SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 26, 1998
OAO TECHNOLOGY SOLUTIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 000-23173 52-1973990
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
7500 Greenway Center Drive, 16th Floor, Greenbelt, MD 20770
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 486-0400
<PAGE>
ITEM 5. Other Events.
On June 26, 1998, OAO Technology Solutions, Inc. announced by a press
release that it (a) had appointed Gregory A. Pratt as Chief Executive Officer of
the Company, effective July 1, 1998, succeeding William Hill; (b) had entered
into a letter of intent to acquire OAO Services, Inc., a national provider of IT
staffing augmentation services with annual revenues of approximately $60
million, in a cash transaction; (c) had entered into a letter of intent to
acquire Enterprise Technology Group, a company founded in 1997 by Gregory A.
Pratt to provide integration, implementation and training services for SAP and
Microsoft applications; and (d) expects to incur a loss of approximately $0.16
per share (diluted) in the quarter ending June 30, 1998.
The press release is attached hereto as Exhibit 99.1 and is incorporated
herein by reference.
ITEM 7. Financial Statements and Exhibits
(a) Financial Statements.
None.
(b) Pro Forma Financial Information.
None.
(c) Exhibits
99.1 Press Release of OAO Technology Solutions, Inc. dated June 26,
1998
-2-
<PAGE>
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.
Dated: June 29, 1998 OAO TECHNOLOGY SOLUTIONS, INC.
By: /s/ Samuel D. Horgan
-----------------------------------------
Samuel D. Horgan, Sr. Vice President,
Chief Financial Officer and Treasurer
-3-
<PAGE>
EXHIBIT INDEX
DOCUMENT
99.1 Press Release of OAO Technology Solutions, Inc. dated June 26, 1998
-4-
EXHIBIT 99.1
FOR IMMEDIATE RELEASE CONTACT: Samuel D. Horgan, CFO
Michael H. Savage
Investor Relations Director
(301)486-2323/[email protected]
OAO TECHNOLOGY SOLUTIONS, INC.
ANNOUNCES NEW CEO,
TWO ACQUISITIONS,
AND REVISES SECOND QUARTER 1998 EARNINGS ESTIMATES
Greenbelt, MD, June 26, 1998 - OAO Technology Solutions, Inc. (NASDAQ - OAOT), a
leading Information Technology (IT) solutions and professional services company,
announced today that it has named Gregory A. Pratt Chief Executive Officer
effective July 1, 1998, succeeding William R. Hill, who will continue to serve
on the Board of Directors of OAOT.
Prior to joining OAOT, Mr. Pratt was Chief Executive Officer of Enterprise
Technology Group ("ETG"), a company he founded in 1997 to provide integration,
implementation and training services for SAP and Microsoft(TM) applications.
Prior to ETG, Mr. Pratt was President and Chief Operating Officer for
Intelligent Electronics from 1992 to 1996, a provider of information technology
products, services and solutions to corporate customers, educational
institutions and governmental agencies in the United States. Mr. Pratt was
instrumental in defining and leading Intelligent Electronics's strategic
repositioning as a services company. Intelligent Electronics had annual sales in
1997 of $3.3 billion. Mr. Pratt comes to OAOT with 20 years of Information
Technology industry experience and has an MBA from the University of
Pennsylvania's Wharton School of Business.
In commenting on the transition to a new Chief Executive Officer, Mr. William
Hill said, "I am very proud of what we have been able to accomplish over the
past six years. I now realize that it is time for new leadership with a more
diversified information technology background to build on these
accomplishments."
-1-
<PAGE>
"OAO Technology Solutions is a company with a solid base of information
technology accomplishments," said Mr. Pratt. "I look forward to continuing to
diversify its service offerings through accelerated internal growth, maximizing
the potential of recent acquisitions, and continued targeted acquisitions."
As previously discussed in the Company's May 11, 1998, news release, the Company
and its Board of Directors continue to take aggressive actions to reposition the
business for the future. Actions completed to date include the following:
1. The Company has entered into a Letter of Intent to acquire OAO Services,
Inc., a national provider of IT Staffing Augmentation Services with annual
revenues of approximately $60 million, in a cash transaction. A significant
portion of the potential purchase price will be contingent upon future
earnings of the Company. With this acquisition, proforma 1997 annual sales
would have been approximately $140 million, compared with $84 million for
the Company alone. This complementary acquisition will position the Company
to enter into a new line of business while growing existing lines of
business, provide a recruiting mechanism for staffing projects, provide
capabilities to assist in the execution of certain projects, and benefit
the Company strategically as part of its ongoing diversification strategy.
2. The Company also has entered into a Letter of Intent to acquire ETG, a
provider of Enterprise Resource Planning integration, implementation and
training services, in a stock transaction. As a result of this acquisition,
ETG provides OAOT with the nucleus for creating an Enterprise Resource
Planning business. The business will initially be focused on SAP and
Microsoft applications. Commenting on the acquisition, Chairman of Board of
Directors, Jerry Johnson, said, "The acquisitions of ETG and OAO Services,
and the recent acquisitions of the MC400 line of business and DHR
Technologies complement OAOT's core systems management business and
position us to aggressively grow in 4 lines of business:
o Software Engineering and Applications Maintenance
o Health Care Solutions
o Technical Staffing Augmentation
o Enterprise Resource Planning software application services.
We are excited about the vision that Greg brings to OAOT and his breadth of
management experience to execute on that vision. "
-2-
<PAGE>
3. The Company also announced today that it expects to incur a loss of
approximately ($0.16) per share (diluted) in the quarter ending June 30,
1998. The majority, approximately ($.09) per share, of this expected loss
is associated with reserves established for uncollectible accounts
receivable expected to be recorded in the quarter. The remainder of the
anticipated loss is associated with operations primarily due to: 1)
continued investment to expand the recently launched Canadian Applications
Development and Maintenance "North Shore" Solution; 2) continued pricing
pressures and lack of revenue growth in the Company's core outsourcing
business; 3) lower second quarter revenues and earnings from the Company's
Health Care Solutions division (MC400) compared to first quarter results
because of sales and delivery resource constraints for which corrective
action was initiated as described below; and 4) costs associated with
severance, cost reduction, and management restructuring actions described
below that were completed during the quarter.
4. In June 1998, the Company completed certain cost reduction actions
including layoffs and salary reductions. These actions are expected to
result in annualized pre-tax savings in excess of $1 million.
5. The Company expanded sales and delivery resources for its MC400 Managed
Care software product line, positioning it for increased growth in the
second half of 1998.
The Company is aggressively pursuing additional initiatives to reduce costs,
diversify its customer base and expand the business, including pursuit of
potential acquisitions and other new business opportunities. Some of these
initiatives, if successful, could result in up-front costs that could impact the
Company's earnings for the balance of 1998.
-3-
<PAGE>
OAO Technology Solutions, Inc. provides clients with a wide range of IT
solutions and professional services, including systems and software engineering,
the operation of large-scale megaplexes and networks, distributed systems
management, applications development and maintenance and other IT services, as
well as state-of-the-art software systems for the managed care marketplace.
OAO Technology Solutions, Inc. is a Safeguard Scientifics, Inc. (NYSE - SFE)
partnership company. Visit the Company's web site, www.oaot.com, for further
company news and information.
### END ###
SAFE HARBOR STATEMENT: This news release contains statements that are
forward-looking statements within the meaning of applicable federal securities
laws and are based upon the Company's current expectations and assumptions that
are subject to a number of risks and uncertainties that would cause actual
results to differ materially from those anticipated.
-4-
