<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): NOVEMBER 20, 1997
COMPLETE BUSINESS SOLUTIONS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MICHIGAN
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-22141 38-2606945
(COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
32605 WEST TWELVE MILE ROAD, SUITE 250, FARMINGTON HILLS, MI 48334
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICE) (ZIP CODE)
(248) 488-2088
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NONE
(FORMER NAME AND FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE> 2
Complete Business Solutions, Inc. (the "Company") hereby amends and restates
Item 7 of its report on Form 8-K dated November 20, 1997, as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
1. The audited financial statements of Synergy Software, Inc. as of
December 31, 1996 and 1995, and for the years ended December 31,
1996 and 1995.
2
<PAGE> 3
SYNERGY SOFTWARE, INC.
TABLE OF CONTENTS
PAGE(S)
Report of Independent Accountants 4
Financial Statements:
Balance Sheets, as of December 31, 1996 and 1995 5
Statements of Operations and Retained Earnings for the years
ended December 31, 1996 and 1995 6
Statements of Cash Flows for the years ended December 31, 1996
and 1995 7
Notes to Financial Statements 8 to 11
3
<PAGE> 4
[COOPERS & LYBRAND LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Synergy Software, Inc.
We have audited the accompanying balance sheets of Synergy Software, Inc., as
of December 31, 1996 and 1995 and the related statements of operations and
retained earnings and cash flows for the years 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 audits.
We conducted our audits 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 audits provide 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 Synergy Software, Inc. as of
December 31, 1996 and 1995 and the results of its operations and its cash flows
for the years then ended in conformity with generally accepted accounting
principles.
/s/ Coopers & Lybrand L.L.P.
Chicago, Illinois
October 25, 1997
4
<PAGE> 5
SYNERGY SOFTWARE, INC.
BALANCE SHEETS
December 31, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 360,927 $ 430,722
Accounts receivable 1,944,463 770,909
---------- ----------
Total current assets 2,305,390 1,201,631
Investment 85,000 -
Property and equipment, net 46,363 38,860
Other assets 5,177 177
---------- ----------
$2,441,930 $1,240,668
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 216,578 $ 125,926
Accrued expenses 258,799 196,393
---------- ----------
Total current liabilities 475,377 322,319
---------- ----------
Stockholders' equity:
Common stock, $.001 par value; 3,000,000 shares authorized;
2,150,000 shares issued and outstanding 2,150 2,150
Additional paid in capital 600 600
Retained earnings 1,963,803 915,599
---------- ----------
1,966,553 918,349
---------- ----------
Total liabilities and stockholders' equity $2,441,930 $1,240,668
========== ==========
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE> 6
SYNERGY SOFTWARE, INC.
STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
for the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Consulting revenue $ 9,509,166 $ 5,259,475
Direct costs 6,346,428 3,490,238
----------- -----------
Gross profit 3,162,738 1,769,237
General and administrative expenses 1,576,157 1,092,173
----------- -----------
Operating income 1,586,581 677,064
Other income (expense):
Interest income 18,984 16,575
Equity in loss of investee (110,000) -
State tax expense (23,982) (10,451)
----------- -----------
Net income 1,471,583 683,188
Retained earnings, beginning of year 915,599 867,273
Stockholder distributions (423,379) (634,862)
----------- -----------
Retained earnings, end of year $ 1,963,803 $ 915,599
=========== ===========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE> 7
SYNERGY SOFTWARE, INC.
STATEMENTS OF CASH FLOWS
for the years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $ 1,471,583 $ 683,188
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 37,605 31,262
Equity in loss of investee 110,000 -
Changes in assets and liabilities resulting in cash
increase (decrease):
Accounts receivable (1,173,554) (404,187)
Other assets (5,000) --
Accounts payable 90,652 73,022
Accrued expenses 62,406 173,360
------------- -------------
Total adjustments (877,891) (126,543)
------------- -------------
Net cash provided by operating activities 593,692 556,645
------------- -------------
Cash flows used in investing activities:
Purchase of property and equipment (45,108) (60,501)
Investment in Travelmaster, Inc. (195,000) -
------------- -------------
Net cash used in investing activities (240,108) (60,501)
------------- -------------
Cash flows used in financing activities:
Distributions to stockholders (423,379) (634,862)
------------- -------------
Net cash used in financing activities (423,379) (634,862)
------------- -------------
Net decrease in cash and cash equivalents (69,795) (138,718)
Cash and cash equivalents, at beginning of year 430,722 569,440
------------- -------------
Cash and cash equivalents, at end of year $ 360,927 $ 430,722
============= =============
</TABLE>
The accompanying notes are an integral part of the financial statements.
7
<PAGE> 8
SYNERGY SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
1. Nature of Business
Synergy Software, Inc. (the "Company") specializes in providing consulting
services with respect to custom and packaged software applications for
middle market companies and divisions of Fortune 500 companies in the
Midwest.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
The Company considers all highly liquid investments with a maturity of
three months or less to be cash equivalents. Such investments are
carried at cost, which approximates fair value given their short-term
nature.
REVENUE RECOGNITION
Revenue from consulting engagements is recognized when the services are
rendered.
INVESTMENT
At December 31, 1996, the Company has a 24.2% investment in Travelmaster,
Inc. ("TI"). TI's primary operation is to own and operate travel
agencies utilizing internet-based technology. The investment in TI is
accounted for on the equity method. Also, at December 31, 1996, the two
principal stockholders of the Company own an aggregate of 51% of TI.
PROPERTY AND EQUIPMENT
Property and equipment are stated at cost. Depreciation is provided using
the straight-line method over the estimated useful lives of the
assets: three to seven years. Upon retirement or sale, the costs of
assets and related accumulated depreciation are removed from the
accounts and any resulting gain or loss is included in the results of
operations. Expenditures for major improvements are capitalized,
repairs and maintenance are expensed as incurred.
INCOME TAXES
Under U.S. federal income tax laws, the Company has elected to be treated
as a small business corporation (S-Corporation). Accordingly, the
Company's taxable income is reportable on the stockholders' individual
tax returns.
There are certain state taxes, based upon taxable income, which are payable
by the Company. Such amounts are classified in other income (expense).
8
<PAGE> 9
SYNERGY SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
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 revenues and expenses
during the reporting periods. Actual results could differ from those
estimates.
3. PROPERTY AND EQUIPMENT
Property and equipment at December 31 consists of the following:
<TABLE>
<CAPTION>
1996 1995
<S> <C> <C>
Furniture and equipment $ 163,072 $118,842
Computer software 44,460 43,582
--------- --------
Property and equipment, at cost 207,532 162,424
Less accumulated depreciation and amortization 161,169 123,564
--------- --------
Property and equipment, net $ 46,363 $ 38,860
========= ========
</TABLE>
4. EMPLOYEE BENEFIT PLANS
DEFINED CONTRIBUTION PLAN
The Company has a defined contribution 401(k) plan for substantially all
employees. Under the plan, eligible employees may elect to contribute
up to 15% of their base compensation. The Company contributes an
additional 50% of employee contributions up to 1% of the participants'
aggregate base compensation. Company contributions to the plan amounted
to $25,940 in 1996 and $16,480 in 1995.
9
<PAGE> 10
SYNERGY SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. STOCK OPTIONS
The Synergy Software 1994 Employee Incentive Compensation Plan (the
"Plan") authorizes the grant of options to purchase the Company's
common stock to executives and other key employees of the Company.
The options granted under the plan become exercisable immediately upon
grant. All options granted expire ten years from the date of grant.
The stock option activity under the Plan for the years ended December
31, 1996 and 1995 was as follows:
<TABLE>
<CAPTION>
EXERCISE
NUMBER OF PRICE PER
OPTION SHARES SHARE
<S> <C> <C>
Outstanding, January 1, 1995 285,648 $.001
Canceled (2,736) .001
Granted 14,036 .001
----------
Outstanding, December 31, 1995 296,948 $.001
Canceled (1,443) $.001
Granted 30,967 $.001-$0.40
----------
Outstanding, December 31, 1996 326,472 $.001-$0.40
==========
</TABLE>
Additionally, under an employment agreement, the Company granted a key
executive options to purchase 198,846 shares of common stock at an
exercise price of $0.40 per share in August 1996. All terms and
conditions of the Synergy Software 1994 Employee Incentive Compensation
Plan apply to these options, except that vesting occurs ratably over
three years.
The total number of shares reserved for grant under the Plan and
employment agreements is 548,846 at December 31, 1996.
Management has estimated that the weighted average grant date fair
value price for all options granted was $0.34, which approximated the
market price at the date of grant. The weighted average remaining
contractual life of the stock options outstanding is approximately
ten years.
Grants of options under the plan are accounted for following the
provisions of APB Opinion No. 25 and its related interpretations.
No compensation cost has been recognized for grants made to date. Had
compensation cost been determined by computing the fair value of each
grant, reported net income would not have been significantly different
than as reported. For the purpose of this determination, fair value
was computed using the Black-Scholes option-pricing model with the
following assumptions: an expected life of three years, dividend rate
of 0%, risk-free interest rate of 6.5% and a volatility factor of 0%.
10
<PAGE> 11
SYNERGY SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS, CONTINUED
6. LEASE COMMITMENTS
The Company leases its office facilities under an operating lease with
future minimum rental payments required as follows:
<TABLE>
<CAPTION>
<S> <C>
1997 $ 84,000
1998 97,500
1999 99,000
2000 110,000
2001 and thereafter 142,000
---------
$ 532,500
=========
</TABLE>
Rent expense was approximately $54,000 for the year ended December 31,
1996 and 1995.
7. SUBSEQUENT EVENT
In April 1997, the Company distributed approximately $592,000 of its
retained earnings to stockholders as permitted under the by-laws of the
Company. Approximately $197,000 of this amount was included in accrued
liabilities at December 31, 1996.
11
<PAGE> 12
2. The following unaudited financial statements of Synergy Software,
Inc. have been prepared by management. Certain information and
footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles
have been omitted. In the opinion of management, the accompanying
unaudited financial statements contain all adjustments, consisting of
normal recurring adjustments, necessary to present fairly the
financial position of Synergy Software, Inc. as of September 30,
1997, the results of its operations for the nine month periods ended
September 30, 1997 and 1996, and cash flows for the nine month
periods ended September 30, 1997 and 1996. These financial
statements should be read in conjunction with the financial
statements and footnotes thereto for the years ended December 31,
1996 and 1995 included in this Form 8-K/A.
The results of operations for the nine month period ended
September 30, 1997 are not necessarily indicative of the results
to be expected in future quarters or for the full fiscal year
ending December 31, 1997. During the nine month period ended
September 30, 1997 and as a result of the pending acquisition,
Synergy Software, Inc., recognized certain additional expenses,
including compensation resulting from stock option grants as required
by APB opinion No. 25.
12
<PAGE> 13
SYNERGY SOFTWARE, INC.
BALANCE SHEET
September 30, 1997
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 942,056
Accounts receivable, net 1,927,593
----------
Total current assets 2,869,649
Investment 174,269
Property and equipment, net 84,397
Other assets 15,078
----------
$3,143,393
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 137,730
Accrued expenses 428,507
----------
Total current liabilities 566,237
----------
Stockholders' equity:
Common stock, $.001 par value; 3,000,000 shares authorized;
2,150,000 shares issued and outstanding 2,150
Additional paid in capital 228,745
Retained earnings 2,346,261
----------
2,577,156
----------
Total liabilities and stockholders' equity $3,143,393
==========
</TABLE>
13
<PAGE> 14
SYNERGY SOFTWARE, INC.
STATEMENTS OF OPERATIONS
for the nine month periods ended
September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Consulting revenue $9,251,674 $6,537,529
Direct costs 6,525,466 4,334,228
---------- ----------
Gross profit 2,726,208 2,203,301
General and administrative expenses 1,749,185 1,116,315
---------- ----------
Operating income 977,023 1,086,986
Other income (expense):
Interest income 16,060 -
Equity in loss of investee (215,731) (82,500)
State tax expense - (8,840)
---------- ----------
Net income $ 777,352 $ 995,646
========== ==========
</TABLE>
14
<PAGE> 15
SYNERGY SOFTWARE, INC.
STATEMENTS OF CASH FLOWS
for the nine month periods ended
September 30, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $ 777,352 $ 995,646
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 18,308 23,792
Stock option expense 228,145 -
Equity in loss of investee 215,731 82,500
Changes in assets and liabilities resulting in cash
increase (decrease):
Accounts receivable 16,869 (721,733)
Accounts payable (78,848) (58,044)
Accrued expenses and other 348,125 282,274
------------- -------------
Total adjustments 748,330 (391,211)
------------- -------------
Net cash provided by operating activities 1,525,682 604,435
------------- -------------
Cash flows used in investing activities:
Purchase of property and equipment (47,858) (43,280)
Investment in Travelmaster, Inc. (305,000) --
------------- -------------
Net cash used in investing activities (352,858) (43,280)
------------- -------------
Cash flows used in financing activities:
Distributions to stockholders (591,695) (409,230)
------------- -------------
Net cash used in financing activities (591,695) (409,230)
------------- -------------
Net increase in cash and cash equivalents 581,129 151,925
Cash and cash equivalents, at beginning of period 360,927 430,722
------------- -------------
Cash and cash equivalents, at end of period $ 942,056 $ 582,647
============= =============
</TABLE>
15
<PAGE> 16
(b) Pro Forma Financial Information
On November 20, 1997 Complete Business Solutions, Inc. (the Company) signed
an Agreement and Plan of Merger (Merger Agreement) with Synergy Software,
Inc., a privately held Illinois Corporation and with the holders of the
issued and outstanding capital stock of Synergy Software, Inc.
The Merger Agreement provides for all of the outstanding Synergy Software, Inc.
common stock to be exchanged for 695,447 shares of the Company's common stock.
The Merger Agreement also provides for the conversion of all existing Synergy
Software, Inc. options into Complete Business Solutions, Inc. options at the
exchange rate provided in the Merger Agreement, with the same terms for
exercising. In negotiating the purchase price, the Company considered; the
current market value of its common stock; Synergy Software, Inc.'s special
expertise in packaged software implementation, AS 400, and Open Systems; its
experience in high-end consulting and track record of delivering a wide range
of IT Solutions.
The unaudited condensed pro forma combined balance sheet as of September 30,
1997 gives pro forma effect to the acquisition of Synergy Software, Inc. as if
it had occurred on September 30, 1997. The acquisition of Synergy Software,
Inc. will be accounted for by the pooling of interests method of accounting.
The pro forma adjustment represents the transfer of Synergy Software, Inc.'s
common stock to additional paid-in-capital. The unaudited condensed pro forma
combined balance sheet does not purport to be indicative of the financial
position of the Company had such transaction actually been completed as of
September 30, 1997, or which may be obtained in the future.
The unaudited condensed pro forma combined statements of operations for the
years ended December 31, 1996 and 1995, and for the nine month periods ended
September 30, 1997 and 1996 give pro forma effect to the Company's initial
public offering and the acquisition of Synergy Software, Inc. as if they had
occurred on the first day of each period presented. The unaudited condensed
pro forma combined statements of income do not purport to be indicative of the
results of operations of the Company had such transaction actually been
completed on the first day of each period presented, or which may be obtained
in the future.
16
<PAGE> 17
COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
This balance sheet should be read in conjuction with the Synergy Software, Inc.
historical financial statements and notes thereto included in this Form 8-K/A,
and the Complete Business Solutions, Inc. and subsidiaries historical financial
statements included in its Quarterly Report on Form 10-Q for the periods ended
September 30, 1997 and the Registration Statement on Form S-4, dated September
30, 1997. All amounts are in thousands.
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL
COMPLETE BUSINESS SYNERGY PRO FORMA PRO FORMA
SOLUTIONS, INC. SOFTWARE, INC. ADJUSTMENTS(2) COMBINED
ASSETS ----------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents ....................... $54,592 $ 942 $ -- $ 55,534
Accounts receivable, net ....................... 23,149 1,928 -- 25,077
Prepaid expenses and other ...................... 1,473 -- -- 1,473
------- ------ ------ --------
Total current assets ........................ 79,214 2,870 -- 82,084
------- ------ ------ --------
Property and equipment, net ....................... 5,505 84 -- 5,589
Goodwill, net ..................................... 2,845 -- -- 2,845
Other assets ...................................... 553 189 -- 742
------- ------ ------ --------
Total assets ................................ $88,117 $3,143 $ -- $ 91,260
======= ====== ====== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................ $ 2,724 $ 138 $ -- $ 2,862
Accured payroll and related costs ............... 6,425 428 -- 6,853
Current portion of deferred revenue ............. 1,159 -- -- 1,159
Other accrued liabilities ....................... 2,128 -- -- 2,128
------- ------ ------ --------
Total current liabilities ................... 12,436 566 -- 13,002
------- ------ ------ --------
Deferred revenue, less current portion ............ 210 -- -- 210
Deferred taxes .................................... 300 -- -- 300
Commitments and contingencies
Shareholders' equity:
Preferred stock ................................... -- -- -- --
Common stock ...................................... -- 2 (2) (3) --
Additional paid-in capital ........................ 72,599 229 2 (3) 72,830
Retained earnings ................................. 4,742 2,346 -- 7,088
Stock subscriptions receivable .................... (1,858) -- -- (1,858)
Cumulative translation adjustment ................. (312) -- -- (312)
------- ------ ------ --------
Total shareholders' equity .................. 75,171 2,577 -- 77,748
------- ------ ------ --------
Total liabilities and shareholders' equity .. $88,117 $3,143 $ -- $ 91,260
======= ====== ====== ========
</TABLE>
17
<PAGE> 18
COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
This statement should be read in conjunction with the Synergy Software, Inc.
historical financial statements and notes thereto included in this Form 8-K/A,
and the Complete Business Solutions, Inc. and subsidiaries historical financial
statements included in its Registration Statement on Form S-4, dated September
30, 1997. All amounts are in thousands, except per share amounts.
<TABLE>
<CAPTION>
HISTORICAL IPO HISTORICAL ACQUISITION
COMPLETE BUSINESS PRO FORMA SYNERGY PRO FORMA PRO FORMA
SOLUTIONS, INC. ADJUSTMENTS(1) SOFTWARE, INC. ADJUSTMENTS(2) COMBINED
----------------- ----------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues ......................................... $ 67,399 $ -- $ 5,259 $ -- $ 72,658
Cost of revenues
Salaries, wages and employee benefits .......... 47,127 -- 1,905 -- 49,032
Contractual services ........................... 2,104 -- 1,585 -- 3,689
Project travel and relocation .................. 3,200 -- -- 58 (4) 3,258
Depreciation and amortization .................. 1,178 -- -- -- 1,178
-------- -------- -------- -------- --------
Total cost of revenues ...................... 53,609 -- 3,490 58 57,157
-------- -------- -------- -------- --------
Gross profit ................................ 13,790 -- 1,769 (58) 15,501
Selling general and administrative expenses ...... 11,824 147 1,092 (58)(4) 13,005
-------- -------- -------- -------- --------
Income from operations ...................... 1,966 (147) 677 -- 2,496
Interest expense (income) ........................ 692 (724) (16) -- (48)
-------- -------- -------- -------- --------
Income before provision for income taxes
and minority interest..................... 1,274 577 693 -- 2,544
Provision for income taxes(1)..................... -- 391 10 250 651
Minority interest ................................ $ 252 (252) -- -- --
-------- -------- -------- -------- --------
Net income ................................. $ 1,022 $ 438 $ 683 $ (250) $ 1,893
======== ======== ======== ======== ========
Net income per common share ...................... $ .14 $ .22
======== ========
Weighted average shares outstanding (5) .......... 7,396 8,740
======== ========
</TABLE>
18
<PAGE> 19
COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
This statement should be read in conjunction with the Synergy Software, Inc.
historical financial statements and notes thereto included in this Form 8-K/A,
and the Complete Business Solutions, Inc. and subsidiaries historical financial
statements included in its Registration Statement on Form S-4, dated September
30, 1997. All amounts are in thousands, except per share amounts.
<TABLE>
<CAPTION>
HISTORICAL IPO HISTORICAL ACQUISITION
COMPLETE BUSINESS PRO FORMA SYNERGY PRO FORMA PRO FORMA
SOLUTIONS, INC. ADJUSTMENTS(1) SOFTWARE, INC. ADJUSTMENTS(2) COMBINED
------------------ ----------- ---------------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Revenues......................................... $ 83,241 $ -- $ 9,509 $ -- $ 92,750
Cost of revenues:
Salaries, wages and employee benefits.......... 54,337 -- 3,695 -- 58,032
Contractual services........................... 3,975 -- 2,651 -- 6,626
Project travel and relocation.................. 3,537 -- - 101 (4) 3,638
Depreciation and amortization.................. 1,453 -- - -- 1,453
--------- -------- -------- ------ ---------
Total cost of revenues....................... 63,302 -- 6,346 101 69,749
--------- -------- -------- ------ ---------
Gross profit................................. 19,939 -- 3,163 (101) 23,001
Selling, general and administrative expenses..... 15,455 147 1,576 (101)(4) 17,077
--------- -------- -------- ------ ---------
Income from operations....................... 4,484 (147) 1,587 -- 5,924
Interest expense (income)........................ 539 (610) (19) -- (90)
Equity in loss of investee....................... -- -- 110 -- 110
--------- -------- -------- ------ ---------
Income before provision for income taxes and
minority interest......................... 3,945 463 1,496 -- 5,904
Provision for income taxes(1).................... 84 1,498 24 544 2,150
Minority interest................................ 158 (158) - -- --
--------- -------- -------- ------ ---------
Net income................................... $ 3,703 $ (877) $ 1,472 $ (544) $ 3,754
========= ======== ======== ====== =========
Net income per common share...................... $ .48 $ .42
========== =========
Weighted average shares outstanding(5)........... 7,658 9,008
========= =========
</TABLE>
19
<PAGE> 20
COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1996
This statement should be read in conjunction with the Synergy Software, Inc.
historical financial statements and notes thereto included in this Form 8-K/A,
and the Complete Business Solutions, Inc. and subsidiaries historical financial
statements included in its Quarterly Report on Form 10-Q for the periods ended
September 30, 1997. All amounts are in thousands, except per share amounts.
<TABLE>
<CAPTION>
HISTORICAL IPO HISTORICAL ACQUISITION
COMPLETE BUSINESS PRO FORMA SYNERGY PRO FORMA PRO FORMA
SOLUTIONS, INC. ADJUSTMENTS(1) SOFTWARE, INC. ADJUSTMENTS(2) COMBINED
------------------ ----------- -------------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues ............................................... $61,499 $ -- $ 6,538 $ - $68,037
Cost of revenues:
Salaries, wages and employee benefits ................ 40,045 -- 2,634 - 42,679
Contractual services ................................. 2,905 -- 1,700 - 4,605
Project travel and relocation ........................ 2,396 -- - 49 (4) 2,445
Depreciation and amoritization ....................... 1,193 -- - - 1,193
------- -------- ------- ------- -------
Total cost of revenues ......................... 46,539 -- 4,334 49 50,922
------- -------- ------- ------- -------
Gross profit ................................... 14,960 -- 2,204 (49)(4) 17,115
Selling, general and administrative expenses ........... 11,086 110 1,117 (49) 12,264
------- -------- ------- ------- -------
Income from operations ......................... 3,874 (110) 1,087 - 4,851
Interest expense (income) .............................. 446 (446) - - --
Equity in loss of investee ............................. - - 83 - 83
------- -------- ------- ------- -------
Income before provision for income taxes
and minority interest .................... 3,428 336 1,004 - 4,768
Provision for income taxes(1)........................... 60 1,171 9 373 1,613
Minority interest ...................................... 180 (180) - - --
------- -------- ------- ------- -------
Net income ..................................... $ 3,188 $ (655) $ 995 $ (373) $ 3,155
======= ======== ======= ======= =======
Net income per common share ............................ $ .42 .35
======= =======
Weighted average shares outstanding (5) ................ 7,616 8,965
======= =======
</TABLE>
20
<PAGE> 21
COMPLETE BUSINESS SOLUTIONS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED PRO FORMA COMBINED
STATEMENT OF OPERATIONS
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997
This statement should be read in conjunction with the Synergy Software, Inc.
historical financial statements and notes thereto included in this Form 8-K/A,
and the Complete Business Solutions, Inc. and subsidiaries historical financial
statements included in its Quarterly Report on Form 10-Q for the periods ended
September 30, 1997. All amounts are in thousands, except per share amounts.
<TABLE>
<CAPTION>
HISTORICAL IPO HISTORICAL ACQUISITION
COMPLETE BUSINESS PRO FORMA SYNERGY PRO FORMA PRO FORMA
SOLUTIONS, INC. ADJUSTMENTS(1) SOFTWARE, INC. ADJUSTMENTS(2) COMBINED
----------------- ----------- -------------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues........................................ $ 80,309 $ - $ 9,252 $ - $ 89,561
Cost of revenues:
Salaries, wages and employee benefits.......... 47,228 - 3,465 - 50,693
Contractual services........................... 6,181 - 3,060 - 9,241
Project travel and relocation.................. 3,802 - - 84 (4) 3,886
Depreciation and amortization.................. 928 - - - 928
-------- -------- ------- -------- --------
Total cost of revenues........................ 58,139 - 6,525 84 64,748
-------- -------- ------- -------- --------
Gross profit.................................. 22,170 - 2,727 (84) 24,813
Selling, general and administrative expenses.... 14,541 24 1,750 (84)(4) 16,231
-------- -------- ------- -------- --------
Income from operations........................ 7,629 (24) 977 - 8,582
Interest expense (income)....................... (747) (53) (16) - (816)
Equity in loss of investee...................... - - 216 - 216
-------- -------- ------- -------- --------
Income before provision for income taxes
and minority interest........................ 8,376 29 777 - 9,182
Provision for income taxes(1)................... 3,209 (560) - 358 3,007
Minority interest............................... 82 $ (82) - - --
-------- -------- ------- -------- --------
Net income.................................... $ 5,085 671 $ 777 $ (358) $ 6,175
======== ======== ======= ======== ========
Net income per common share..................... $ .55 $ .61
======== ========
Weighted average shares outstanding(5).......... 9,265 10,109
======== ========
</TABLE>
21
<PAGE> 22
NOTE 1. On March 5, 1997, the Company filed a Registration Statement on
Form S-1 with the Securities and Exchange Commission for the sale of its Common
Stock. The net proceeds to the Company from this offering were used for
payment of undistributed S corporation earnings; the repayment of existing
debt; expansion of existing operations, including the Company's offshore
software development operations; development of new service lines and possible
acquisitions of related businesses; and general corporate purposes, including
working capital.
The unaudited condensed pro forma combined statements of operations
included in this Form 8-K/A for the years ended December 31, 1995 and
1996 and the nine month periods ended September 30, 1997 and 1996, give effect
to the following transactions as if such transactions had occurred on the first
day of each period presented:
(i) amortization of goodwill over a period of 20 years as a
result of the Company's purchase of the 28% minority interest in CBS Mauritius,
including the elimination of the minority interest;
(ii) elimination of interest expense to give effect to the
repayment of the Company's revolving credit facility and long-term debt;
(iii) provision for Federal and state income taxes at the
effective income tax rate as if the Company and Synergy Software, Inc. had been
taxed as a C corporation and no foreign tax holidays had been granted during
the periods presented.
NOTE 2. The unaudited condensed pro forma combined balance sheet and
statements of operations have been prepared to reflect the acquisition of
Synergy Software, Inc. The acquisition of Synergy Software, Inc. will be
accounted for by the pooling of interests method of accounting. All amounts
are in thousands, except per share amounts.
NOTE 3. Represents the transfer of Synergy Software, Inc.'s common stock to
additional paid-in capital as required under the pooling of interests method of
accounting.
NOTE 4. Represents certain reclassifications to the Synergy Software, Inc.
financial statements to conform with the Company's presentation.
NOTE 5. Weighted average shares outstanding have been adjusted to give pro
forma effect to the initial public offering of the Company and the acquisition
of Synergy Software, Inc. as if they had occurred on the first day of each
period presented.
22
<PAGE> 23
(c) Exhibits
23.1 Consent of Coopers and Lybrand, L.L.P.
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.
Complete Business Solutions, Inc.
By: /s/ Timothy S. Manney
-------------------------
Timothy S. Manney
Executive Vice President for Finance and Administration
Date: January 23, 1998
<PAGE> 24
COMPLETE BUSINESS SOLUTIONS, INC.
EXHIBIT INDEX
Number and Description
of Exhibit
23.1 Consent of Coopers and Lybrand, L.L.P.
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statement of
Complete Business Solutions, Inc. on Form S-4 (File No. 333-36701) of our
report dated October 25, 1997 on our audits of the financial statements of
Synergy Software, Inc. as of December 31, 1996 and 1995, and for the years
ended December 31, 1996 and 1995, which report is included in this Form 8-K/A.
Coopers & Lybrand L.L.P.
Chicago, Illinois
January 22, 1998
