<PAGE>
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM 8-K/A
----------------
AMENDMENT NO. 1
TO
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: JULY 20, 1998
(DATE OF EARLIEST EVENT REPORTED: MAY 8, 1998)
GROUP MAINTENANCE AMERICA CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 1-13565 76-0535259
(STATE OR OTHER (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER
JURISDICTION OF IDENTIFICATION NO.)
INCORPORATION)
8 GREENWAY PLAZA, SUITE 1500 HOUSTON, 77046
TEXAS (ZIP CODE)
(ADDRESS OF PRINCIPAL EXECUTIVE
OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (713) 860-0100
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<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On May 8, 1998, Group Maintenance America Corp. (the "Company") completed
the acquisitions of Premex, Inc., a Maryland corporation ("Premex"), and Barr
Electric Corp., an Illinois corporation ("Barr").
ACQUISITION OF PREMEX
The Company acquired Premex pursuant to a merger (the "Premex Merger") of
Premex with and into Commercial Air Acquisition Corp., a wholly-owned
subsidiary of the Company ("CAAC"). The Premex Merger was effected in
accordance with the Agreement and Plan of Merger (the "Premex Merger
Agreement") dated as of March 31, 1998, among the Company, CAAC, Premex, the
shareholders of Premex and Commercial Air Power and Cable, Inc. ("Commercial
Air"). A copy of the Premex Merger Agreement has been filed as an exhibit to
this Current Report on Form 8-K and is incorporated herein by reference. In
the Premex Merger, CAAC was the surviving corporation and changed its name to
"Commercial Air Holding Company." The purchase price paid or to be paid by the
Company for Premex consists of $6.9 million in cash and .4 million shares of
the Company's common stock, par value $.001 per share ("Common Stock").
Prior to the Premex Merger, the stockholders of Premex were Thomas R.
Rosato, Barbara Rosato, Donald Franklin and Kristen Franklin. After the Premex
Merger, Messrs. Rosato and Franklin will be employed by the surviving
corporation.
Premex was a holding company whose only subsidiary was Commercial Air, which
provides retrofit renovations, replacement equipment installations, service
and maintenance for building automation systems, electrical distribution
systems, distributed data processing systems, communication networks and
complex building mechanical systems. The assets of Commercial Air consist
primarily of cash, accounts receivable, inventory, equipment, vehicles and
goodwill. The Company expects that Commercial Air will continue to conduct its
business in substantially the same manner as conducted before the Premex
Merger.
ACQUISITION OF BARR ELECTRIC CORP.
The Company acquired Barr pursuant to a merger (the "Barr Merger" and,
together with the Premex Merger, the "Mergers") of Barr with and into Barr
Acquisition Corp., a wholly-owned subsidiary of the Company ("BAC"). The Barr
Merger was effected in accordance with the Agreement and Plan of Merger (the
"Barr Merger Agreement") dated as of March 27, 1998, among the Company, BAC,
Barr, and the shareholders of Barr. A copy of the Barr Merger Agreement has
been filed as an exhibit to this Current Report on Form 8-K and is
incorporated herein by reference. In the Barr Merger, BAC was the surviving
corporation and changed its name to "Barr Electric Corp." The purchase price
paid or to be paid by the Company for Barr consists of $5.3 million in cash
and .4 million shares of Common Stock.
Prior to the Barr Merger, the stockholders of Barr were Michael Steven Barr,
as trustee of the Michael Steven Barr Trust, Terri Louise Barr, as trustee of
the Terri Louise Barr Trust, Patricia Ann Barr, as trustee of the Patricia Ann
Barr Trust, and Emil Widitz. After the Barr Merger, Messrs. Barr and Widitz
will be employed by the surviving corporation.
Barr is engaged in the business of providing electrical contracting services
for renovation and remodeling for large commercial and industrial customers
primarily in the Chicago area. The assets of Barr consist primarily of cash,
accounts receivable, inventory, equipment, vehicles and goodwill. The Company
expects that Barr will continue to conduct its business in substantially the
same manner as conducted before the Barr Merger.
CREDIT AGREEMENT
The cash portion of the consideration paid by the Company in connection with
each Merger was provided pursuant to loans made under a Credit Agreement dated
as of December 11, 1998, (the "Credit Agreement") among the Company, certain
subsidiaries of the Company, Texas Commerce Bank National Association (now
Chase Bank of Texas, National Association), as Agent, Banque Paribas and ABN
AMRO Bank, N.V., as Co-
2
<PAGE>
Agents, and the banks named therein (the "Lenders"). Under the Credit
Agreement, a syndicate of banks agreed to provide up to $75 million of
financing to the Company on a secured basis. A list of the Lenders is set
forth on Exhibit 99 which is incorporated herein by reference.
3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of businesses acquired.
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Premex, Inc.
We have audited the accompanying consolidated balance sheet of Premex, Inc.
and Subsidiary (the Company) as of March 31, 1998, and the related
consolidated statements of operations, shareholders' equity and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Premex,
Inc. and Subsidiary as of March 31, 1998, and the results of their operations
and their cash flows for the year then ended in conformity with generally
accepted accounting principles.
KPMG Peat Marwick LLP
Houston, Texas
April 27, 1998
4
<PAGE>
PREMEX, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
MARCH 31, 1998
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
CURRENT ASSETS:
Cash.............................................................. $ 18,131
Accounts receivable, net of allowance for doubtful accounts of
$141,632......................................................... 3,560,052
Inventories....................................................... 475,234
Costs and estimated earnings in excess of billings on uncompleted
contracts........................................................ 452,111
Due from related party............................................ 66,207
Deferred taxes--current........................................... 157,937
Prepaid expenses and other current assets......................... 34,019
----------
Total current assets............................................ 4,763,691
PROPERTY AND EQUIPMENT, net......................................... 1,271,010
DEFERRED TAX ASSETS................................................. 334,095
OTHER LONG-TERM ASSETS.............................................. 278,578
----------
Total assets.................................................... $6,647,374
==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C>
CURRENT LIABILITIES:
Short-term borrowings and current maturities of long-term debt.... $ 427,520
Current obligations under capital leases.......................... 221,094
Accounts payable.................................................. 1,737,908
Accounts payable--related party................................... 95,757
Accrued expenses.................................................. 450,382
Deferred service contract revenue................................. 82,681
Billings in excess of costs and estimated earnings on uncompleted
contracts........................................................ 456,614
Accrued income taxes.............................................. 101,623
----------
Total current liabilities....................................... 3,573,579
LONG-TERM DEBT, net of current maturities........................... 580,085
OBLIGATIONS UNDER CAPITAL LEASES, net of current maturities......... 401,814
DEFERRED COMPENSATION LIABILITY..................................... 678,018
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock--$0.01 par value; 100,000 shares authorized, issued
and outstanding.................................................. 1,000
Additional paid-in capital........................................ 1,000
Retained earnings................................................. 1,411,878
----------
Total shareholders' equity...................................... 1,413,878
----------
Total liabilities and shareholders' equity...................... $6,647,374
==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
PREMEX, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<S> <C>
REVENUES........................................................... $20,749,665
COST OF SERVICES................................................... 13,854,759
-----------
Gross profit................................................... 6,894,906
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES....................... 5,648,875
-----------
Income from operations......................................... 1,246,031
OTHER INCOME (EXPENSE):
Interest expense................................................. (152,297)
Interest income.................................................. 10,511
Other, net....................................................... 69,200
-----------
Income before income tax provision............................. 1,173,445
INCOME TAX PROVISION............................................... 492,782
-----------
NET INCOME......................................................... $ 680,663
===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
PREMEX, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON PAID-IN RETAINED SHAREHOLDERS'
STOCK CAPITAL EARNINGS EQUITY
------ ---------- ---------- -------------
<S> <C> <C> <C> <C>
BALANCE, March 31, 1997.............. $1,000 $1,000 $ 731,215 $ 733,215
Net income......................... -- -- 680,663 680,663
------ ------ ---------- ----------
BALANCE, March 31, 1998.............. $1,000 $1,000 $1,411,878 $1,413,878
====== ====== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
7
<PAGE>
PREMEX, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED MARCH 31, 1998
<TABLE>
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................... $680,663
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization....................................................... 37,572
Depreciation....................................................... 324,296
Deferred taxes..................................................... 280,608
Change in operating assets and liabilities:
(Increase) decrease in--
Accounts receivable.............................................. (586,288)
Inventories...................................................... (188,807)
Costs and estimated earnings in excess of billings on uncompleted
contracts....................................................... (235,281)
Other current assets............................................. (26,067)
Other noncurrent assets.......................................... (26,358)
Increase (decrease) in--
Accounts payable................................................. (340,906)
Accrued expenses................................................. (39,822)
Deferred service contract revenue................................ 1,842
Billings in excess of costs and estimated earnings on uncompleted
contracts....................................................... (4,638)
Deferred compensation liability.................................. 174,521
--------
Net cash provided by operating activities...................... 51,335
--------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment................................. (458,488)
--------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit, net................................... 281,000
Proceeds from notes payable......................................... 799,003
Payments of notes payable........................................... (665,007)
Payments of obligations under capital lease......................... (203,436)
--------
Net cash provided by financing activities...................... 211,560
--------
NET DECREASE IN CASH................................................. (195,593)
CASH, beginning of period............................................ 213,724
--------
CASH, end of period.................................................. $ 18,131
========
</TABLE>
See accompanying notes to consolidated financial statements.
8
<PAGE>
PREMEX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
Premex, Inc. is the holding company of Commercial Air, Power and Cable, Inc.
(Commercial Air), a wholly-owned subsidiary, (collectively referred to herein
as the Company). Commercial Air provides retrofit renovations, replacement
equipment installations, service and maintenance for building automation
systems, electrical distribution systems, distributed data processing systems,
communication networks and complex building mechanical systems. All this work
is either performed under a fixed price, modified fixed price, cost-plus-fee,
or a time and material contract. Commercial Air's market area is the
metropolitan Baltimore/Washington, D.C. area.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The consolidated financial statements include the financial statements of
Premex, Inc. and its wholly owned subsidiary Commercial Air. All significant
intercompany balances and transactions have been eliminated in consolidation.
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 period. Actual results could differ from those estimates.
Revenue and Cost Recognition
Revenues from fixed-price and modified fixed-price and cost-plus-fee
construction contracts are recognized on the percentage of completion method.
The completed percentage is measured by the percentage of cost incurred to
date as compared to the estimated total cost for each contract. Revenues from
service contracts are recognized ratably over the term of the service
contract. Revenue from time and material service projects are recognized at
the completion of the project.
Contract costs include all direct material and labor costs and those
indirect costs related to contract performance, such as labor, supplies,
tools, repairs and depreciation. Selling, general and administrative costs are
charged to expense as incurred. Provisions for estimated losses on uncompleted
contracts are made in the period in which such losses are determined. Changes
in job performance, job conditions, and estimated profitability may result in
revisions to costs and revenues and are recognized in the period in which the
revisions are determined.
Revenues for one customer amounted to 12.6% of revenues during the year
ended March 31, 1998.
Inventories
Inventories consist of parts and supplies used mainly in the service portion
of the Company's operation. The inventory is valued at the lower of cost or
market, with cost determined using the weighted average method of valuation.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the useful lives of the assets. Leasehold
improvements are amortized over the lesser of the remaining lease term or the
estimated life of the asset.
Expenditures for repairs and maintenance are charged to expense when
incurred. Expenditures for major renewals and betterments, which extend the
useful lives of existing equipment, are capitalized and depreciated. Upon
retirement or disposition of property or equipment, the cost and related
accumulated depreciation are removed from the accounts and any resulting gain
or loss is recognized in the statements of operations.
9
<PAGE>
PREMEX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The Company leases vehicles used in its operations under leases which have
been capitalized. The vehicles are being depreciated using the straight-line
method over their estimated useful lives, which is approximately 5 years.
Leases not meeting the criteria for capital leases are classified as operating
leases and are charged to rent equipment expense as incurred.
Income Taxes
The Company uses the asset and liability method to account for income taxes.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the
enactment date.
Supplemental Disclosure of Cash Flow Information
Cash payments for interest and income taxes were $152,297 and $138,967,
respectively, for the year ended March 31, 1998. During the year ended March
31, 1998, the Company acquired vehicles and computer equipment under capital
leases amounting to $336,885.
3. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
A summary of the status of uncompleted contracts as of March 31, 1998 is as
follows:
<TABLE>
<S> <C>
Costs incurred..................................................... $2,067,996
Estimated earnings recognized...................................... 545,482
----------
2,613,478
Less billings on contracts......................................... 2,617,981
----------
$ (4,503)
==========
</TABLE>
These costs and estimated earnings on uncompleted contracts are included in
the accompanying balance sheet under the following captions:
<TABLE>
<S> <C>
Costs and estimated earnings in excess of billings on uncompleted
contracts.......................................................... $ 452,111
Billings in excess of costs and estimated earnings on uncompleted
contracts.......................................................... (456,614)
---------
$ (4,503)
=========
</TABLE>
10
<PAGE>
PREMEX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
4. PROPERTY AND EQUIPMENT
The principal categories and estimated useful lives of property and
equipment as of March 31, 1998 are as follows:
<TABLE>
<CAPTION>
ESTIMATED
USEFUL
LIVES
-----------
<S> <C> <C>
Service and other vehicles............................. 3-7 years $ 1,205,276
Machinery and tools.................................... 3-10 years 226,963
Office equipment, furniture and fixtures............... 5-10 years 350,486
Leasehold improvements................................. 10-30 years 382,892
Software............................................... 3-5 years 99,765
----------- -----------
$ 2,265,382
Less accumulated depreciation...................................... (994,372)
-----------
$ 1,271,010
===========
</TABLE>
5. SHORT- AND LONG-TERM DEBT
The Company has a line of credit with up to $1,000,000 available through May
28, 2002, subject to renewal. Advances under the line are due on demand and
interest accrues at LIBOR plus 3.0%, which was 8.68% at March 31, 1998. The
balance outstanding on the line at March 31, 1998 was $281,000. The line of
credit and the following notes are collateralized by a lien on corporate
assets and by a personal guarantee of a shareholder.
Short- and long-term debt as of March 31, 1998 consists of the following:
<TABLE>
<S> <C>
Borrowings under line of credit agreement........................... $ 281,000
Note payable to bank, due in monthly installments of $6,250, plus
interest at LIBOR plus 2.75% (8.43% as of March 31, 1998).......... 286,205
Note payable to bank, due in 24 monthly installments of $5,960
followed by 35 monthly installments of $9,920, plus interest at
LIBOR plus 3% (8.68% as of March 31, 1998)......................... 440,400
----------
Total short- and long-term debt................................. $1,007,605
Less short-term borrowings and current maturities................... 427,520
----------
$ 580,085
==========
</TABLE>
The aggregate maturities of the short- and long-term debt as of March 31,
1998 are as follows:
<TABLE>
<S> <C>
1999............................................................ 427,520
2000............................................................ 186,120
2001............................................................ 194,040
2002............................................................ 180,245
2003............................................................ 19,680
</TABLE>
6. LEASES
Commercial Air leases vehicles under agreements which are being accounted
for as capital leases. These leases expire at various dates through April,
2002. The interest rates included in these leases range from 7.9% to 15.9%.
Total cost and accumulated depreciation related to vehicles under capital
leases as of March 31, 1998 was $997,903 and $337,649, respectively.
11
<PAGE>
PREMEX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Commercial Air leases its operating facility jointly with an affiliated
entity, Chesapeake Tower Systems, Inc. (CTS), under an agreement accounted for
as an operating lease. This lease expires in May, 2006.
Additionally, Commercial Air leases vehicles and equipment which are being
accounted for as operating leases. These leases expire at various dates
through December, 2001. Total facility and equipment rent expense for the year
ended March 31, 1998 was $314,492.
Future minimum lease payments under noncancelable operating leases and
future minimum capital lease payments as of March 31, 1998 are as follows:
<TABLE>
<CAPTION>
CAPITAL OPERATING
LEASES LEASES
-------- ----------
<S> <C> <C>
Year ending March 31,
1999................................................... $278,306 $ 217,243
2000................................................... 241,781 218,900
2001................................................... 161,984 197,217
2002................................................... 45,007 200,192
2003................................................... -- 201,843
Thereafter............................................. -- 622,065
-------- ----------
Total minimum lease payments........................... 727,078 $1,657,460
==========
Less amount representing interest.................... 104,170
--------
Present value of net minimum lease payments............ 622,908
Less current maturities.............................. 221,094
--------
Long-term maturities................................... $401,814
========
</TABLE>
7. RELATED PARTIES
The Company is affiliated with two separate companies through common
ownership and management. The two affiliated companies are CTS and Automotive
Technology, Inc. (ATI). On a contract by contract basis, the Company sells
certain equipment to CTS and purchases certain equipment from CTS. ATI
provides vehicle maintenance services to the Company.
Transactions with affiliated companies included in the accompanying
statement of operations for the year ended March 31, 1998 are as follows:
<TABLE>
<CAPTION>
CTS ATI
-------- -------
<S> <C> <C>
Revenues............................................... $109,004 $ --
Cost of services....................................... 453,589 121,004
Management fee income.................................. 75,000 --
</TABLE>
Included in the accompanying balance sheet as of March 31, 1998 are the
following balances associated with affiliated companies:
<TABLE>
<CAPTION>
CTS ATI
------- ---
<S> <C> <C>
Accounts receivable......................................... $66,207 --
Accounts payable............................................ 95,757 --
</TABLE>
8. EMPLOYEE BENEFIT PLANS
The Company has a 401(k) plan which provides benefits to employees.
Substantially all employees who meet certain eligibility requirements are
eligible to participate. Participants may elect to defer up to 15% of
compensation, subject to the total limit on deferrals for each calendar year
in accordance with Section 401(k) of
12
<PAGE>
PREMEX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
the Internal Revenue Code. The Company makes matching contributions of 10% of
the first 6% of compensation deferred by each participant. The plan does not
have any vesting requirements regarding Company contributions. Total Company
contributions to the plan for the year ended March 31, 1998 were $35,410.
The Company has an Employee Equity Plan which provides for the award of
hypothetical shares of Common Stock ("Units") to certain officers and key
employees. The value of each Unit on the award date is equal to the current
book value of a share of Common Stock. Benefits will be paid in cash upon
termination of employment over a five year period. As of March 31, 1998, Units
were held by 17 employees. The Company recognized compensation expense under
the Employee Equity Plan of $150,521 in the year ended March 31, 1998.
9. INCOME TAXES
Income tax expense consists of the following:
<TABLE>
<S> <C>
Federal:
Current............................................................. $ 180,348
Deferred............................................................ 238,720
State:
Current............................................................. 31,826
Deferred............................................................ 41,888
---------
$ 492,782
=========
</TABLE>
Total income tax expense differs from the amount computed by applying the
U.S. federal statutory income tax rate of 34% to income before income tax
provision for the year ended March 31, 1998 as a result of the following:
<TABLE>
<S> <C>
Expense at statutory rate............................................ $ 398,971
Increase resulting from:
State income taxes, net of federal benefit......................... 48,651
Nondeductible expenses............................................. 18,572
Other.............................................................. 26,588
---------
$ 492,782
=========
</TABLE>
The components of the deferred income tax assets and liabilities as of March
31, 1998 are as follows:
<TABLE>
<S> <C>
Deferred income tax assets:
Net operating loss carryforward..................................... $393,408
Allowance for doubtful accounts..................................... 56,653
Accrued vacation and other.......................................... 57,572
Valuation allowance................................................. --
--------
Total deferred income tax asset................................... 507,633
Deferred income tax liabilities--depreciation......................... 15,601
--------
Net deferred tax asset............................................ $492,032
========
</TABLE>
The Company's net operating loss carryforwards expire from 2007 to 2008, and
are limited on amounts that can be utilized in any one year. Management
believes it is more likely than not the Company will realize the benefits of
the net deferred income tax asset.
13
<PAGE>
PREMEX, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
10. COMMITMENTS AND CONTINGENCIES
The Company may be involved in various claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
11. SUBSEQUENT EVENT
The Company has entered into an agreement whereby Group Maintenance America
Corp. (GroupMAC) will acquire all of the outstanding shares of the Company for
a combination of cash and common stock of GroupMAC.
14
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Barr Electric Corporation:
We have audited the accompanying balance sheet of Barr Electric Corporation
as of December 31, 1997, and the related statements of operations,
shareholders' equity, 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 Barr Electric Corporation
as of December 31, 1997, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
KPMG PEAT MARWICK LLP
Houston, Texas
July 9, 1998
15
<PAGE>
BARR ELECTRIC CORP.
BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------ -----------
(UNAUDITED)
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents........................... $1,418,516 $1,126,581
Accounts receivable--trade, net of allowance for
doubtful accounts of $15,000....................... 779,693 432,456
Accounts receivable, Other.......................... 12,307 12,007
Inventories......................................... 113,790 104,882
Costs and estimated earnings in excess of billings
on uncompleted contracts........................... 59,749 23,661
Prepaid expenses and other current assets........... 28,920 19,691
---------- ----------
Total current assets.............................. 2,412,975 1,719,278
MACHINERY AND EQUIPMENT, NET.......................... 126,131 122,221
CASH SURRENDER VALUE OF LIFE INSURANCE POLICY......... 226,856 226,856
---------- ----------
Total assets...................................... $2,765,962 $2,068,355
========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable.................................... $ 158,924 $ 41,188
Accrued expenses.................................... 210,841 119,335
---------- ----------
Total current liabilities......................... 369,765 160,523
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock--$1.00 par value; 100,000 shares
authorized, 50,000 issued and outstanding.......... 50,000 50,000
Treasury Stock...................................... (248,791) (248,791)
Retained earnings................................... 2,594,988 2,106,623
---------- ----------
Total shareholders' equity........................ 2,396,197 1,907,832
---------- ----------
Total liabilities and shareholders' equity........ $2,765,962 $2,068,355
========== ==========
</TABLE>
See accompanying notes to financial statements.
16
<PAGE>
BARR ELECTRIC CORP.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, --------------------
1997 1997 1998
------------ ---------- --------
(UNAUDITED)
<S> <C> <C> <C>
REVENUES..................................... $7,716,731 $1,291,112 $949,913
COST OF SERVICES............................. 5,148,132 1,056,797 712,139
---------- ---------- --------
Gross profit............................. 2,568,599 234,315 237,774
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. 1,495,834 165,598 206,047
---------- ---------- --------
Income from operations................... 1,072,765 68,717 31,727
OTHER INCOME (EXPENSE):
Interest income............................ 41,679 8,265 9,908
Other, net................................. (3,564) (3,564) --
---------- ---------- --------
NET INCOME................................... $1,110,880 $ 73,418 $ 41,635
========== ========== ========
</TABLE>
See accompanying notes to financial statements.
17
<PAGE>
BARR ELECTRIC CORP.
STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
TOTAL
COMMON TREASURY RETAINED SHAREHOLDERS'
STOCK STOCK EARNINGS EQUITY
------- --------- ---------- -------------
<S> <C> <C> <C> <C>
Balance, December 31, 1996......... $50,000 $(248,791) $2,424,108 $2,225,317
Net income....................... -- -- 1,110,880 1,110,880
Distributions.................... -- -- (940,000) (940,000)
------- --------- ---------- ----------
Balance, December 31, 1997......... $50,000 $(248,791) $2,594,988 $2,396,197
======= ========= ========== ==========
</TABLE>
See accompanying notes to financial statements.
18
<PAGE>
BARR ELECTRIC CORP.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED MARCH 31,
DECEMBER 31, --------------------
1997 1997 1998
------------ -------- ----------
(UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................. $1,110,880 $ 73,418 $ 41,635
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation.............................. 34,374 4,801 3,910
Loss on sale of machinery and equipment... 3,564 3,564 --
Change in operating assets and
liabilities:
(Increase) decrease in -
Accounts receivable--Trade.............. 325,916 41,068 347,237
Accounts receivable--Other.............. 1,800 1,566 300
Inventories............................. (19,213) (5,579) 8,908
Costs and estimated earnings in excess
of billings on uncompleted contracts... 13,048 -- 36,088
Prepaid expenses and other current
assets................................. (13,830) (8,756) 9,229
Increase (decrease) in -
Accounts payable........................ 97,662 28,804 (117,736)
Accrued expenses........................ 28,325 (53,366) (91,506)
---------- -------- ----------
Net cash provided by operating
activities............................ 1,582,526 85,520 238,065
---------- -------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of machinery and equipment....... (60,508) (45,811) --
Proceeds from sale of equipment............ 1,000 1,000 --
Other...................................... (5,500) -- --
---------- -------- ----------
Net cash used in investing activities.. (65,008) (44,811) --
---------- -------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Distributions to shareholders.............. (940,000) (340,000) (530,000)
---------- -------- ----------
Net cash used in financing activities.. (940,000) (340,000) (530,000)
---------- -------- ----------
NET CHANGE IN CASH AND CASH EQUIVALENTS..... 577,518 (299,291) (291,935)
CASH AND CASH EQUIVALENTS, beginning of
period..................................... 840,998 840,998 1,418,516
---------- -------- ----------
CASH AND CASH EQUIVALENTS, end of period.... $1,418,516 $541,707 $1,126,581
========== ======== ==========
</TABLE>
See accompanying notes to financial statements.
19
<PAGE>
BARR ELECTRIC CORP.
NOTES TO FINANCIAL STATEMENTS
1. BUSINESS AND ORGANIZATION
Barr Electric Corp. (the Company), an Illinois corporation, is a provider of
electrical contracting services consisting of installation, service and
maintenance of electrical systems primarily in the Chicago, Illinois area.
This work is performed under fixed price contracts subject to modifications
based on approved change orders or under time and material contracts.
2. SUMMARY OF SIGNIFICANT POLICIES
Interim Financial Information
The interim financial statements for the three months ended March 31, 1997
and 1998 are unaudited, and 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, all adjustments, consisting only of normal recurring adjustments,
necessary to fairly present the financial position, results of operations and
cash flows with respect to the interim financial statements, have been
included. The results of operations for the interim periods are not
necessarily indicative of the results for the entire fiscal year.
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 period. Actual results could differ from those estimates.
Revenue and Cost Recognition
Revenues from fixed price contracts are recognized on the percentage of
completion method. The completed percentage is measured by the percentage of
cost incurred to date as compared to the estimated total cost for each
contract, including work for approved change orders. Revenue from time and
material contracts is recognized at the completion of the job.
Contract costs include all direct material, subcontract and labor costs and
a provision for indirect costs such as indirect labor, payroll taxes, tools,
equipment rental, permits, union welfare payments, truck expense and
depreciation. Selling, general and administrative costs are charged to expense
as incurred. Provisions for estimated losses on uncompleted contracts are made
in the period in which such losses are determined. Changes in job performance,
job conditions, and estimated profitability may result in revisions to costs
and revenues and are recognized in the period in which the revisions are
determined.
The Company's largest three customers accounted for 86% of total revenues
for the year ended December 31, 1997.
Cash and cash equivalents
The Company considers investments in money market accounts and certificates
of deposits purchased with an original maturity of three months or less to be
cash equivalents.
Inventories
Inventories consist of parts and supplies used in the Company's operations.
The inventory is valued at the lower of cost or market, with cost determined
using the weighted average method of valuation.
20
<PAGE>
BARR ELECTRIC CORP.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
Machinery and Equipment
Machinery and equipment are stated at cost. Depreciation is computed using
the straight-line method over the useful lives of the assets. Expenditures for
major renewals and improvements, which extend the useful lives of existing
equipment, are capitalized and depreciated. Expenditures for repairs and
maintenance are charged to expense when incurred. Upon retirement or
disposition of property and equipment, the cost and related accumulated
depreciation are removed from the accounts and any resulting gain or loss is
recognized in the statements of operations.
Income Taxes
The Company has elected to be taxed under the provisions of Subchapter S of
the Internal Revenue Code. Under those provisions, the Company does not pay
corporate income taxes on its taxable income. Instead, the shareholders are
liable for individual income taxes on their respective shares of the Company's
net operating income in their individual income tax returns. Therefore, no
income tax expense appears on these financial statements.
3. PROFIT SHARING PLAN
The Company has a Profit-Sharing Plan for eligible non-union employees. All
contributions to the plan are 100% vested in the employees' accounts and are
made at the discretion of management. The Company's contribution to the plan
was $91,711 in 1997.
4. LEASES
The Company operates from a leased facility under an operating lease that
expires March 14, 2000. The annual rental amount under the current lease
agreement is $55,000.
Net future minimum rental payments required under operating leases as of
December 31, 1997 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1998............................................................ $ 55,000
1999............................................................ 56,742
2000............................................................ 11,917
--------
$123,659
--------
</TABLE>
In addition to these minimum rentals, the Company agrees to pay their
percentage of any increases in the real estate taxes and operating expenses
over the base year period of January 1, 1995 to December 31, 1995.
21
<PAGE>
BARR ELECTRIC CORP.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
A summary of the status of uncompleted contracts as of December 31, 1997 is
as follows:
<TABLE>
<S> <C>
Costs incurred................................................ $ 748,015
Estimated earnings recognized................................. 266,388
----------
1,014,403
Less billings on contracts.................................... 954,654
----------
$ 59,749
==========
</TABLE>
The costs and estimated earnings on uncompleted contracts in excess of
amounts billed are included in the accompanying balance sheet under the
caption "Costs and estimated earnings in excess of billings on uncompleted
contracts".
6. MACHINERY AND EQUIPMENT
The principal categories of machinery and equipment as of December 31, 1997
are as follows:
<TABLE>
<S> <C>
Machinery and equipment......................................... $ 43,191
Vehicles........................................................ 156,940
Office equipment and furniture.................................. 198,831
Leasehold improvements.......................................... 27,247
--------
426,209
Less: Accumulated depreciation.................................. 300,078
--------
$126,131
========
</TABLE>
Fixed assets generally are depreciated over useful lives of 5-7 years.
7. EMPLOYEE BENEFIT PLANS
The Company makes contributions to a union-administered benefit fund which
covers a majority of the Company's employees. For the year ended December 31,
1997, the participant costs charged to operations were approximately $0.9
million. Governmental regulations impose certain requirements relative to
multi-employer plans. In the event of a plan's termination or employer
withdrawal, the Company may be liable for a portion of the plans' unfunded
vested benefits, if any. The Company has not yet received information from the
plans' administrators to determine its share of any unfunded vested benefits.
The Company does not anticipate withdrawal from the plans, nor is the Company
aware of any expected plan terminations.
8. COMMITMENTS AND CONTINGENCIES
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position, results of operations or liquidity.
Many computer software programs, as well as certain hardware and equipment
containing date sensitive data, were structured to utilize a two-digit date
field meaning that they may not be able to properly recognize dates in the
year 2000 and later. This could result in significant system and equipment
failures. The Company has assessed its current software programs and
determined that the Company's software programs will need to
22
<PAGE>
BARR ELECTRIC CORP.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
be replaced. It is the Company's intentions to replace affected software
before the year 2000. Assessments and cost estimates are being conducted
currently by Group Maintenance America Corp. which acquired the Company as
discussed in note 9.
9. SUBSEQUENT EVENT
In March 1998, the Company entered into an agreement whereby Group
Maintenance America Corp. (GroupMAC) has acquired all of the outstanding
shares of the Company for a combination of cash and common stock of GroupMAC.
23
<PAGE>
(b) Pro forma financial information.
GROUP MAINTENANCE AMERICA CORP.
UNAUDITED PRO FORMA COMBINED
FINANCIAL STATEMENTS
Although for legal purposes Airtron, Inc. ("Airtron") was acquired by Group
Maintenance America Corp. ("GroupMAC"), for accounting purposes, the
transaction was accounted for as a reverse acquisition, as if Airtron acquired
GroupMAC, due to the fact that the former shareholders of Airtron then owned a
majority of the GroupMAC common stock. The following unaudited pro forma
combined financial statements give effect to the acquisition of Airtron and
(i) 10 companies acquired prior to the IPO (together with Airtron, the "Pre-
Offering Companies"), (ii) 13 companies acquired in connection with the IPO
(the "Offering Acquisition Companies") and (iii) 15 companies in the first
quarter of 1998 (the "First Quarter Post-Offering Companies") and 12 companies
in the second quarter of 1998 and one probable future acquisition (the "Second
Quarter Post-Offering Companies", and together with the First Quarter Post-
Offering Companies, the "Post-Offering Companies", the Pre-Offering Companies
and the Offering Acquisition Companies, the "GroupMAC Companies"). The Post-
Offering Companies are as follows:
<TABLE>
<CAPTION>
DATE
COMPANY ACQUIRED
------- --------
<S> <C>
Sterling Air Conditioning, Inc........................................ 1/6/98
A-1 Mechanical of Lansing, Inc........................................ 1/15/98
Air Conditioning Engineers, Inc....................................... 1/15/98
Air Conditioning, Plumbing & Heating Service Co., Inc................. 1/15/98
Hungerford Mechanical Corporation..................................... 1/15/98
Mechanical Interiors, Inc............................................. 1/15/98
Valley Wide Plumbing & Heating, Inc................................... 1/15/98
Weigold & Sons, Inc................................................... 1/15/98
AA Advance Air, Inc................................................... 2/12/98
DIVCO, Inc............................................................ 2/12/98
J. D. Steward Air Conditioning, Inc................................... 2/13/98
New Construction Air Conditioning, Inc................................ 2/13/98
Aircon Energy, Incorporated........................................... 3/13/98
Ray & Claude Goodwin, Inc. (d/b/a "Ray's Plumbing, Inc.")............. 3/13/98
Sun Plumbing, Inc..................................................... 3/13/98
Barr Electric Corp.................................................... 5/8/98
Premex, Inc. and Subsidiary (d/b/a "Commercial Air, Power & Cable,
Inc.")............................................................... 5/8/98
Vantage Mechanical Contractors, Inc................................... 5/12/98
Wade's Heating and Cooling............................................ 5/15/98
Gilbert Mechanical Contractors, Inc................................... 5/15/98
HPS Plumbing Services, Inc............................................ 5/15/98
Atlantic Industrial Constructors, Inc. ............................... 6/12/98
Colonial Air Conditioning, Inc........................................ 6/12/98
Laney's, Inc. ........................................................ 6/12/98
Noron, Inc. .......................................................... 6/12/98
Team Mechanical, Inc. ................................................ 6/12/98
Air Conditioning and Heating Service, Inc............................. 6/14/98
The Farfield Company.................................................. *
</TABLE>
- --------
*GroupMAC has identified this company as an acquisition probable of occurring.
All of the acquisitions were or will be accounted for under the purchase
method of accounting. These unaudited pro forma combined financial statements
are based on the historical financial statements of the acquired companies and
estimates and assumptions set forth below and in the notes to the unaudited
pro forma combined financial statements.
24
<PAGE>
The unaudited pro forma combined balance sheet combines the historical
consolidated balance sheet of the Company and the balance sheets of the Second
Quarter Post-Offering Companies, as if such acquisitions had occurred
on March 31, 1998. The accompanying unaudited pro forma statements of
operations of the Company combines the historical statements of operations of
the Company and the statements of operations of the acquired entities as if
such acquisitions had occurred on January 1, 1997.
GroupMAC has analyzed the savings that it expects to realize from reductions
in salaries and certain benefits to the owners. To the extent the owners of
the GroupMAC Companies have agreed prospectively to reductions in salary,
bonuses and benefits, these reductions have been reflected in the pro forma
combined statements of operations. With respect to other potential cost
savings, GroupMAC cannot fully quantify these savings at this time. It is
anticipated that these savings will be partially offset by costs related to
GroupMAC's corporate management and by the costs associated with being a
public company. However, because these savings and costs cannot be accurately
quantified at this time, they have not been included in the pro forma combined
financial information of GroupMAC.
The pro forma adjustments are based on available information and certain
assumptions that management deems appropriate and may be revised as additional
information becomes available. Certain acquisitions are subject to final
equity adjustments, of which an estimate is reflected in the pro forma
adjustments. The pro forma combined financial data do not purport to represent
what GroupMAC's financial position or results of operations would actually
have been if such transactions had in fact occurred on those dates and are not
necessarily representative of GroupMAC's financial position or results of
operations for any future period. Since the acquisitions have not historically
been under common control or management, historical pro forma combined results
may not be indicative of or comparable to future performance. The unaudited
pro forma combined financial statements should be read in conjunction with
other financial statements and notes thereto included in GroupMAC's Transition
Report on Form 10-K for the ten month period ended December 31, 1997 and its
Quarterly Report on Form 10-Q for the quarter ended March 31, 1998.
25
<PAGE>
GROUP MAINTENANCE AMERICA CORP.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
MARCH 31, 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
OTHER
2ND QUARTER
GROUPMAC AND COMMERCIAL BARR ATLANTIC ACQUISITION PRO FORMA
SUBSIDIARIES AIR ELECTRIC INDUSTRIAL COMPANIES ADJUSTMENTS PRO FORMA
ASSETS ------------ ---------- -------- ---------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equiva-
lents.................. $ 5,715 $ 18 $1,127 $1,750 $ 2,014 $(10,624) $ --
Accounts receivable
Trade, net of allow-
ance................. 67,745 3,560 432 3,447 21,737 -- 96,921
Other................ -- -- 12 4 46 -- 62
Due from related par-
ties................... -- 66 -- -- 336 (403) (1)
Inventories............ 12,227 475 105 -- 1,938 -- 14,745
Costs and estimated
earnings in excess of
billings on uncom-
pleted contracts....... 8,047 452 24 1,153 4,500 -- 14,176
Deferred tax asset..... 2,734 158 -- -- 12 (1,028) 1,876
Prepaid expenses and
other current assets... 1,912 34 20 59 914 -- 2,939
-------- ------ ------ ------ ------- -------- --------
Total current as-
sets................ 98,380 4,763 1,720 6,413 31,497 (12,055) 130,718
PROPERTY AND EQUIPMENT,
net..................... 18,806 1,271 122 1,005 7,633 -- 28,837
GOODWILL, net........... 139,789 -- -- -- -- 82,709 222,498
DEFERRED TAX ASSETS..... 4,804 334 -- -- 42 (240) 4,940
REFUNDABLE INCOME TAXES. 3,478 -- -- -- -- -- 3,478
OTHER NONCURRENT ASSETS. 1,886 279 226 142 175 (114) 2,594
-------- ------ ------ ------ ------- -------- --------
Total assets........ $267,143 $6,647 $2,068 $7,560 $39,347 $ 70,300 $393,065
======== ====== ====== ====== ======= ======== ========
<CAPTION>
LIABILITIES AND
SHAREHOLDERS' EQUITY
<S> <C> <C> <C> <C> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable and
accrued expenses....... $ 41,334 $2,186 $ 160 $1,440 $ 9,090 $ -- $ 54,210
Short-term debt, in-
cluding current matu-
rities................. 1,466 649 -- -- 4,090 (1,837) 4,368
Billings in excess of
costs and estimated
earnings on uncom-
pleted contracts....... 10,482 457 -- 178 4,188 -- 15,305
Liability for warranty
costs.................. -- -- -- -- 109 -- 109
Deferred service reve-
nue.................... 3,127 83 -- -- 42 -- 3,252
Income taxes payable... 1,722 102 -- -- 706 -- 2,530
Deferred tax liabili-
ties................... -- -- -- -- 961 (961) --
Other current liabili-
ties................... 5,375 -- -- -- -- -- 5,375
Due to related par-
ties................... 2,151 96 -- 205 -- (301) 2,151
-------- ------ ------ ------ ------- -------- --------
Total current lia-
bilities............ 65,657 3,573 160 1,823 19,186 (3,099) 87,300
LONG-TERM DEBT, net of
current maturities...... 21,313 580 -- -- 2,498 52,381 76,772
SUBORDINATED DEBT....... 820 -- -- -- -- -- 820
LEASE OBLIGATIONS....... -- 402 -- -- 107 (509) --
DEFERRED TAX LIABILI-
TIES.................... -- -- -- -- 240 (240) --
DEFERRED COMPENSATION... -- 678 -- -- -- (678) --
DUE TO RELATED PARTIES.. 9,745 -- -- -- 616 (616) 9,745
OTHER LONG-TERM LIABILI-
TIES.................... 1,048 -- -- -- -- -- 1,048
SHAREHOLDERS' EQUITY:
Common stock........... 23 1 50 2 873 (922) 27
Additional paid-in
capital................ 198,776 1 -- 376 3,055 45,384 247,592
Retained earnings
(deficit).............. (30,239) 1,412 2,107 5,359 12,982 (21,860) (30,239)
Treasury stock......... -- -- (249) -- (210) 459 --
-------- ------ ------ ------ ------- -------- --------
Total shareholders'
equity.............. 168,560 1,414 1,908 5,737 16,700 23,061 217,380
-------- ------ ------ ------ ------- -------- --------
Total liabilities
and shareholders'
equity.............. $267,143 $6,647 $2,068 $7,560 $39,347 $ 70,300 $393,065
======== ====== ====== ====== ======= ======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
combined financial statements.
26
<PAGE>
GROUP MAINTENANCE AMERICA CORP.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
OTHER
POST-
GROUPMAC AND COMMERCIAL BARR ATLANTIC OFFERING PRO FORMA
SUBSIDIARIES AIR ELECTRIC INDUSTRIAL COMPANIES ADJUSTMENTS PRO FORMA
------------ ---------- -------- ---------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
REVENUES................ $107,092 $5,003 $950 $5,428 $34,336 $ -- $152,809
COST OF SERVICES........ 82,706 3,921 712 4,397 27,279 -- 119,015
-------- ------ ---- ------ ------- ------- --------
Gross profit.......... 24,386 1,082 238 1,031 7,057 -- 33,794
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES. 18,994 918 206 403 5,451 (117)(a) 25,855
GOODWILL AMORTIZATION... 821 -- -- -- -- 570 (b) 1,391
-------- ------ ---- ------ ------- ------- --------
Income from
operations............ 4,571 164 32 628 1,606 (453) 6,548
OTHER INCOME (EXPENSE):
Interest expense...... (413) (41) -- (4) (186) (722)(c) (1,366)
Interest income....... 184 -- 10 31 24 (249)(d) --
Other................. (5) 25 -- 13 10 -- 43
-------- ------ ---- ------ ------- ------- --------
INCOME BEFORE INCOME
TAX PROVISION........ 4,337 148 42 668 1,454 (1,424) 5,225
INCOME TAX PROVISION.... 2,065 394 -- 8 36 145 (e) 2,648
-------- ------ ---- ------ ------- ------- --------
NET INCOME.............. $ 2,272 $ (246) $ 42 $ 660 $ 1,418 $(1,569) $ 2,577
======== ====== ==== ====== ======= ======= ========
BASIC EARNINGS PER
SHARE:
EARNINGS PER SHARE.... $ 0.10 $ 0.10
======== ========
WEIGHTED AVERAGE
SHARES................ 23,141 26,892 (f)
======== ========
DILUTED EARNINGS PER
SHARE:
EARNINGS PER SHARE.... $ 0.10 $ 0.09
======== ========
WEIGHTED AVERAGE
SHARES................ 23,495 27,283 (f)
======== ========
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
combined financial statements.
27
<PAGE>
GROUP MAINTENANCE AMERICA CORP.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
OTHER PRE-
OFFERING,
GROUPMAC AND OFFERING
SUBS ACQUISITION
YEAR ENDED SUPPLEMENTAL AND POST-
DECEMBER 31, COMMERCIAL BARR ATLANTIC PRO FORMA SUPPLEMENTAL OFFERING
1997 HUNGERFORD MIINC AIR ELECTRIC INDUSTRIAL ADJUSTMENTS PRO FORMA COMPANIES
------------ ---------- ------- ---------- -------- ---------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
REVENUES........... $138,479 $32,850 $42,283 $20,750 $7,717 $37,035 $ -- $279,114 $390,798
COST OF SERVICES... 101,762 24,602 35,909 13,855 5,148 28,625 -- 209,901 303,785
-------- ------- ------- ------- ------ ------- ------- -------- --------
Gross profit...... 36,717 8,248 6,374 6,895 2,569 8,410 -- 69,213 87,013
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES........... 35,862 5,591 5,360 5,649 1,496 1,936 (1,844)(a) 54,050 79,485
GOODWILL
AMORTIZATION....... 633 -- -- -- -- -- 1,641 (b) 2,274 --
-------- ------- ------- ------- ------ ------- ------- -------- --------
Income from
operations........ 222 2,657 1,014 1,246 1,073 6,474 203 12,889 7,528
OTHER INCOME
(EXPENSE):
Interest expense.. (1,542) (121) (73) (152) -- (24) (850)(c) (2,762) (2,018)
Interest income... 398 89 21 10 42 91 -- 651 437
Other............. 112 42 -- 69 (4) 27 -- 246 387
-------- ------- ------- ------- ------ ------- ------- -------- --------
INCOME (LOSS)
BEFORE INCOME
TAX PROVISION... (810) 2,667 962 1,173 1,111 6,568 (647) 11,024 6,334
INCOME TAX
PROVISION.......... 2,832 -- 409 493 -- 11 4,477 (e) 8,222 2,578
-------- ------- ------- ------- ------ ------- ------- -------- --------
NET INCOME (LOSS).. $ (3,642) $ 2,667 $ 553 $ 680 $1,111 $ 6,557 $(5,124) $ 2,802 $ 3,756
======== ======= ======= ======= ====== ======= ======= ======== ========
BASIC EARNINGS
(LOSS) PER SHARE:
EARNINGS (LOSS)
PER SHARE......... $ (0.34)
========
WEIGHTED AVERAGE
SHARES............ 10,800
========
DILUTED EARNINGS
(LOSS) PER SHARE:
EARNINGS (LOSS)
PER SHARE......... $ (0.34)
========
WEIGHTED AVERAGE
SHARES............ 10,800
========
<CAPTION>
COMBINED
PRO FORMA
ADJUSTMENTS PRO FORMA
------------- -------------
<S> <C> <C>
REVENUES........... $ -- $669,912
COST OF SERVICES... -- 513,686
------------- -------------
Gross profit...... -- 156,226
SELLING, GENERAL
AND ADMINISTRATIVE
EXPENSES........... (26,614)(a) 106,921
GOODWILL
AMORTIZATION....... 3,288 (b) 5,562
------------- -------------
Income from
operations........ 23,326 43,743
OTHER INCOME
(EXPENSE):
Interest expense.. (685)(c) (5,465)
Interest income... (1,088)(d) --
Other............. -- 633
------------- -------------
INCOME (LOSS)
BEFORE INCOME
TAX PROVISION... 21,553 38,911
INCOME TAX
PROVISION.......... 6,989 (e) 17,789
------------- -------------
NET INCOME (LOSS).. $14,564 $ 21,122
============= =============
BASIC EARNINGS
(LOSS) PER SHARE:
EARNINGS (LOSS)
PER SHARE......... $ 0.79
=============
WEIGHTED AVERAGE
SHARES............ 26,892 (f)
=============
DILUTED EARNINGS
(LOSS) PER SHARE:
EARNINGS (LOSS)
PER SHARE......... $ 0.77
=============
WEIGHTED AVERAGE
SHARES............ 27,283 (f)
=============
</TABLE>
The accompanying notes are an integral part of these unaudited pro forma
combined financial statements.
28
<PAGE>
GROUP MAINTENANCE AMERICA CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
1. BACKGROUND:
The respective results of operations for the Pre-Offering and Offering
Acquisition Companies from January 1, 1997 to the dates of the acquisitions
were combined with the Company and the Post-Offering Companies', excluding
Premex, Inc. ("Commercial Air"), actual results of operations for the twelve
months ended December 31, 1997 and Commercial Air for the twelve months ended
March 31, 1998 to determine the pro forma results of operations for the twelve
months ended December 31, 1997. The respective results of operations for the
Post-Offering Companies from January 1, 1998 to the dates of the acquisitions,
or March 31, 1998 for acquisitions consummated subsequent to March 31, 1998,
were combined with actual results of the Company for the three months ended
March 31, 1998 to determine the pro forma results of operations for the three
months ended March 31, 1998.
2. ACQUISITIONS:
The acquisitions of the Pre-Offering Companies were financed by borrowings
under a credit agreement dated May 2, 1997 (the "Original Credit Agreement").
The Original Credit Agreement provided secured facilities consisting of (a) an
18-month revolving credit facility providing up to $3 million in revolving
loans (the "Revolving Credit Facility"), (b) a six-year term loan of $20
million to help fund the acquisition of Airtron (the "Airtron Term Loan"), and
(c) a term loan facility available until October 31, 1998, providing for up to
$12 million in term loans having a final maturity six years after the date of
the Original Credit Agreement (the "Acquisition Credit Facility"). Borrowings
under this facility were repaid with proceeds from the Company's initial
public offering of its Common Stock (the "IPO").
The results of operations of the acquired businesses are included in the
actual results of operations of the Company from the date of acquisition and
the historical balance sheet at March 31, 1998 includes the acquisitions
completed as of that date. All of the acquisitions are accounted for as
purchases. The cash consideration associated with the acquisition of the
Offering Acquisition Companies and the Post-Offering Companies was provided by
proceeds from the IPO and borrowings under a credit agreement dated December
11, 1997 (the "Credit Agreement"). The Credit Agreement is more fully
described in Note 7 to the GroupMAC and subsidiaries consolidated financial
statements and notes thereto included in GroupMAC's Transition Report on Form
10-K for the ten month period ended December 31, 1997.
The following table sets forth the consideration paid or to be paid in (a)
cash, (b) subordinated debt, (c) shares of non-convertible, non-voting
Preferred Stock to the shareholders of the Pre-Offering Companies and (d)
shares of Common Stock to the shareholders of the Pre-Offering, Offering
Acquisition and Post-Offering Companies. The Preferred Stock was redeemable at
any time after the initial issuance, in whole or in part, at the option of the
Company, at an amount equal to the liquidation value of $1.00 per share plus
any accrued but unpaid dividends. Redemption of all outstanding Preferred
Stock occurred in connection with the IPO.
For purposes of computing the estimated purchase price for accounting
purposes for the Second Quarter Post-Offering Companies, the value of the
Common Stock is determined using an estimated weighted average fair value of
$13.79 per share, which represents a discount rate of 19% from the weighted
average stock price of $17.08 at the respective dates of acquisition due
primarily to restrictions on the sale and transferability of such shares. The
restrictions are created by a contractual restriction imposed on the shares
issued in connection with the acquisition of the acquired businesses. This
contractual provision prohibits the shareholders from selling, transferring or
otherwise disposing of any shares for one year following the date of
acquisition of such shares and limiting dispositions for one additional year
to no more than 36% of their holdings.
The estimated purchase price and related allocations of the excess purchase
price for the Post-Offering Companies are based upon preliminary estimates and
are subject to certain purchase price adjustments at and following closing.
Based upon management's preliminary analysis, it is anticipated that the
historical carrying
29
<PAGE>
GROUP MAINTENANCE AMERICA CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
value of the assets and liabilities of the Second Quarter Post-Offering
Companies (representing $22.4 million) will approximate fair value. This
results in an allocation to goodwill of approximately $82.7 million.
Management has not identified any other material tangible or identifiable
intangible assets to which a portion of the purchase price could reasonably be
allocated. Amounts in thousands.
<TABLE>
<CAPTION>
SUBORDINATED SHARES OF SHARES OF TOTAL
CASH DEBT PREFERRED STOCK(1) COMMON STOCK(3) CONSIDERATION(2)
-------- ------------ ------------------ --------------- ----------------
<S> <C> <C> <C> <C> <C>
Airtron................. $ 20,849 $ -- 14,873 4,652 $ 58,192
-------- ---- ------ ------ --------
Pre-Offering Companies
(excluding Airtron).... 12,504 -- 4,405 1,437 32,033
Offering Acquisition
Companies.............. 30,585 -- -- 3,007 64,851
First Quarter Post-
Offering Companies..... 36,666 820 -- 2,506 68,228
Second Quarter Post-
Offering Companies..... 56,243 -- -- 3,313 105,063
-------- ---- ------ ------ --------
Total Acquisitions.... 135,998 820 4,405 10,263 270,175
-------- ---- ------ ------ --------
Totals................ $156,847 $820 19,278 14,915 $328,367
======== ==== ====== ====== ========
</TABLE>
- --------
(1) The preferred stock is valued at $1 per share. This stock was redeemed for
$1 per share in connection with the IPO.
(2) The total consideration specified above has been reduced by distributions
totaling $8.1 million representing substantially all of the previously
taxed undistributed earnings of such acquired companies from the acquired
companies that are S corporations.
(3) Excludes 0.2 million of options to purchase common stock.
30
<PAGE>
GROUP MAINTENANCE AMERICA CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
3. UNAUDITED PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS
a) Records the S Corporation distributions of $4.3 million on one of the
Second Quarter Post-Offering Companies to be satisfied with cash and notes to
the selling shareholders. Also records the deferred income tax liabilities
associated with converting all acquired companies taxed under Subchapter S of
the Internal Revenue Code (the Code) to corporations taxed under Subchapter C
of the Code.
b) Records the settlement of all shareholder receivables and payables with
cash at closing.
c) Records the elimination of all assets and liabilities of the Second
Quarter Post-Offering Companies that are specifically excluded as part of the
purchase transaction.
d) Records the elimination of the historical equity accounts of the Second
Quarter Post-Offering Companies.
e) Records the purchase of the Second Quarter Post-Offering Companies,
including the cash, options to purchase Common Stock and Common Stock
consideration due to these companies.
f) Records the refinancing of debt assumed in connection with the
acquisition of the Second Quarter Post-Offering Companies with the Credit
Agreement.
The following table summarizes unaudited pro forma combined balance sheet
adjustments (in thousands):
<TABLE>
<CAPTION>
PRO FORMA
(A) (B) (C) (D) (E) (F) ADJUSTMENTS
------- ------ ---- ------- -------- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Cash and cash
equivalents............ $(1,400) $ (514) $ -- $ -- $ (8,710) $ -- $(10,624)
Due from related
parties................ -- (403) -- -- -- -- (403)
Deferred tax assets..... (1,028) -- -- -- -- -- (1,028)
Goodwill................ 67 -- (564) (21,457) 104,663 -- 82,709
Deferred tax assets
(noncurrent)........... (240) -- -- -- -- -- (240)
Other noncurrent assets. -- -- (114) -- -- -- (114)
Short-term debt,
including current
maturities............. (2,902) -- -- -- -- 4,739 1,837
Deferred tax
liabilities............ 961 -- -- -- -- -- 961
Due to related parties.. -- 301 -- -- -- -- 301
Long-term debt, net of
current maturities..... -- -- -- -- (47,133) (5,248) (52,381)
Lease obligations....... -- -- -- -- -- 509 509
Deferred tax liabilities
(noncurrent)........... 240 -- -- -- -- -- 240
Deferred compensation... -- -- 678 -- -- -- 678
Due to related parties.. -- 616 -- -- -- -- 616
Common stock............ -- -- -- 925 (3) -- 922
Additional paid-in
capital................ -- -- -- 3,433 (48,817) -- (45,384)
Retained earnings....... 4,302 -- -- 17,558 -- -- 21,860
Treasury stock.......... -- -- -- (459) -- -- (459)
------- ------ ---- ------- -------- ------ --------
Total................. $ -- $ -- $ -- $ -- $ -- $ -- $ --
======= ====== ==== ======= ======== ====== ========
</TABLE>
31
<PAGE>
GROUP MAINTENANCE AMERICA CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
4. UNAUDITED PRO FORMA STATEMENT OF OPERATIONS ADJUSTMENTS:
MARCH 31, 1998
a) Reflects the prospective reduction in salaries, bonuses and benefits to
the owners of the Post-Offering Companies to which they have agreed. These
reductions in salaries, bonuses and benefits are in accordance with the terms
of the employment agreements. Such employment agreements are primarily for
three years, contain restrictions related to competition and provide severance
for termination of employment in certain circumstances.
The salaries, bonuses, benefits and other compensation items recorded in the
individual financial statements of each of the Post-Offering Companies
amounted to $903,000 for the periods presented. The contractually agreed upon
compensation and benefits for these same businesses, on a going forward basis,
amount to $786,000 for the periods presented. The difference between these
amounts equates to $117,000 and is reflected as a pro forma adjustment.
b) Reflects the amortization of goodwill to be recorded as a result of the
acquisitions over a 40-year estimated life.
c) Represents the adjustment necessary to reflect interest expense related
to borrowings under the Credit Agreement to fund the cash portion of the
purchase price and the assumption of debt related to the Post-Offering
Companies and interest related to the subordinated debt and notes issued to
fund the S Corporation distributions discussed in Note 3a. A summary of the
historical and pro forma debt outstanding and a summary of the pro forma
interest expense assuming the acquisitions occurred on January 1, 1997, is as
follows (in thousands):
<TABLE>
<CAPTION>
INTEREST QUARTERLY
BALANCE RATE INTEREST
------- -------- ---------
<S> <C> <C> <C>
Short-Term Debt:
Historical March 31, 1998 short-term debt. $ 531 6.6875%(i) $ 9
Historical March 31, 1998 S Corporation
Notes.................................... 935 6.0000%(ii) 14
------- ------
1,466 23
Second Quarter Post-Offering Companies S
Corporation Notes........................ 2,902 6.0000%(ii) 44
------- ------
Total pro forma short-term debt/interest
expense................................ $ 4,368 $ 67
======= ======
Long-Term Debt:
Historical March 31, 1998 long-term debt.. $21,313 6.6875%(i) $ 356
Historical March 31, 1998 subordinated
debt..................................... 820 8.0000%(iii) 16
------- ------
22,133 372
Second Quarter Post-Offering Companies
assumed debt refinanced.................. 8,326 6.6875%(i) 139
Second Quarter Post-Offering Companies
borrowings to fund cash portion of
purchase prices.......................... 47,133 6.6875%(i) 788
------- ------
Total pro forma long-term debt/interest
expense................................ $77,592 $1,299
======= ======
Total pro forma debt/interest expense... $81,960 $1,366
======= ======
</TABLE>
- --------
(i) Represents current borrowing rates under the Credit Agreement.
(ii) Represents the contractual interest rate for the S Corporation Notes
discussed in Note 3a.
(iii) Represents the contractual interest rates for the subordinated debt
outstanding on the Company's historical balance sheet at March 31, 1998.
32
<PAGE>
GROUP MAINTENANCE AMERICA CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
d) Reflects the reduction to historical interest income earned on acquired
cash and the remaining IPO proceeds, all of which is assumed to be used for
the acquisition of the Post-Offering Companies.
e) Reflects the incremental provision for federal and state income taxes
relating to the compensation differential and other pro forma adjustments
discussed in this Note 4 as well as income taxes on S Corporation earnings.
f) Weighted average shares outstanding include the following (in thousands):
<TABLE>
<S> <C>
Shares issued in Initial Public Offering.............................. 8,340
Shares issued under Subscription Agreement dated October 24, 1996..... 2,600
Shares issued to Pre-Offering Companies............................... 6,089
Shares issued to Offering Acquisition Companies....................... 3,007
Shares issued to First Quarter Post-Offering Companies................ 2,506
Shares issued to Second Quarter Post-Offering Companies............... 3,313
Shares issued to Founding Management and Directors.................... 1,037
------
Weighted average shares outstanding--basic............................ 26,892
Incremental effect of options and warrants on shares outstanding...... 391
------
Weighted average shares outstanding--diluted.......................... 27,283
======
</TABLE>
DECEMBER 31, 1997
a) Reflects the prospective reduction in salaries, bonuses and benefits to
the owners of Hungerford, MIINC, Commercial Air, Barr Electric and Atlantic
Industrial (the "Supplemental Companies") under the Supplemental Pro Forma
Adjustments and all other companies (the "Combined Companies") in the Combined
Pro Forma Adjustments to which they have agreed. These reductions in salaries,
bonuses and benefits are in accordance with the terms of the employment
agreements. Such employment agreements are primarily for three years, contain
restrictions related to competition and provide severance for termination of
employment in certain circumstances.
The salaries, bonuses, benefits and other compensation items recorded in the
individual financial statements amounted to $3.2 million and $26.6 million for
the Supplemental Companies and the Combined Companies respectively, for the
periods presented. The contractually agreed upon compensation and benefits for
these same businesses, on a going forward basis, amount to $1.4 million and
$7.0 million, respectively. The difference between these respective amounts
equates to $1.8 million and $19.6 million and is reflected as a pro forma
adjustment in the Supplemental Pro Forma Adjustments and the Combined Pro
Forma Adjustments, respectively.
Also reflects the reduction in compensation expense related to the non-
recurring, non-cash compensation charge of $7.0 million recorded by the
Company in the second quarter of 1997 related to the reverse acquisition of
GroupMAC.
b) Reflects the amortization of goodwill to be recorded as a result of the
acquisitions over a 40-year estimated life.
c) Represents the adjustment necessary to reflect interest expense related
to borrowings under the Credit Agreement to fund the cash portion of the
purchase price and the assumption of debt related to the Post-Offering
Companies, and interest related to the subordinated debt and notes issued to
fund the S Corporation
33
<PAGE>
GROUP MAINTENANCE AMERICA CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(CONTINUED)
distributions discussed in Note 3a. A summary of the historical and pro forma
debt outstanding and a summary of the pro forma interest expense assuming the
acquisitions occurred on January 1, 1997, is as follows (in thousands):
<TABLE>
<CAPTION>
INTEREST ANNUAL
BALANCE RATE INTEREST
------- -------- --------
<S> <C> <C> <C>
Short-Term Debt:
Historical March 31, 1998 short-term debt. $ 531 6.6875%(i) $ 35
Historical March 31, 1998 S Corporation
Notes.................................... 935 6.0000%(ii) 56
------- ------
1,466 91
Second Quarter Post-Offering Companies S
Corporation Notes........................ 2,902 6.0000%(ii) 174
------- ------
Total pro forma short-term debt/interest
expense................................ $ 4,368 $ 265
======= ======
Long-Term Debt:
Historical March 31, 1998 long-term debt.. $21,313 6.6875%(i) $1,425
Historical March 31, 1998 subordinated
debt..................................... 820 8.0000%(iii) 66
------- ------
22,133 1,491
Second Quarter Post-Offering Companies
assumed debt refinanced.................. 8,326 6.6875%(i) 557
Second Quarter Post-Offering Companies
borrowings to fund cash portion of
purchase prices.......................... 47,133 6.6875%(i) 3,152
------- ------
Total pro forma long-term debt/interest
expense................................ $77,592 $5,200
======= ======
Total pro forma debt/interest expense... $81,960 $5,465
======= ======
</TABLE>
- --------
(i) Represents current borrowing rates under the Credit Agreement.
(ii) Represents the contractual interest rate for the S Corporation Notes
discussed in Note 3a.
(iii) Represents the contractual interest rates for the subordinated debt
outstanding on the Company's historical balance sheet at March 31, 1998.
d) Reflects the reduction to historical interest income earned on acquired
cash and the remaining IPO proceeds, all of which is assumed to be used for
the acquisition of the GroupMAC Pro Forma Combined Companies.
e) Reflects the incremental provision for federal and state income taxes
relating to the compensation differential and other pro forma adjustments
discussed in this Note 4 as well as income taxes on S Corporation earnings.
f) Weighted average shares outstanding include the following (in thousands):
<TABLE>
<S> <C>
Shares issued in Initial Public Offering.............................. 8,340
Shares issued under Subscription Agreement dated October 24, 1996..... 2,600
Shares issued to Pre-Offering Companies............................... 6,089
Shares issued to Offering Acquisition Companies....................... 3,007
Shares issued to First Quarter Post-Offering Companies................ 2,506
Shares issued to Second Quarter Post-Offering Companies............... 3,313
Shares issued to Founding Management and Directors.................... 1,037
------
Weighted average shares outstanding--basic............................ 26,892
Incremental effect of options and warrants on shares outstanding...... 391
------
Weighted average shares outstanding--diluted.......................... 27,283
======
</TABLE>
34
<PAGE>
(c) Exhibits.
<TABLE>
<C> <S>
2.1* Agreement and Plan of Merger dated as of March 27, 1998 among the
Company, Barr Acquisition Corp., Barr Electric Corp. and the
shareholders of Barr Electric Corp.
2.2* Agreement and Plan of Merger dated as of March 31, 1998 among the
Company, Premex Acquisition Corp., Premex, Inc. and the shareholders
of Premex, Inc.
23 Consent of KPMG Peat Marwick, LLP.
99* List of Lenders under the Credit Agreement.
</TABLE>
- --------
* Incorporated by reference to the Company's Form 8-K dated May 22, 1998.
35
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GROUP MAINTENANCE AMERICA CORP.
/s/ Randolph W. Bryant
By:
----------------------------------
Randolph W. Bryant
Senior Vice President
and General Counsel
Date: July 20, 1998
36
<PAGE>
INDEX OF EXHIBITS
Exhibits not incorporated by reference to a prior filing are designated by
an asterisk; all exhibits not so designated are incorporated to a prior filing
as indicated.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<C> <S>
2.1 Agreement and Plan of Merger dated as of March 27, 1998 among the
Company, Barr Acquisition Corp., Barr Electric Corp. and the
shareholders of Barr Electric Corp. (Exhibit 2.1 to Group Maintenance
America Corp.'s Form 8-K dated May 22, 1998, File No. 1-13565).
2.2 Agreement and Plan of Merger dated as of March 31, 1998 among the
Company, Premex Acquisition Corp., Premex, Inc. and the shareholders
of Premex, Inc. (Exhibit 2.2 to Group Maintenance America Corp.'s Form
8-K dated May 22, 1998, File No. 1-13565).
23* Consent of KPMG Peat Marwick, LLP
99 List of Lenders under the Credit Agreement (Exhibit 99 to Group
Maintenance America Corp.'s Form 8-K dated May 22, 1998, File No.
1-13565).
</TABLE>
37
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Group Maintenance America Corp.
We consent to incorporation by reference in the registration statements (No.
333-41749, No. 333-41751 and No. 333-58651) on Form S-8 of Group Maintenance
America Corp. of (i) our report dated April 27, 1998, relating to the
consolidated balance sheet of Premex, Inc. and Subsidiary as of March 31,
1998, and the related consolidated statements of operations, shareholders'
equity and cash flows for the year then ended, and (ii) our report dated July
9, 1998, relating to the balance sheet of Barr Electric Corporation as of
December 31, 1997, and the related statements of operations, shareholders'
equity and cash flows for the year then ended, which reports appear in the
current report on Form 8-K/A of Group Maintenance America Corp. dated July 20,
1998.
KPMG PEAT MARWICK LLP
Houston, Texas
July 17, 1998