 48,750 *
</TABLE>
*Less than one percent.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
AMSTAFF OWNED PRIOR TO OFFERING NUMBER OF SHARES OWNED AFTER OFFERING
SELLING SHAREHOLDER(2) NUMBER PERCENT BEING OFFERED NUMBER PERCENT
- ---------------------- ------ ------- ---------------- ------ -------
<S> <C> <C> <C> <C> <C>
Gregory J. Packer, as 380,812 2.4% 182,482 198,330 1.3%
Trustee of the Revocable
Living Trust of Gregory
John Packer
</TABLE>
(1) A total of 97,500 shares of Common Stock which will be owned by the CSS
Selling Shareholders after the completion of this offering will be subject to
future registration by the Company pursuant to certain registration rights
granted to the CSS Selling Shareholders by the Company in connection with the
CSS Acquisition.
None of the CSS Selling Shareholders had any material relationship with Vincam
prior to the CSS Acquisition, which was completed on January 30, 1998. Willard
Finkle and John J. Piscioniere both became employees of Vincam in connection
with the CSS Acquisition.
(2) A total of 182,481 shares of Common Stock which will be owned by the Amstaff
Selling Shareholder after the completion of this offering will be subject to
future registration by the Company pursuant to certain registration rights
granted to the Amstaff Selling Shareholder by the Company in connection with the
Amstaff Acquisition.
The Amstaff Selling Shareholder did not have any material relationship with
Vincam prior to the Amstaff Acquisition, which was completed on June 30, 1997.
Gregory J. Packer, the settlor and trustee of the Revocable Living Trust of
Gregory John Packer under agreement dated February 7, 1990, as amended and
restated, entered into an employment agreement with the Company and
Vincam/Amstaff, Inc., a Michigan corporation and a wholly
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<PAGE>
owned subsidiary of the Company, in connection with the Amstaff Acquisition, and
currently holds the office of Area President-Midwest of The Vincam Group, Inc.
PLAN OF DISTRIBUTION
The Offered Shares are being sold by the Selling Shareholders named
herein. See "Selling Shareholders." The Company will not receive any of the
proceeds from the sale of the Offered Shares.
The Company has been advised by each Selling Shareholder that such
Selling Shareholder expects to offer the Offered Shares to or through brokers
and dealers and underwriters to be selected by the Selling Shareholder from time
to time. In addition, the Offered Shares may be offered for sale through the
Nasdaq Stock Market, in the over-the-counter market, through a market maker, in
one or more private transactions, or a combination of such methods of sale, at
prices and on terms then prevailing, at prices related to such prices, or at
negotiated prices. The Selling Shareholders may pledge all or a portion of the
Offered Shares owned as collateral for margin accounts or in loan transactions,
and the Offered Shares may be resold pursuant to the terms of such pledges,
accounts or loan transactions. Upon default by such Selling Shareholders, the
pledgee in such loan transaction would have the same rights of sale as the
Selling Shareholders under this Prospectus. The Selling Shareholders also may
enter into exchange traded listed option transactions which require the delivery
of the Offered Shares listed hereunder. The Selling Shareholders may also
transfer Offered Shares owned in other ways not involving market makers or
established trading markets, including directly by gift, distribution, or other
transfer without consideration, and upon any such transfer the transferee would
have the same rights of sale as such Selling Shareholders under this Prospectus.
In addition, any securities covered by this Prospectus which qualify for sale
pursuant to Rule 144 of the 1933 Act may be sold under Rule 144 rather than
pursuant to this Prospectus. Without limiting the foregoing, brokers may act as
dealers by purchasing any or all of the Offered Shares either as agents for
others or as principals for their own accounts and reselling such shares
pursuant to this Prospectus. Such brokers will receive compensation from the
Selling Shareholders in the form of commissions or discounts and may receive
compensation from purchasers of the Offered Shares for whom they may act as
agent or to whom they may sell as principal in the form of commissions or
discounts. Finally, the Selling Shareholders and any brokers and dealers through
whom sales of the Offered Shares are made may be deemed to be "underwriters"
within the meaning of the 1933 Act, and the commissions or discounts and other
compensation paid to such persons may be regarded as underwriters' compensation.
See "Risk Factors -- Possible Lack of Financial Resources of Selling
Shareholders." The Company has agreed to indemnify the Selling Shareholders
against certain liabilities, including liabilities under the 1933 Act.
There can be no assurances that the Selling Shareholders will sell any
or all of the Offered Shares.
LEGAL MATTERS
Steel Hector & Davis LLP, Miami, Florida, has rendered an opinion as to
the validity of the Offered Shares.
EXPERTS
The consolidated financial statements incorporated in this Prospectus
by reference to (i) the Company's Annual Report on Form 10-K for the year ended
December 31, 1997, as amended by Form 10-K/A No. 1 and (ii) its Amendment No. 1
to the Current Report on Form 8-K dated December 1, 1997 have been so
incorporated in reliance on the reports of Price Waterhouse LLP, independent
certified public accountants, given on the authority of said firm as experts in
auditing and accounting.
The financial statements of Staffing Network, Inc. at December 31, 1996
and 1995, and for the years then ended, incorporated in this Prospectus by
reference to the Company's Amendment No. 1 to the Current Report on Form 8-K
dated December 1, 1997 have been audited by Ernst & Young LLP as set forth in
their report thereon included therein and incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
auditing and accounting.
11
<PAGE>
The financial statements of Staffing Network, Inc. for the year ended
December 31, 1994 incorporated in this Prospectus by reference to the Company's
Amendment No. 1 to the Current Report on Form 8-K dated December 1, 1997 have
been so incorporated in reliance, in part, on the report of Howe, Riley & Howe
Professional Corporation, given on the authority of said firm as experts in
auditing and accounting.
12
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NO DEALER, SALESPERSON, OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY SELLING SHAREHOLDER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS
PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH
SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH
OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.
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TABLE OF CONTENTS
PAGE
----
Available Information..................... 2
Incorporation of Certain
Information by Reference.............. 2
The Company............................... 3
Cautionary Note Regarding Forward
Looking Statements.................... 3
Risk Factors.............................. 4
Selling Shareholders...................... 10
Plan of Distribution...................... 11
Legal Matters............................. 11
Experts................................... 11
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THE VINCAM GROUP, INC.
234,982 SHARES
COMMON STOCK
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P R O S P E C T U S
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MAY 19, 1998
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