<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): MARCH 12, 1997
SUPERIOR CONSULTANT HOLDINGS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
<TABLE>
<S> <C>
0-21485 38-3306717
- ------- ----------
(Commission File Number) (IRS Employer Identification No.)
4000 TOWN CENTER, SUITE 1100, SOUTHFIELD, MICHIGAN 48075
- -------------------------------------------------- ----------
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
(248) 386-8300
(Registrant's Telephone Number, Including Area Code)
NONE
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
On March 27, 1997, the Company filed a Current Report on Form 8-K with
respect to the acquisition by the Company's wholly-owned subsidiary, Superior
Consultant Company, Inc., of all of the outstanding securities of The Kaufman
Group, Inc., a healthcare consulting corporation organized under the laws of
California. Such Current Report indicated that the required financial
statements and pro forma financial information would be filed within sixty (60)
days of the due date of this Form 8-K.
The financial statements and pro forma financial information are filed
herewith as follows:
(a) Financial statements of business acquired
Financial statements of the business acquired as of and for the year ended
December 31, 1996 are included herein.
(b) Pro forma financial information
Pro forma financial information for the year ended December 31, 1996 is
included herein.
2
<PAGE> 3
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 hereunto duly authorized.
SUPERIOR CONSULTANT HOLDINGS
CORPORATION
Date: May 27, 1997 By: /s/James T. House
---------------------------------------
James T. House, Chief Financial Officer
(Signature)
3
<PAGE> 4
INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION
PAGE
<TABLE>
<S> <C>
Report of Independent Certified Public Accountants ......................... 5
Balance Sheet .............................................................. 6
Statement of Operations and Retained Earnings .............................. 7
Statement of Cash Flows .................................................... 8
Notes to Financial Statements .............................................. 9
Pro Forma Unaudited Consolidated Condensed Statement of Operations
for the Year Ended December 31, 1996 ..................................... 13
Notes to Pro Forma Unaudited Consolidated Condensed Financial Information .. 14
</TABLE>
4
<PAGE> 5
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors
The Kaufman Group
We have audited the accompanying balance sheet of The Kaufman Group (a
California corporation) as of December 31, 1996, and the related statements of
operations and retained earnings, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. 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 audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Kaufman Group as of
December 31, 1996, and the results of its operations and its cash flows for the
year then ended, in conformity with generally accepted accounting principles.
GRANT THORNTON LLP
Detroit, Michigan
May 13, 1997
5
<PAGE> 6
THE KAUFMAN GROUP
BALANCE SHEET
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
ASSETS
<TABLE>
<S> <C>
CURRENT ASSETS
Cash and cash equivalents ................................................. $ 130,560
Accounts receivable ....................................................... 894,071
----------
Total current assets ........................................... 1,024,631
PROPERTY AND EQUIPMENT, NET ................................................. 43,121
----------
Total Assets.................................................... $1,067,752
==========
</TABLE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<S> <C>
CURRENT LIABILITIES
Accounts payable .......................................................... $ 62,565
Accrued liabilities ....................................................... 172,995
Deferred revenue .......................................................... 36,500
Income taxes payable ...................................................... 38,000
Deferred income taxes ..................................................... 235,000
----------
Total Current Liabilities ..................................... 545,060
COMMITMENT (NOTE 7) ......................................................... -
STOCKHOLDERS' EQUITY
Common stock; authorized 100,000 shares of $1 par value;
issued and outstanding, 1,000 shares ...................................... 1,000
Additional paid-in capital ................................................ 5,024
Retained earnings ......................................................... 516,668
----------
Total stockholders' equity....................................... 522,692
----------
Total Liabilities and Stockholders' Equity....................... $1,067,752
==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
6
<PAGE> 7
THE KAUFMAN GROUP
STATEMENT OF OPERATIONS AND RETAINED EARNINGS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Revenues .................................................................... $4,204,980
Costs and expenses
Cost of services .......................................................... 1,182,625
Selling, general and administrative expenses .............................. 555,234
Executive compensation expense ............................................ 2,712,445
----------
Total costs and expenses............................................... 4,450,304
----------
Loss from operations .................................................. (245,324)
Other income, principally interest income ................................... 21,484
----------
Loss before income taxes ............................................. (223,840)
Income tax benefit .......................................................... (82,200)
----------
Net loss ............................................................. (141,640)
Retained earnings - beginning of year ....................................... 658,308
----------
Retained earnings - end of year.............................................. $ 516,668
==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
7
<PAGE> 8
THE KAUFMAN GROUP
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1996
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Cash flows from operating activities
Net loss .......................................................................... $(141,640)
Adjustments to reconcile net loss to net cash
provided by operating activities
Depreciation and amortization ................................................ 20,767
Deferred income tax credit ................................................... (121,000)
Changes in operating assets and liabilities:
Accounts receivable ....................................................... 270,530
Other assets .............................................................. 800
Accounts payable .......................................................... 45,214
Accrued liabilities ....................................................... 9,802
Deferred revenue .......................................................... 36,500
Income taxes payable ...................................................... 38,000
---------
Net cash provided by operating activities ............................... 158,973
Cash flows used in investing activities:
Purchases of property and equipment ............................................... (36,247)
---------
Net increase in cash and cash equivalents ........................................... 122,726
Cash and cash equivalents, beginning of period ...................................... 7,834
---------
Cash and cash equivalents, end of period............................................. $ 130,560
=========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THIS FINANCIAL STATEMENT.
8
<PAGE> 9
THE KAUFMAN GROUP
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
1. NATURE OF OPERATIONS
The Kaufman Group (the Company) provides management consulting for firms
in the health care industry throughout the United States. Such consulting
services include structuring medical groups, group practices operations
improvement, practice valuations and practice acquisitions.
2. SUMMARY OF ACCOUNTING POLICIES
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all
highly liquid investments purchased with a maturity of three months or less to
be cash equivalents.
Property and Equipment
Property and equipment are stated at cost. Expenditures for major
renewals and improvements that extend the useful life of property and equipment
are capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred.
Income Taxes
Taxes are accounted for under the liability method pursuant to Statement
of Financial Accounting Standards No. 109, Accounting for Income Taxes. This
approach requires the recognition of deferred tax liabilities and assets for
the expected future tax consequences of temporary differences between the
financial statement carrying amounts and the tax bases of assets and
liabilities.
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 these estimates.
Accounts Receivable
The Company believes that all accounts receivable as of December 31, 1996
are fully collectible. Therefore, no allowance for doubtful accounts has been
recorded.
Revenue Recognition
The Company recognizes revenues as services are performed for projects
billed on a time and materials basis. On fixed-fee projects, the Company
recognizes revenue using the percentage of completion basis. Deferred revenue
represents billings and collections made in advance of services being
performed.
9
<PAGE> 10
THE KAUFMAN GROUP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1996
- --------------------------------------------------------------------------------
3. PROPERTY AND EQUIPMENT
Property and equipment consists of the following at December 31, 1996:
<TABLE>
RANGE
OF LIFE
-------
<S> <C> <C>
Machinery and equipment ............................................... $ 83,693 3-10 years
Furniture and fixtures ................................................ 22,600 3-10 years
---------
106,293
Less accumulated depreciation................................ 63,172
---------
$ 43,121
=========
4. ACCRUED LIABILITIES
Accrued liabilities consist of the following at December 31, 1996:
Payroll and withholding taxes ........................... $ 4,156
Profit sharing .......................................... 60,839
Bonuses ................................................. 108,000
---------
Total accrued liabilities........................ $ 172,995
=========
</TABLE>
5. INCOME TAXES
The historical income tax benefit consists of the following for the year
ended December 31, 1996:
<TABLE>
<S> <C>
Current federal income taxes ................................ $ 30,000
Deferred federal income tax credit .......................... (121,000)
Current state income taxes .................................. 8,800
---------
$ (82,200)
=========
</TABLE>
The tax effects of temporary differences that give rise to the deferred
tax liability at December 31, 1996 are as follows:
<TABLE>
<S> <C>
Accrual basis of accounting for financial reporting,
cash basis for tax reporting .............................. $ 232,000
Depreciation ................................................ 3,000
----------
$ 235,000
==========
</TABLE>
10
<PAGE> 11
THE KAUFMAN GROUP
NOTES TO FINANCIAL STATEMENTS - CONTINUED
DECEMBER 31, 1996
- -------------------------------------------------------------------------------
6. PROFIT-SHARING PLAN
The Company has a profit-sharing plan which qualifies under Section 401(k)
of the Internal Revenue Code. Eligible employees may contribute up to the
maximum allowable under tax regulations. Company contributions are fully
discretionary. Profit sharing expense was $57,000 for the year ended December
31, 1996.
7. COMMITMENT
The Company leases its office facilities under a lease agreement
classified as an operating lease. Future minimum lease payments under such
noncancelable operating lease as of December 31, 1996 follows:
<TABLE>
<S> <C>
Years ending December 31:
1997 .............. $63,000
1998 .............. 53,000
-------
Total future minimum lease payments $116,000
========
</TABLE>
Rent expense amounted to approximately $63,000 for the year ended December
31, 1996, and has been included in selling, general and administrative expenses
in the accompanying statement of operations.
8. MAJOR CUSTOMER
During the year ended December 31, 1996, the Company derived approximately
23% of its revenue from one customer. As of December 31, 1996, accounts
receivable from this customer comprised approximately 13% of total accounts
receivable.
9. SUBSEQUENT EVENT
Effective March 12, 1997, the Company was purchased by Superior Consultant
Company, Inc. (a subsidiary of Superior Consultant Holdings Corporation) for
$3.2 million in cash, $1.6 million of newly-issued common stock of Superior,
and a maximum additional payment of $1.45 million payable in cash over a
three-year period.
11
<PAGE> 12
SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
On March 12, 1997 Superior Consultant Holdings Corporation (the Company),
through its subsidiary, Superior Consultant Company, Inc. purchased all the
common stock of The Kaufman Group for $3,227,000 in cash, $1,600,000 of the
Company's newly-issued common stock, and a maximum additional payment of
$1,450,000 payable in cash over a three-year period.
The pro forma unaudited consolidated condensed financial statements for
the year ended December 31, 1996 present the historical results of the Company
combined with The Kaufman Group and the pro forma adjustments as if the
purchase had been made at the beginning of the period presented. The pro forma
financial information should be read in conjunction with the Company's
historical financial statements and notes thereto contained in the Company's
Form 10-K for the year ended December 31, 1996, and Form 10-Q for the quarter
ended March 31, 1997. The pro forma results do not reflect any benefit from
economies which might be achieved from combined operations. These pro forma
results have been prepared for comparative purposes only and do not purport to
be indicative of the results of operations which actually would have occurred
if the acquisition had taken place on the basis presumed above, nor are they
indicative of future combined operations.
12
<PAGE> 13
SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
PRO FORMA UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THE PRO
KAUFMAN FORMA PRO
SUPERIOR GROUP ADJUSTMENTS FORMA
<S> <C> <C> <C> <C>
------------------------------------------
Revenues ............................................ $35,925 $4,205 $ - $40,130
Cost and expenses
Cost of services .................................. 17,743 1,183 - 18,926
Selling, general and administrative expenses ...... 13,498 555 327 (a) 14,380
Executive compensation expense .................... 4,579 2,712 (1,887)(b) 5,404
------- ------ ------ -------
Total costs and expenses .................. 35,820 4,450 (1,560) 38,710
------- ------ ------ -------
Earnings (loss) from operations ........... 105 (245) 1,560 1,420
Interest expense .................................... 47 - - 47
Other (income), principally interest income ......... (406) (21) - (427)
------- ------ ------ -------
Earnings (loss) before income taxes ....... 464 (224) 1,560 1,800
Income taxes (benefit) .............................. 886 (82) 609 (c) 1,413
------- ------ ------ -------
Net earnings (loss) ....................... $ (422) $ (142) $ 951 $ 387
======= ====== ====== =======
Pro forma earnings data
Earnings (loss) before income taxes, as reported .. $ 464 $ (224) $1,560 $ 1,800
Adjustment for executive compensation expense ..... 3,519 - - 3,519
------- ------ ------ -------
Pro forma earnings (loss) before income taxes ..... 3,983 (224) 1,560 5,319
Pro forma income tax expense ...................... 1,568 - 609 2,177
------- ------ ------ -------
Pro forma net earnings (loss) ..................... $ 2,415 $ (224) $ 951 $ 3,142
======= ====== ====== =======
Pro forma net earnings per share .................. $ 0.44 $ 0.57
======= =======
Pro forma weighted average number of common
and common equivalent shares outstanding .......... 5,455 5,530
======= =======
</TABLE>
See notes to pro forma consolidated condensed statement.
13
<PAGE> 14
SUPERIOR CONSULTANT HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA UNAUDITED CONSOLIDATED CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
The accompanying pro forma unaudited consolidated condensed statement of
operations presents the results of operations of Superior Consultant Holdings
Corporation and Subsidiaries (Superior) giving effect to the acquisition on
March 12, 1997 of the stock of The Kaufman Group. The purchase price was
$3,227,000 in cash paid at closing, and $1,600,000 of Superior's newly-issued
common stock issued at closing. There is also a contingent maximum additional
payment of $1,450,000 payable in cash over a three-year period.
Pro forma adjustments are as follows:
(a) Adjust depreciation and goodwill amortization based on the cost of the
business acquired and the excess of the purchase price over the fair value
of the net assets acquired, using an amortization period of fifteen years.
(b) Elimination of executive compensation expense in excess of the maximum
amount that would have been paid had the compensation-limiting agreements
for two executives of the acquired company, which became effective
concurrent with the purchase of The Kaufman Group, been effective
throughout the year.
(c) Adjustment to reflect tax expense of the combined operations after giving
effect to the above adjustments.
Pro forma weighted average number of common and common equivalent shares
outstanding include 74,590 shares issued in satisfaction of the purchase price.
14
