<PAGE>
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
<TABLE>
<CAPTION>
April 9, 1999
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Date of Report (Date of earliest event reported)
Building One Services Corporation
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(Exact name of registrant specified in Charter)
<S> <C> <C>
Delaware 00-23421 52-2054952
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(State or other (Commission (IRS Employee
jurisdiction of File Number) Identification No.)
incorporation)
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800 Connecticut Ave., N.W., Suite 1111, Washington, DC 20006
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(Address of principal executive offices) Zip Code
02/261-6000
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(Registrant's telephone, including area code)
</TABLE>
<PAGE>
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information.
The financial statements of Building One Services Corporation (the
"Company") included in the following unaudited pro forma financial statements
represent the consolidated financial statements of the Company, which are
included in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998. The unaudited pro forma financial data gives effect to:
. the purchase in the previously annnounced tender offer commenced on
February 19,1999 of 25,500,000 shares of common stock, consisting of, for
purposes of the pro forma financial data, approximately 24,600,000 shares
at a price of $22.50 per share and approximately 900,000 shares
underlying stock options at a price of $22.50 per share less the exercise
price for the purchase of employee stock options;
. the businesses the Company acquired in 1998 (the "1998 Acquisitions")
and 1999 (the "1999 Acquisitions"), in each case as if they had been
acquired on January 1, 1998; and
. the financing of the tender offer and the 1999 Acquisitions from the
proceeds of the sale of $200 million of senior subordinated notes and
$100 million of convertible subordinated notes, $124.8 million of
borrowings under a revolving credit facility and available cash.
The pro forma financial statements do not reflect any earn-out payments pay-
able with respect to completed and pending acquisitions. The Company estimates
that the acquisition agreements provide for the potential payment of approxi-
mately $147.6 million in cash and shares of common stock.
<PAGE>
The following unaudited pro forma balance sheet gives effect to the tender
offer, including the financing of the tender offer, and the 1999 Acquisitions as
if they had been consummated as of December 31, 1998.
The unaudited pro forma statements of operations give effect to (i) the
tender offer, including the financing of the tender offer, and (ii) the 26
acquisitions completed during the year ended December 31, 1998 which were
accounted for under the purchase method of accounting (the "1998 Purchases") and
the 1999 Acquisitions as if they had been consummated on January 1, 1998, and
(iii) certain other pro forma adjustments to the historical financial
statements.
The pro forma adjustments are based on estimates, available information
and certain assumptions and may be revised as additional information becomes
available. The pro forma financial data does not purport to represent what the
Company's consolidated financial position and results of operations would ac-
tually have been if such transactions in fact had occurred on the assumed
dates and are not necessarily representative of the Company's financial posi-
tion or results of operations for any future period. The unaudited pro forma
financial statements should be read in conjunction with the audited financial
statements and notes thereto included in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998.
<PAGE>
Unaudited Pro Forma Balance Sheet
December 31, 1998
(Dollars in thousands)
<TABLE>
<CAPTION>
1999 Acquisitions
Building One ---------------------
Services Pro Forma Tender Pro Forma
Corporation Historical Adjustment Offer Combined
------------ ---------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS (A) (B)
Current assets:
Cash and cash
equivalents........... $ 213,096 $ 2,966 $(42,230) $(563,502)(i) $ 13,096
402,766 (ii)
Accounts receivable,
net................... 246,623 24,798 271,421
Cost and estimated
earnings in excess of
billings on
uncompleted
contracts............. 25,441 4,160 29,601
Prepaid expenses and
other current
assets................ 17,108 625 17,733
---------- ------- -------- --------- --------
Total current
assets.............. 502,268 32,549 (42,230) (160,736) 331,851
Property and equipment,
net.................... 38,967 4,812 43,779
Intangible assets, net.. 496,381 37,201 533,582
Other assets............ 6,306 916 22,000 29,222
---------- ------- -------- --------- --------
Total assets......... $1,043,922 $38,277 $ (5,029) $(138,736) $938,434
========== ======= ======== ========= ========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt........ $ 2,167 $ 2,383 $ $ $ 4,550
Accounts payable....... 75,029 10,412 85,441
Billings in excess of
costs and estimated
earnings on
uncompleted
contracts............. 58,773 3,087 61,860
Income taxes payable... 6,125 (2,801) 3,324
Accrued compensation... 27,737 3,098 30,835
Accrued liabilities.... 25,047 3,075 28,122
---------- ------- -------- --------- --------
Total current
liabilities......... 194,878 22,055 (2,801) 214,132
Long-term debt.......... 3,287 1,586 424,766 429,639
Other liabilities....... 8,220 125 (3,442) 4,903
---------- ------- -------- --------- --------
Total liabilities.... 206,385 23,766 (3,442) 421,965 648,674
Stockholders' equity:
Common stock........... 45 120 (119) (25) 21
Additional paid-in
capital............... 832,514 60 12,863 (600,430) 245,007
Treasury stock......... (41,832) (78) 78 41,832
Retained earnings...... 47,255 14,409 (14,409) (2,078) 45,177
Accumulated other
comprehensive
(loss)................ (445) (445)
---------- ------- -------- --------- --------
Total stockholders'
equity ............. 837,537 14,511 (1,587) (560,701) 289,760
---------- ------- -------- --------- --------
Total liabilities and
stockholders'
equity.............. $1,043,922 $38,277 $ (5,029) $(138,736) $938,434
========== ======= ======== ========= ========
</TABLE>
<PAGE>
Unaudited Pro Forma Statement of Operations
For the Year Ended December 31, 1998
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
Building
One
Services 1998 1999 Pro Forma Pro Forma
Corporation Purchases Acquisitions Adjustments Combined
----------- --------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
Revenues................ $ 809,601 $502,663 $155,072 $ $1,467,336
Cost of revenues........ 636,225 411,042 127,080 1,174,347
---------- -------- -------- -------- ----------
Gross profit........... 173,376 91,621 27,992 292,989
Selling, general and
administrative
expenses............... 99,771 71,905 20,546 (23,357)(A) 168,865
Goodwill amortization... 7,653 237 5,535 (B) 13,425
Non-recurring pooling
costs.................. 768 (768)(C)
---------- -------- -------- -------- ----------
Operating income....... 65,184 19,479 7,446 18,590 110,699
Other (income) expense:
Interest expense....... 1,054 1,835 441 39,161 (D) 42,491
Interest income........ (19,373) (1,852) (78) 21,303 (E)
Other, net............. (80) (1,455) (150) (1,950)(F) (3,635)
---------- -------- -------- -------- ----------
Income before provision
for income taxes....... 83,583 20,951 7,233 (39,924) 71,843
Provision for income
taxes.................. 36,120 6,550 793 (9,746)(G) 33,717
---------- -------- -------- -------- ----------
Net income.............. $ 47,463 $ 14,401 $ 6,440 $(30,178) $ 38,126
========== ======== ======== ======== ==========
Net income per share--
Basic.................. $ 1.19 $ 1.77
========== ==========
Net income per share--
Diluted................ $ 1.16 $ 1.63
========== ==========
Weighted average shares
outstanding--Basic..... 39,908,364 21,597,071
========== ==========
Weighted average shares
outstanding--Diluted... 40,928,452 26,314,739
========== ==========
</TABLE>
<PAGE>
Notes to Unaudited Pro Forma Financial Statements
(Dollars in thousands, except share and per share data)
Note 1--Unaudited Pro Forma Balance Sheet Adjustments
(A) Adjustment to reflect the purchase of the 1999 Acquisitions for
consideration of approximately $42,230 in cash (excluding related
professional fees) and 922,019 shares of common stock resulting in excess
purchase price over the fair value of net assets acquired of $37,201. Such
allocations are preliminary in nature, pending the outcome of a detailed
analysis being performed by the Company of the assets and liabilities
acquired. For purposes of computing the estimated purchase price for
business combinations accounted for under the purchase method of accounting,
the value of the shares was determined in consideration of restrictions, if
applicable, on the transferability of the shares issued.
(B) (i) Adjustment to reflect the use of cash to purchase the 25,500,000 shares
of common stock, consisting of 24,600,000 shares at a price of $22.50 per
share and 900,000 shares at a price of $22.50 per share less the exercise
price for outstanding employee stock options estimated to be exercised,
including applicable transaction fees of $3,000.
(ii) Adjustment to reflect the sale of $200,000 of senior subordinated notes
at an assumed interest rate of 10.5% and $100,000 of 7.5% convertible
subordinated notes and $124,766 of borrowings under the revolving credit
facility at an assumed rate of 7.5%. Additionally, the adjustment reflects
approximately $22,000 of debt issue costs which will be capitalized and
amortized over the life of the debt.
As a result of the Company allowing for the exchange of an estimated 900,000
employee stock options in the tender offer, compensation expense is
recorded to the extent that the option holder exercises the stock option for
the net cash payments made upon exercise. The Company estimates that the
compensation expense related to the option shares purchased in the tender
offer will approximate $3,464, assuming all eligible options are exchanged.
For purposes of the pro forma balance sheet, the Company has reflected the
after-tax compensation expense of $2,078 ($3,464 before the benefit from
income taxes) as a reduction to retained earnings. Additionally, income
taxes payable has been decreased by approximately $2,801 to reflect the
expected income tax benefit and additional paid-in-capital has been
increased by $4,879. The Company has not included these items as
compensation expense in the unaudited pro forma statement of operations
because they are of a non-recurring nature and are directly related to the
tender offer.
<PAGE>
Notes To Unaudited Pro Forma Financial Statements--(Continued)
(Dollars in thousands, except share and per share data)
Note 2--Unaudited Pro Forma Statements of Operations Adjustments
(A) Adjustment to reflect the modifications in salaries, bonuses and benefits
to owners of the 1998 Purchases, and the 1999 Acquisitions to which they
have agreed prospectively.
(B) Adjustment to reflect the increase in amortization expense relating to
goodwill recorded in purchase accounting related to the 1998 Purchases and
the 1999 Acquisitions for the periods prior to the date of acquisition.
The goodwill is being amortized over an estimated life of 40 years.
(C) Adjustment to reflect the reduction in one-time non-recurring acquisition
costs related to pooling-of-interests business combinations. These costs
consist of legal, accounting and broker fees.
(D) Adjustment to reflect the increase in interest expense as follows:
<TABLE>
<S> <C>
Interest expense on the senior subordinated notes at an assumed
rate of 10.5%.................................................... $21,000
Interest expense on the convertible subordinated notes at 7.5%.... 7,500
Interest expense on the borrowings of $124,766 under the
revolving credit facility at an assumed rate of 7.5%............. 9,357
Commitment fees on the unused portion of the revolving credit
facility of 0.5%................................................. 1,126
Interest expense on other secured debt at an average rate of
7.5%............................................................. 708
-------
Subtotal........................................................ 39,691
Elimination of historical interest expense........................ (3,330)
Amortization of debt financing costs.............................. 2,800
-------
$39,161
=======
</TABLE>
Depending on market conditions at the time the senior subordinated notes
are offered and the revolving credit facility is obtained, the interest
rates may vary from those indicated herein. A 1/8 of 1% change in the in-
terest rate on the senior subordinated notes and the revolving credit fa-
cility would change interest expense and net income as follows:
<TABLE>
<CAPTION>
Senior Subordinated Revolving Credit
Notes Facility
------------------- ----------------
<S> <C> <C>
Interest expense..................... $250 $156
Net income........................... $150 $ 94
</TABLE>
(E) Adjustment to eliminate interest income relating to the cash consideration
used in the acquisition of the 1998 Purchases, the 1999 Acquisitions and
cash used in the tender offer.
(F) Adjustment to reflect the elimination of minority interest associated with
the acquisition of the remaining 50% interest of a currently 50%-owned
business by the Company.
(G) Adjustment to reflect the incremental provision for federal and state in-
come taxes assuming a combined federal and state statutory rate of approx-
imately 40% and the non-deductibility of certain goodwill amortization.
<PAGE>
Notes To Unaudited Pro Forma Financial Statements--(Continued)
(Dollars in thousands, except share and per share data)
Note 3--Shares Used To Compute Earnings Per Share
Basic pro forma earnings per share is calculated based upon 21,597,071
weighted average shares of common stock outstanding for the year December 31,
1998. This amount represents the shares outstanding subsequent to the purchase
in the tender offer of 24,600,000 shares as well as the repurchase of an
estimated 900,000 shares from underlying employee stock options.
Diluted earnings per share is calculated based upon the weighted average
shares outstanding of 21,604,084, the incremental shares assuming the convert-
ible subordinated notes convert into shares and the dilution attributable to
options and warrants outstanding subsequent to the tender offer.
The weighted average shares outstanding used to calculate pro forma earn-
ings per share for the year ended December 31, 1998 are as follows:
<TABLE>
<CAPTION>
Year ended
December 31, 1998
-----------------
<S> <C>
Basic earnings per share:
Net income.................................................. $ 38,126
Pro forma weighted average shares outstanding -- Basic...... 21,597,071
-----------
Net income per share -- Basic............................... $ 1.77
===========
Diluted earnings per share:
Net income ................................................. $ 38,126
Plus: Interest expense on 7.5% convertible subordinated
notes and related amortization expense on debt issue costs
net of applicable income taxes............................. 4,788
-----------
Net income on an as if converted basis...................... 42,914
-----------
Pro forma weighted average shares outstanding -- Basic...... 21,597,071
Dilution attributable to options and warrants............... 273,224
Convertible subordinated notes, on an as if converted
basis...................................................... 4,444,444
-----------
Pro forma weighted average shares outstanding -- Diluted.... 26,314,739
-----------
Net income per share -- Diluted.............................. $ 1.63
===========
</TABLE>
<PAGE>
(c) Exhibits.
99.1 Press Release Dated April 6, 1999.
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.
Building One Services Corporation
Dated: April 8, 1999 By:/s/ F. Traynor Beck
-------------------
F. Traynor Beck
Executive Vice President, General
Counsel and Secretary
<PAGE>
EXHIBIT INDEX
Exhibit
99.1 Press Release dated April 6, 1999.
<PAGE>
EXHIBIT 99.4
[Building One logo appears here] PRESS RELEASE
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For immediate release -- April 6, 1999 Release No. 99-008
BUILDING ONE SERVICES CORPORATION
(NASDAQ - "BOSS") Company
Contact: Timothy Clayton
Building One Services
Corporation
202-261-6000
[email protected]
Media
Contact: Bill Snethen
RMR & Associates
301-217-0009 ext. 34
[email protected]
BUILDING ONE SERVICES CORPORATION ANNOUNCES MAILING
OF TENDER OFFER DOCUMENTS;EXTENDS EXPIRATION DATE TO
APRIL 22, 1999
Washington, DC (April 6, 1999) -- Building One Services Corporation (NASDAQ:
BOSS) announced that it has commenced today the mailing of its Supplement to the
Offer to Purchase relating to its tender offer for up to 25.5 million shares of
its outstanding common stock and shares underlying stock options with exercise
prices below $22.50. The offer is conditioned upon, among other things, the
receipt of the proposed financing and the valid tender of at least 21.0 million
shares. The expiration date has also been extended to 11:59 p.m., New York City
time, on April 22, 1999, unless further extended.
As previously disclosed, the tender offer is expected to be funded with cash on
the Company's balance sheet, $200 million in bond financing, $100 million from
the purchase of convertible notes by an affiliate of Apollo Management L.P. and
borrowings under a proposed $350 million revolving credit facility. The Company
has received commitment letters relating to the $350 million credit facility
from Bankers Trust Company, Goldman Sachs Credit Partners LP and Citicorp USA,
Inc.
The depositary for the tender offer is Harris Trust Company of New York (call
collect: 212/701-7624) and the information agent is MacKenzie Partners, Inc.
(call toll free: 800/322-2885).
<PAGE>
BUILDING ONE SERVICES CORPORATION
________________________________________________________________________
Press Release 99-008
Page 2
Building One Services Corporation is a leader in the facilities services
industry and has a corporate goal of becoming a national single-source provider
of facilities services. Facility services companies provide many products and
services needed for the routine operation and maintenance of a building.
Building One currently has annualized revenues of approximately $1.5 billion and
has operations in the electrical, mechanical and janitorial segments of the
facilities services industry.
This press release and our other public documents contain forward-looking
statements. Such statements relate to, among others things, the growth in
earnings of the Company and the Company's acquisition program. Any or all of
our forward-looking statements in this press release or in any other public
statements we make may turn out to be wrong. They can be affected by inaccurate
assumptions we might make or by known or unknown risks and uncertainties,
including, without limitation, the following: the risks associated with
significant indebtedness that we may incur in our proposed tender offer, the
dependence on key personnel of the Company and hourly wage and technical
employees; risks related to the Company's consolidation strategy, its ability to
complete acquisitions and the continuing consolidation in the industry; the
ability to integrate acquisitions; risks related to acquisition financing,
including potential dilution; possible significant amortization charges;
exposure to downturns in commercial and industrial construction; substantial
competition; and other factors affecting the Company's prospects described in
the Company's most recent prospectus filed with the Securities and Exchange
Commission on March 16, 1999 and in its other public filings.
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