<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) July 31, 1998
AHL Services, Inc.
(Exact name of registrant as specified in its charter)
Georgia 0-22195 58-2277249
- ------------------------------- ------------------------ ---------------------
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation) Identification No.)
3353 Peachtree Road, NE, Atlanta, Georgia 30326
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (404) 267-2222
---------------------
This document consists of 3 pages.
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On July 31, 1998, a wholly owned subsidiary of AHL Services, Inc. (the
"Registrant") acquired EMD Gesellschaft fur Elektroinstallation-und
Maschinenbau-Dienstleistungen GmbH ("EMD") for a cash purchase price of
approximately $42 million all of which was provided by the Registrant's credit
facility with a syndicate of banks.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired:
EMD-Group
Audited Financial Statements
Report of Independent Accountants
Combined Balance Sheet -- December 31, 1997
Combined Statement of Operations for the year ended December 31,
1997
Combined Statement of Cash Flow for the year ended December 31,
1997
Combined Statement of Shareholders' Equity for the year ended
December 31, 1997
Notes to Combined Financial Statements
Interim Financial Statements (unaudited)
Combined Balance Sheet -- June 30, 1998 (unaudited)
Combined Statements of Operations for the Six Months Ended June
30, 1998 and 1997 (unaudited)
(b) Pro Forma Financial Information:
Introduction
Pro Forma Unaudited Condensed Consolidated Balance Sheet as of June 30,
1998
Pro Forma Unaudited Condensed Consolidated Statements of Operations for
the year ended December 31, 1997 and six months ended June 30, 1998.
(c) Exhibits:
2.1 - Share Purchase Agreement, dated as of June 28, 1998, between and
among Mr. Volker Zahn, Mr. Dirk Schrecker, Ms. Judith Schrecker,
Mr. Jan Schrecker, Mr. Kurt Wolf, Ms. Birgit Webster,
Mr. Albrecht Kerschbaumer, ADI Holding GmbH, ADI Management
GmbH, and ADI Beteiligungs GmbH.*
23.1 - Consent of Price Waterhouse GmbH
- --------------
* Incorporated by reference to the Company's Current Report on Form 8-K dated
July 31, 1998 which was filed on August 17, 1998.
2
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
We have audited the accompanying combined balance sheet of the EMD - Group as of
December 31, 1997 and the related combined statement of operations, of
shareholders' equity and cash flows for the year ended December 31, 1997. These
financial statements are the responsibility of management. Our responsibility is
to issue an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards
in the United States. 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 combined financial statements referred to above present
fairly, in all material respects, the combined financial position of the EMD -
Group as of December 31, 1997 and the combined results of its operations and its
cash flows for the year ended December 31, 1997 in accordance with generally
accepted accounting principles in the United States.
Stuttgart
July 30, 1998
Price Waterhouse GmbH
Wirtschaftsprufungsgesellschaft
<PAGE> 4
EMD - GROUP
COMBINED BALANCE SHEET
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
December 31, December 31,
1997 1997
------------ ------------
ASSETS DM US$
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 6,589 $ 3,677
Accounts receivable, less allowance
for doubtful accounts 11,454 6,391
Unbilled accounts receivable 20 11
Prepaid expenses 6 3
--------- ---------
Total current assets 18,069 10,082
--------- ---------
PROPERTY AND EQUIPMENT, NET 876 489
INVESTMENTS, NET 20 11
DEFERRED INCOME TAXES 34 19
OTHER ASSETS 2,187 1,220
--------- ---------
21,186 $ 11,821
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 445 $ 248
Accrued payroll and other current
liabilities 13,664 7,625
Income taxes payable 831 464
Deferred income taxes 106 59
---------- ---------
Total current liabilities 15,046 8,396
---------- ---------
BENEFIT OBLIGATION 386 215
---------- ---------
TOTAL LIABILITIES 15,432 8,611
---------- ---------
SHAREHOLDERS' EQUITY
Common stock 275 153
Retained earnings 5,479 3,057
---------- ---------
Shareholders' equity, net 5,754 3,210
---------- ---------
21,186 $ 11,821
========== =========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
<PAGE> 5
EMD - GROUP
COMBINED STATEMENT OF OPERATIONS
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
For the Year Ended
December 31, 1997
------------------
DM US$
<S> <C> <C>
REVENUES 89,252 $49,803
------ -------
OPERATING EXPENSES
Cost of services 64,372 35,920
Field operating 14,081 7,857
Corporate, general, and administrative 1,823 1,017
------ -------
Total operating expenses 80,276 44,794
------ -------
OPERATING INCOME 8,976 5,009
Interest income, net 141 78
Other income, net 406 227
------ -------
INCOME BEFORE INCOME TAXES 9,523 5,314
------ -------
Income tax provision 4,179 2,332
------ -------
NET INCOME 5,344 $ 2,982
====== =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
<PAGE> 6
EMD - GROUP
COMBINED STATEMENT OF CASH FLOW
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
For the year ended
December 31,
1997
------------------------------
DM US$
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income 5,344 $ 2,982
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 431 241
(Gain) loss on sales of property and equipment 80 45
Changes in assets and liabilities:
Accounts receivable, net (280) (156)
Inventories (20) (11)
Prepaid expenses 7 3
Other assets (1,562) (872)
Accounts payable 39 22
Accrued payroll and other current liabilities 2,932 1,636
Benefit funds 89 49
Income taxes payable (1,199) (669)
Deferred income taxes (24) (13)
--------- --------
Net cash provided by operating activities 5,837 3,257
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment, net (378) (210)
Proceeds from sales of property and equipment 3 1
--------- --------
Net cash used in investing activities (375) (209)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Repayments of line of credit (153) (85)
Dividend payments to shareholder (4,457) (2,487)
--------- ---------
Net cash used in financing activities (4,610) (2,572)
--------- --------
NET CHANGE IN CASH AND CASH EQUIVALENTS 852 476
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 5,737 3,201
--------- --------
CASH AND CASH EQUIVALENTS AT END OF YEAR 6,589 $ 3,677
========= ========
CASH PAID/RECEIVED (-) DURING THE YEAR FOR:
Interest (140) $ (78)
========= ========
Income taxes 4,663 $ 2,602
========= ========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
<PAGE> 7
EMD - GROUP
COMBINED STATEMENT OF SHAREHOLDERS' EQUITY
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
EMD - EMD -
Subscribed Retained Subscribed Retained
capital earnings Total capital earnings Total
---------- ---------- ---------- ---------- ---------- ----------
DM DM DM US$ US$ US$
<S> <C> <C> <C> <C> <C> <C>
Balance,
December 31, 1996 275 4,592 4,867 $ 153 $ 2,562 $ 2,715
Dividends paid to shareholders 0 (4,457) (4,457) 0 (2,487) (2,487)
Net income 1997 0 5,344 5,344 0 2,982 2,982
---------- ---------- ---------- ---------- ---------- ----------
Balance,
December 31, 1997 275 5,479 5,754 $ 153 $ 3,057 $ 3,210
========== ========== ========== ========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
<PAGE> 8
NOTES TO COMBINED FINANCIAL STATEMENTS
1. DESCRIPTION OF THE BUSINESS
EMD Gesellschaft fur Elektroinstallation- und Maschinenbau- Dienstleistungs GmbH
("EMD-Group") provides services in the area of electronic installation,
mechanical engineering and other kinds of services, including hiring out
employees as temporary workers as well as all activities directly or indirectly
connected to the aforementioned services throughout Germany to various
customers, including large corporations, small corporations and other
enterprises.
The EMD-Group is not an legal entity but rather consists of the following
separate entities:
- - EMD Gesellschaft fur Elektroinstallation- und Maschinenbau-
Dienstleistungs mbH, Aschaffenburg
- - EMD Gesellschaft fur Elektroinstallation- und Maschinenbau-
Dienstleistungs mbH, Bruchsal
- - EMD Gesellschaft fur Elektroinstallation- und Maschinenbau-
Dienstleistungs mbH, Freiburg
- - EMD Gesellschaft fur Elektroinstallation- und Maschinenbau-
Dienstleistungs mbH, Mannheim
- - EMD Gesellschaft fur Elektroinstallation- und Maschinenbau-
Dienstleistungs mbH, Sindelfingen
At December 31, 1997 the companies were owned by a group of shareholders whereby
the ownership of the individual shareholders varied from company to company.
During 1998, newly formed holding companies, indirect subsidiaries of AHL
Services Inc., will acquire all shares in the above companies.
The accompanying combined financial statements for the year ended December 31,
1997 include the business operations of the companies listed above.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying combined financial statements include the accounts of the five
entities discussed above. All significant intercompany accounts have been
eliminated.
The term "DM" and "TDM" in these combined financial statements refers to
Deutsche Marks and Thousands of Deutsche Marks. Solely for the convenience of
the reader, the combined financial statements as of and for the year ended
December 31, 1997 have been translated into United States Dollars ("US $) at the
rate of 1.7921 DM per US $, the rate of exchange on December 31, 1997. The
translation should not be construed as a representation that the Deutsche Mark
amounts represent or have been or could be converted into US $ at that or any
other rate.
<PAGE> 9
FISCAL YEAR END
The fiscal year ends of the companies representing the EMD-Group are December
31.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
effect the reported amounts of assets and liabilities and the disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include highly liquid investments with original
purchase maturities of one month or less.
UNBILLED ACCOUNTS RECEIVABLE
Unbilled accounts receivable include work in progress in the amount of DM 20,000
(US $11,000) due from two contracts of labour which have not been invoiced as at
December 31, 1997.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost, less accumulated depreciation.
Depreciation is provided using the straight-line method over estimated useful
lives of four to ten years.
Property and equipment comprised the following:
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
December 31,
1997
---------------------
DM US$
<S> <C> <C>
Software 20 $ 11
Office furniture and equipment 2,263 1,263
----- ------
2,283 1,274
Less accumulated depreciation 1,407 785
----- ------
876 $ 489
===== ======
</TABLE>
Depreciation expense was DM 430,000 (US $240,000) for the year ended
December 31, 1997.
<PAGE> 10
OTHER ASSETS
Other assets include mainly tax refunds for income tax, value added tax and a
claim for a refund from social security.
3. INVESTMENTS
The EMD - Group holds a 20% investment which is available for sale. The
investment has been valued at historical cost as it is assumed that the fair
value equals the book value.
4. BENEFIT OBLIGATION
The EMD - Group has pension plans covering all general managers. Other employees
are not covered by pension plans. The group's salaried plans principally provide
benefits based on an average earnings formula.
Statement of Financial Accounting Standards No. 87, "Employees Accounting for
Pensions" (SFAS 87) was effective as of January 1, 1989 for the German plan with
the transition asset being amortised over remaining service life of the current
employees.
The principle actuarial assumptions under SFAS 87 are as follows:
<TABLE>
<CAPTION>
1997
------
%
<S> <C>
Discount rate 6,50
Investment return 6,00
Salary Inflation 1,75
Pension Increases 1,75
</TABLE>
The components of pension expense are as follows:
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
December 31,
1997
-------------------
DM US$
<S> <C> <C>
Actual return on assets (19) $(11)
Service cost 105 59
Interest cost 82 46
Net amortisation and deferral 6 3
--- ----
Net periodic pension expense 174 $ 97
=== ====
</TABLE>
<PAGE> 11
The reconciliation of the funded status under SFAS 87 are as follows:
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
December 31,
1997
-----------------------
DM US$
<S> <C> <C>
Vested benefit obligation (VBO) (1,111) $(619)
====== =====
Accumulated benefit obligation (ABO) (1,111) (619)
====== =====
Project benefit obligation (1,325) (739)
Plan asset at fair value 847 472
------ -----
Excess of projected benefit obligation over
plan assets (478) (267)
------ -----
Transition asset 92 52
------ -----
Net projected benefit obligation (386) $(215)
====== =====
</TABLE>
REVENUE RECOGNITION
The EMD - Group recognises revenues as services are performed.
SIGNIFICANT CUSTOMER CONCENTRATION
During the year ended December 31, 1997 no client individually accounted for
more than 10 % of the Company's revenues.
5. TAXES
INCOME TAXES
The income tax provision consists of the following:
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
December 31,
1997
---------------------------
DM US$
<S> <C> <C>
Current:
--------
Trade tax 1,555 $ 868
Corporation tax 2,647 1,477
----- ------
4,202 2,345
----- ------
Deferred:
---------
Trade tax and corporation tax (24) (13)
----- ------
4,178 $2,332
===== ======
</TABLE>
<PAGE> 12
DEFERRED TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the tax bases of assets and liabilities and their financial reporting
amounts. The tax effect of significant temporary differences representing
deferred tax assets and tax liabilities is as follows:
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
December 31,
1997
----------------------
DM US$
<S> <C> <C>
Deferred tax assets:
Benefit obligation 34 $ 19
Deferred tax liabilities
Allowance for doubtful accounts (106) (59)
---- ----
Net deferred tax liability (72) $(40)
==== ====
</TABLE>
Tax rate applied for the calculation of deferred taxes amounts to 44%.
6. COMMITMENTS AND CONTINGENCIES
LEASES
The EMD-Group leases office space and transportation equipment from third
parties under lease agreements expiring through 2003. Rental expense under these
operating leases was DM 1,188,000 (US $663,000) in 1997.
Future minimum lease payments for non cancellable leases were as follows at
December 31, 1997:
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
December 31,
1997
--------------------------------
DM US$
<S> <C> <C>
1998 1,208 $ 671
1999 1,091 606
2000 749 416
2001 331 184
2002 267 149
Thereafter 193 107
----- ------
3,839 $2,133
Total ===== ======
</TABLE>
<PAGE> 13
INSURANCE
The EMD-Group has various insurance contracts as follows: deductible workers'
compensation, intentional torts by employees insurance, group accident
insurance, comprehensive car insurance for business trips, electronics
insurance, business liability insurance and personal liability insurance for
managing directors, fire, burglary and water damage insurance, group life
insurance and coverage of pension reserves insurance.
LITIGATION
The EMD-Group is involved in various routine litigation arising in the ordinary
course of business. Management is of the opinion that the resolution of these
matters will not have a material effect on the combined results of operations
or financial condition of the EMD-Group.
7. OPERATIONS BY GEOGRAPHICAL AREA
The EMD-Group operates solely in Germany.
8. SUBSEQUENT EVENT REVIEW
In May 1998 the shareholders' agreed that the statutory net income of 1997 in
the amount of DM 4,953,000 (US$ 2,764,000) was distributed to the shareholders
on June 12, 1998.
9. SALE OF THE COMPANIES SUBSEQUENT TO DATE OF AUDITORS' REPORT (UNAUDITED):
On July 31, 1998, the Owners sold the net assets of the companies to an
independent third party for cash consideration equalling approximately DM
50,000,000 (US$ 42,000,000).
<PAGE> 14
EMD - GROUP
COMBINED BALANCE SHEET
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
June 30, June 30,
1998 1998
------------ ------------
ASSETS DM UNAUDITED US$
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents 812 $ 450
Accounts receivable, less allowance
for doubtful accounts 12,316 6,823
Prepaid expenses 96 54
--------- ---------
Total current assets 13,224 7,327
--------- ---------
PROPERTY AND EQUIPMENT, NET 1,002 555
INVESTMENTS, NET 20 11
DEFERRED INCOME TAXES 62 34
OTHER ASSETS 1,987 1,101
--------- ---------
16,295 $ 9,028
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable 70 $ 39
Accrued payroll and other current
liabilities 12,484 6,916
Income taxes payable 234 130
Deferred income taxes 17 9
---------- ---------
Total current liabilities 12,805 7,094
---------- ---------
BENEFIT OBLIGATION 407 226
---------- ---------
TOTAL LIABILITIES 13,212 7,320
---------- ---------
SHAREHOLDERS' EQUITY
Common stock 275 152
Retained earnings 2,808 1,556
---------- ---------
Shareholders' equity, net 3,083 1,708
---------- ---------
16,295 $ 9,028
========== =========
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
<PAGE> 15
EMD - GROUP
COMBINED STATEMENTS OF OPERATIONS
(US Dollars and German Deutsche Marks in Thousands)
<TABLE>
<CAPTION>
For the Six Months Ended
June 30,
------------------------------------------------------------
UNAUDITED
1998 1998 1997 1997
------ ------- ------ -------
DM US$ DM US$
<S> <C> <C> <C> <C>
REVENUES 45,979 $25,463 39,018 $23,157
------ ------- ------ -------
OPERATING EXPENSES
Cost of services 32,994 18,272 27,792 16,495
Field operating 7,110 3,938 6,566 3,896
Corporate, general, and administrative 920 509 780 463
------ ------- ------ -------
Total operating expenses 41,024 22,719 35,138 20,854
------ ------- ------ -------
OPERATING INCOME 4,955 2,744 3,880 2,303
Interest income, net 49 27 54 32
Other income, net 1 1 19 11
------ ------- ------ -------
INCOME BEFORE INCOME TAXES 5,005 2,772 3,953 2,346
------ ------- ------ -------
Income tax provision 2,197 1,217 1,723 1,023
------ ------- ------ -------
NET INCOME 2,808 $ 1,555 2,230 $ 1,323
====== ======= ====== =======
</TABLE>
The accompanying notes are an integral part of these combined financial
statements
<PAGE> 16
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
The accompanying unaudited pro forma condensed consolidated financial
statements include the EMD acquisition and the Gage acquisition reported
previously on a Current Report on Form 8-K and Form 8-K/A filed on August 10,
1998 and October 6, 1998, respectively.
The accompanying unaudited pro forma condensed consolidated balance
sheet as of June 30, 1998 gives effect to the EMD and Gage acquisitions as if
they had occurred on that date. The accompanying unaudited pro forma
consolidated statements of operations for the year ended December 31, 1997 and
the six months ended June 30, 1998 give effect to the EMD and Gage acquisitions
as if they had occurred at the beginning of the respective periods. The pro
forma adjustments are based upon available information and certain assumptions
that management believes to be reasonable. Final purchase adjustments may
differ from the pro forma adjustments herein.
The accompanying pro forma statements are not necessarily indicative of
the results of operations which would have been attained had the acquisitions
been consummated on the dates indicated or which may be attained in the
future. These pro forma statements should be read in conjunction with the
historical consolidated financial statements of the Company and related notes
thereto.
3
<PAGE> 17
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
JUNE 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Gage EMD
Pro Forma Pro Forma Pro Forma
AHL Gage Adjustments EMD Adjustments Total
-------- ------- ----------- ------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 5,222 $ 2,234 $(2,234)(1) $ 450 $ -- $ 5,672
Accounts receivable 67,398 22,662 -- 6,823 -- 96,883
Due from affiliates -- 402 (402)(1) -- -- --
Work in process -- 5,670 -- -- -- 5,670
Inventory 1,894 -- -- -- -- 1,894
Prepaid expenses and other 4,552 1,560 -- 54 -- 6,166
-------- ------- ------- ------- ------- --------
TOTAL CURRENT ASSETS 79,066 32,528 (2,636) 7,327 -- 116,285
Property and equipment 12,037 9,244 (2,327)(2) 555 -- 19,509
Intangibles 45,059 8,387 61,983 (2) -- 40,792 (2) 156,221
Other assets 714 -- -- 1,112 -- 1,826
Deferred taxes 980 -- -- 34 -- 1,014
-------- ------- ------- ------- ------- --------
TOTAL ASSETS $137,856 $50,159 $57,020 $ 9,028 $40,792 $294,855
======== ======= ======= ======= ======= ========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 4,534 $14,425 $ -- $ 39 $ -- $ 18,998
Accrued payroll and other liabilities 29,215 9,713 800 (2) 7,142 500 (4) 47,370
Current portion of self-insurance
reserves 920 -- -- -- -- 920
Income taxes payable 2,049 23 -- 130 -- 2,202
Deferred income taxes 467 -- -- 9 -- 476
Current portion of long term debt 471 960 (960)(1) -- -- 471
-------- ------- ------- ------- ------- --------
TOTAL CURRENT LIABILITIES 37,656 25,121 (160) 7,320 500 70,437
-------- ------- ------- ------- ------- --------
Long-term debt, less current portion 17,446 320 (320)(1) -- 42,000 (4) 113,546
54,100 (3)
-------- ------- ------- ------- ------- --------
Self-insurance reserves, less
current portion 3,680 -- -- -- -- 3,680
-------- ------- ------- ------- ------- --------
Convertible securities -- -- 10,000 (3) -- -- 10,000
-------- ------- ------- ------- ------- --------
Other long-term obligations -- 1,322 (204)(1) -- -- 1,118
SHAREHOLDERS' EQUITY:
Preferred stock -- -- -- -- -- --
Common stock 136 -- 5 (3) 152 (152)(5) 141
Paid in capital 62,973 17,037 16,995 (3) -- -- 79,968
(17,037)(5)
Cumulative translation adjustment 4 -- -- -- -- 4
Retained earnings 15,961 6,359 (6,359)(5) 1,556 (1,556)(5) 15,961
-------- ------- ------- ------- ------- --------
TOTAL SHAREHOLDERS' EQUITY 79,074 23,396 (6,396) 1,708 (1,708) 96,074
-------- ------- ------- ------- ------- --------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $137,856 $50,159 $57,020 $ 9,028 $40,792 $294,855
======== ======= ======= ======= ======= ========
</TABLE>
- --------------
4
<PAGE> 18
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(1) Reflects elimination of Gage cash, bank debt, deferred compensation
liability and intercompany balances not assumed by the Company.
(2) Reflects adjustments to record the estimated fair value of the
identifiable assets acquired plus the resulting goodwill related to the
excess purchase price over the fair value of net assets acquired. (in
thousands).
<TABLE>
<CAPTION>
Gage EMD
Acquisition Acquisition
----------- -----------
<S> <C> <C>
Total consideration and costs ............. $81,900 $42,500
Estimated fair value of net assets
purchased................................ (13,187) (1,708)
------- -------
Adjustments to goodwill ................... $68,713 $40,792
======= =======
</TABLE>
(3) Reflects (A) $81.1 million purchase price consisting of $54.1 million
in cash provided through the Company's credit facility, issuance of
461,172 shares of AHL common stock with an estimated fair value of
approximately $17.0 million as of the acquisition date of July 24,
1998, and issuance of $10.0 million in an interest bearing convertible
subordinated note, with an interest rate of 4.5% and (B) the accrual of
transaction related expenses of $800,000.
(4) Reflects $42.0 million purchase price in cash provided through the
Company's credit facility. Additionally, reflects the accrual of
transaction related expenses of $500,000.
(5) Reflects the elimination of Gage and EMD shareholders' equity.
5
<PAGE> 19
Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the year ended December 31, 1997
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Gage EMD
Pro Forma Pro Forma
AHL Gage Adjustments EMD Adjustments Pro Forma
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 276,013 $ 81,318 $ -- $ 49,803 $ - $407,134
---------- --------- -------- --------- -------- --------
Operating expenses: --
Cost of services 204,512 37,892 -- 35,919 - 278,323
Field operating 45,956 33,941 (1,688)(2) 7,857 1,122 (1) 88,223
1,035 (1)
Corporate general and administrative 14,840 5,479 1,017 - 21,336
---------- --------- -------- --------- -------- --------
Total operating expenses 265,308 77,312 (653) 44,793 1,122 387,882
---------- --------- -------- --------- -------- --------
Operating income 10,705 4,006 653 5,010 (1,122) 19,252
Interest (income) expense, net 1,159 624 3,200 (3) (78) 2,100 (4) 7,005
Other (income) expense, net (723) 336 -- (226) - (613)
---------- --------- -------- --------- -------- --------
Income before income taxes 10,269 3,046 (2,547) 5,314 (3,222) 12,860
Income tax provision 3,850 -- 200 (5) 2,332 (1,418)(6) 4,964
---------- --------- -------- --------- -------- --------
Income before extraordinary items 6,419 3,046 (2,747) 2,982 (1,804) 7,896
Extraordinary items in 1997 (385) -- -- - - (385)
---------- --------- -------- --------- -------- --------
Net income $ 6,034 $ 3,046 $(2,747) $ 2,982 $ (1,804) $ 7,511
---------- --------- -------- --------- -------- --------
Diluted EPS:
Number of weighted average
shares outstanding 10,960 461 (7) 11,421
========== ======== ========
Earnings per share $ 0.55 $ 0.66
========== ========
</TABLE>
6
<PAGE> 20
Unaudited Pro Forma Condensed Consolidated Statements of Operations
For the Six Months Ended June 30, 1998
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
GAGE
PRO FORMA PRO FORMA
AHL GAGE ADJUSTMENTS EMD ADJUSTMENTS PRO FORMA
<S> <C> <C> <C> <C> <C> <C>
Revenues $ 183,371 $ 40,933 $ -- $ 25,463 $ -- $249,767
---------- --------- -------- --------- -------- --------
Operating expenses:
Cost of services 135,597 $ 18,709 -- 18,272 -- 172,578
Field operating 31,494 17,111 520 (1) 3,938 561 (1) 52,778
Corporate general and (846)(2)
administrative 9,047 3,140 -- 509 -- 12,696
---------- --------- -------- --------- -------- --------
Total operating
expenses 176,138 38,960 (326) 22,719 561 238,052
---------- --------- -------- --------- -------- --------
Operating income 7,233 1,973 326 2,744 (561) 11,715
Interest (income)
expense, net 214 120 1,792 (3) (27) 1,050 (4) 3,149
Other (income) expense, net (299) 24 -- (1) -- (276)
---------- --------- -------- --------- -------- --------
Income before income taxes 7,318 1,829 (1,466) 2,772 (1,611) 8,842
Income tax provision 2,927 -- 145 (5) 1,217 (709)(6) 3,580
---------- --------- -------- --------- -------- --------
Net income $ 4,391 $ 1,829 $ (1,611) $ 1,555 $ (902) $ 5,262
---------- --------- -------- --------- -------- --------
Diluted EPS:
Number of weighted average
shares outstanding 14,163 461 (7) 14,624
========== ======== ========
Earnings per share $ 0.31 $ 0.36
========== ========
</TABLE>
7
<PAGE> 21
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS
(1) Reflects additional amortization of intangible assets, primarily
goodwill, over an estimated useful life of 20 to 40 years.
(2) Reflects change in depreciation and amortization as a result of the
allocation of the purchase price to the estimated fair value of net
assets acquired.
(3) Reflects interest expense on the increase in the Company's credit
facility at an annual rate of 6.2% and interest expense on the
subordinated convertible subordinated note at an annual rate of 4.5%.
(4) Reflects interest expense on the increase in the Company's credit
facility in foreign currency at an annual rate of 5%.
(5) Reflects effect of income taxes at 40% on Gage income, net of
adjustments.
(6) Reflects effect of income taxes at 44% on net EMD pro forma
adjustments.
(7) Weighted average common shares outstanding assumes that the 461,172
shares of AHL common stock issued as part of the Gage Acquisition
purchase price occurred at the beginning of the respective periods.
8
<PAGE> 22
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
AHL Services, Inc.
(Registrant)
Date: October 13, 1998 By: /s/ David L. Gamsey
------------------------------------------
David L. Gamsey
Vice President and Chief Financial Officer
(On behalf of the Registrant and as Chief
Accounting Officer)
9
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
of our report included in this Form 8-KA into AHL Services, Inc.'s previously
filed Registration Statement File Nos. 333-37627 and 333-36813.
Price Waterhouse GmbH
Stuttgart, Germany
October 9, 1998
