<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
Form 10-Q/A
----------------
(Mark One)
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-23241
BUILDING ONE SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
DELAWARE 52-2054952
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
</TABLE>
<TABLE>
<S> <C>
800 Connecticut Avenue, NW, Suite 1111
Washington, D.C. 20006
(Address of principal executive offices) (Zip Code)
</TABLE>
(202) 261-6000
(Registrant's telephone number, including area code)
The Company's former name was Consolidation Capital Corporation
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes [X] No [_]
As of February 12, 1999, there were 45,275,052 shares of common stock
outstanding and 500,000 shares of convertible non-voting common stock
outstanding.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
EXPLANATORY NOTE
On August 13, 1998, the Company filed its Quarterly Report on Form 10-Q for
the period ended June 30, 1998 with the Securities and Exchange Commission
which included financial statements that gave retroactive effect to a business
combination with The Lewis Companies, Inc. The acquisition of The Lewis
Companies was consummated during the quarter ended June 30, 1998 and was
originally recorded under the pooling-of-interests method of accounting.
Additionally, on November 13, 1998, the Company filed its Quarterly Report on
Form 10-Q for the period ended September 30, 1998 which included financial
statements that gave retroactive effect to a business combination with
Robinson Mechanical, Inc. Robinson Mechanical was consummated during the
quarter ended September 30, 1998 and was originally accounted for under the
pooling-of-interests method.
As a result of the announcement of the Company's intention to, among other
things, repurchase shares of its Common Stock and as required by generally
accepted accounting principles, the Company has restated its consolidated
financial statements for all periods to account for these acquisitions under
the purchase method of accounting.
<PAGE>
BUILDING ONE SERVICES CORPORATION
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet as of December 31, 1997 and September
30, 1998.......................................................... 1
Consolidated Statement of Operations for the three months ended
September 30, 1998 and 1997 and for the nine months ended Septem-
ber 30, 1998 and 1997............................................. 2
Consolidated Statement of Stockholders' Equity for the nine months
ended September 30, 1998.......................................... 3
Consolidated Statement of Cash Flows for the nine months ended Sep-
tember 30, 1998 and 1997.......................................... 4
Notes to Consolidated Financial Statements......................... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations............................................ 11
Item 3. Quantitative and Qualitative Disclosures about Market Risk.... 16
PART II--OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds..................... 17
Item 4. Submission of Matters to a Vote of Security Holders........... 18
Item 5. Other Events.................................................. 18
Item 6. Exhibits and Reports on Form 8-K.............................. 18
Signatures............................................................ 19
Exhibit Index......................................................... 20
</TABLE>
(i)
<PAGE>
PART I--FINANCIAL INFORMATION
Item 1. Financial Statements
BUILDING ONE SERVICES CORPORATION
CONSOLIDATED BALANCE SHEET
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
------------ -------------
(unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $528,972 $ 272,022
Accounts receivable, net.......................... 5,193 205,502
Costs and estimated earnings in excess of billings
on uncompleted contracts......................... 20,410
Prepaid expenses and other current assets......... 2,065 12,955
-------- ----------
Total current assets............................ 536,230 510,889
Property and equipment, net......................... 2,593 31,718
Intangible assets, net.............................. 152 454,862
Other assets........................................ 184 4,643
-------- ----------
Total assets.................................... $539,159 $1,002,112
======== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt................................... $ 1,553 $ 3,864
Accounts payable.................................. 1,800 57,352
Billings in excess of costs and estimated earnings
on uncompleted contracts......................... 59,361
Income taxes payable.............................. 298 7,304
Accrued compensation.............................. 2,237 31,796
Accrued liabilities............................... 2,107 17,597
-------- ----------
Total current liabilities....................... 7,995 177,274
Long-term debt...................................... 1,679 3,094
Other liabilities................................... 5 4,497
-------- ----------
Total liabilities............................... 9,679 184,865
-------- ----------
Stockholders' equity:
Common stock, $.001 par value, 250,000,000 shares
authorized, 31,440,724 and 44,160,179 shares is-
sued and outstanding, respectively............... 31 44
Convertible Non-Voting Common Stock, $.001 par
value, 500,000 shares authorized, issued and
outstanding...................................... 1 1
Additional paid-in capital........................ 529,441 814,791
Treasury stock.................................... (27,048)
Retained earnings................................. 7 30,083
Accumulated other comprehensive income (loss)..... (624)
-------- ----------
Total stockholders' equity...................... 529,480 817,247
-------- ----------
Total liabilities and stockholders' equity...... $539,159 $1,002,112
======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE>
BUILDING ONE SERVICES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Dollars in thousands, except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
--------------------- ---------------------
1998 1997 1998 1997
---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Revenues......................... $ 252,324 $ 17,538 $ 478,595 $ 52,410
Cost of revenues................. 197,086 14,806 376,318 44,112
---------- --------- ---------- ---------
Gross profit................. 55,238 2,732 102,277 8,298
Selling, general and administra-
tive expenses................... 30,106 2,342 59,786 7,223
Goodwill amortization............ 2,613 4,584
Non-recurring acquisition costs.. 768
---------- --------- ---------- ---------
Operating income............. 22,519 390 37,139 1,075
Other (income) expense:
Interest income................ (4,280) (16,043)
Interest expense............... 239 53 565 160
Other, net..................... 184 38 (134) (35)
---------- --------- ---------- ---------
Income before taxes.............. 26,376 299 52,751 950
Provision for income taxes....... 11,212 22,460 7
---------- --------- ---------- ---------
Net income....................... $ 15,164 $ 299 $ 30,291 $ 943
========== ========= ========== =========
Net income per Common Share--Ba-
sic............................. $ 0.35 $ 0.08 $ 0.79 $ 0.30
========== ========= ========== =========
Net income per Common Share--Di-
luted........................... $ 0.34 $ 0.08 $ 0.77 $ 0.29
========== ========= ========== =========
Weighted average shares outstand-
ing--Basic...................... 43,122,092 3,590,724 38,298,295 3,102,079
========== ========= ========== =========
Weighted average shares outstand-
ing--Diluted.................... 44,255,655 3,705,840 39,368,321 3,217,195
========== ========= ========== =========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
BUILDING ONE SERVICES CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
For the nine months ended September 30, 1998
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Convertible
Non-Voting
Common Stock Common Stock Accumulated
------------------- ------------------ Additional Other Total Total
Shares Shares Paid-in- Treasury Retained Comprehensive Stockholders' Comprehensive
Outstanding Amount Outstanding Amount Capital Stock Earnings Income (loss) Equity Income (Loss)
----------- ------ ----------- ------ ---------- -------- -------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December
31, 1997......... 31,440,724 $ 31 500,000 $ 1 $529,441 $ $ 7 $529,480
Transactions of
Pooled Companies:
Distributions
paid............ (628) (628)
Stock issued
upon exercise of
options......... 115,116 1 216 217
Issuance of com-
mon stock for ac-
quisitions....... 14,443,040 14 285,373 285,387
Stock issued un-
der employee
stock purchase
plan............. 16,299 174 174
Stock repur-
chase............ (1,855,000) (2) (27,048) (27,050)
Unrealized loss
on marketable se-
curities--net of
tax.............. (624) (624) $ (624)
Net income....... 215 30,076 30,291 30,291
-------
Total
comprehensive
income........... $29,667
---------- ----- ------- ----- -------- -------- ------- ----- -------- =======
Balance,
September 30,
1998 ............ 44,160,179 $ 44 500,000 $ 1 $814,791 $(27,048) $30,083 $(624) $817,247
========== ===== ======= ===== ======== ======== ======= ===== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
BUILDING ONE SERVICES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
-------------------
1998 1997
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 30,291 $ 943
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization............................ 7,946 626
Deferred income taxes.................................... (205)
Gain (Loss) on disposal of equipment..................... 27 (1)
Changes in operating assets and liabilities:
Accounts receivable..................................... (21,323) (1,006)
Costs and estimated earnings in excess of billings...... 3,190
Prepaid expenses and other current assets............... (2,237) (786)
Billings in excess of costs and estimated earnings...... 9,787 (479)
Accounts payable........................................ (2,485) 120
Accrued liabilities..................................... 7,538 990
Change in other assets................................... 1,135 40
--------- -------
Net cash provided by operating activities.............. 33,664 447
--------- -------
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired.......... (195,155)
Purchases of property and equipment....................... (6,677) (395)
Proceeds on sale of equipment............................. 740
Other..................................................... 24
--------- -------
Net cash provided by (used in) investing activities.... (201,068) (395)
--------- -------
Cash flows from financing activities:
Net payments (proceeds) on short-term debt................ (36,355) 269
Payments on long-term debt................................ (28,690) (165)
Proceeds from long-term debt.............................. 2,239
Payment of dividends at Pooled companies.................. (628) (100)
Net Proceeds (payments) on related party loans............ 547 (194)
Proceeds from stock options exercised..................... 217
Proceeds from issuance of stock under employee stock
purchase plan............................................ 174
Purchase of treasury stock................................ (27,050)
--------- -------
Net cash (used in) financing activities................ (89,546) (190)
--------- -------
Net (decrease) increase in cash and cash equivalents....... (256,950) (138)
Cash and cash equivalents, beginning of period............. 528,972 243
--------- -------
Cash and cash equivalents, end of period................... $ 272,022 $ 105
========= =======
The Company issued shares of common stock and cash in connection with certain
business combinations during the nine months ended September 30, 1998. The
fair values of the assets acquired and liabilities assumed at the dates of
acquisition are as follows:
Accounts receivable........................................ $ 178,497
Inventories................................................ 2,117
Costs and earnings in excess of billings................... 26,045
Prepaid expenses and other current assets.................. 9,108
Property and equipment..................................... 27,530
Intangible assets.......................................... 459,446
Other assets............................................... 6,293
Short-term debt............................................ (29,358)
Accounts payable........................................... (57,420)
Accrued liabilities........................................ (45,280)
Billings in excess of costs and estimated earnings......... (49,776)
Long-term debt............................................. (40,848)
Other long-term liabilities................................ (5,812)
---------
Net assets acquired........................................ $ 480,542
=========
These acquisitions were funded as follows:
Common stock, 14,443,040 shares............................ $ 285,387
Cash, net of cash acquired................................. 195,155
---------
$ 480,542
=========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
BUILDING ONE SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
(Dollars in thousands, except per share amounts)
NOTE 1--BUSINESS AND ORGANIZATION
Building One Services Corporation, ("Building One" or the "Company") a
Delaware corporation, was incorporated in September 1997. Ledecky Brothers
L.L.C., ("LLC"), a limited liability corporation formed in February 1997,
merged with and into the Company in September 1997 (the "Merger"). The sole
member of LLC received, in connection with the Merger, 2,300,000 shares of
Common Stock of the Company which represented all of the issued and
outstanding shares of Common Stock, in exchange for 100% of his ownership
interest in the LLC. The Merger was implemented to facilitate a public
offering of securities. Because both of the organizations were under control
of the sole owner, the Merger was accounted for on a historical cost basis.
The Company completed an initial public offering of its Common Stock in
December 1997, selling 27,850,000 shares of Common Stock and 500,000 shares of
Convertible Non-Voting Common Stock and raising net proceeds of approximately
$527,000.
The Company is consolidating the facilities services industry with the
intent to become a national single-source provider of facilities services.
Currently the Company provides electrical installation and maintenance
services, mechanical installation and maintenance services and janitorial
maintenance and management services throughout the United States.
In the opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim period
a fair presentation of such operations. All of such adjustments are of a
normal recurring nature. Operating results for interim periods are not
necessarily indicative of results that may be expected for the year as a
whole. It is suggested that these consolidated financial statements be read in
conjunction with the Company's audited consolidated financial statements for
the year ended December 31, 1997.
NOTE 2--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements and related notes to
consolidated financial statements include the accounts of Building One, and
the companies acquired in business combinations accounted for under the
purchase method (the "Purchased Companies") from their respective acquisition
dates and give retroactive effect to the results of the companies acquired in
business combinations accounted for under the pooling-of-interests method (the
"Pooled Companies") for all periods presented.
Principles of Consolidation
The consolidated financial statements include the accounts of the Company
and its majority owned subsidiaries. All significant intercompany transactions
and accounts are eliminated in consolidation.
Revenue Recognition
The Company utilizes the percentage-of-completion method of accounting for
the recognition of revenues and costs of all significant installation
contracts. Revenues are recognized according to the ratio of costs incurred to
estimated total contract costs. Changes in job performance, job conditions,
estimated profitability and final contract settlements may result in revisions
to costs and income and are recognized in the period in which the revisions
are determined. Maintenance and other service revenues are recognized as the
services are performed.
5
<PAGE>
BUILDING ONE SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(unaudited)
(Dollars in thousands, except per share amounts)
Non-Recurring Acquisition Costs
Non-recurring acquisition costs consist of costs incurred in conjunction
with the business combinations accounted for under the pooling-of-interests
method. These costs include legal and accounting fees, broker fees and other
costs directly attributable to the business combination.
Property and Equipment
Property and equipment are stated at cost, and depreciation is computed
using the straight-line method over the estimated useful lives of the assets
ranging from three to seven years for equipment, vehicles, and furniture and
fixtures and 40 years for buildings. Leasehold improvements are capitalized
and amortized over the lesser of the life of the lease or the estimated useful
life of the asset.
Intangible Assets
Intangible assets consist primarily of goodwill, which represents the excess
of cost over the fair value of assets acquired in business combinations
accounted for under the purchase method. Goodwill is being amortized on a
straight-line basis over 40 years which is the estimated period benefitted.
The recoverability of the unamortized balance of goodwill is assessed on an
ongoing basis by comparing anticipated undiscounted future cash flows from
operations to net book value. If at such time these assessments indicate that
the future undiscounted cash flows from operations are not sufficient to
recover the net book value, the goodwill balance is adjusted to its fair
value. No such adjustments have been recognized through September 30, 1998.
Other Comprehensive Income
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards "SFAS" No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for the reporting
and display of comprehensive income and its components (revenues, expenses,
gains and losses) in a full set of general purpose financial statements. SFAS
No. 130 requires that all items required to be recognized under accounting
standards as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. The Company adopted SFAS No. 130 during the first quarter of 1998.
Prior periods have been reclassified for comparative purposes.
The Company's other comprehensive income consists of unrealized gains
(losses) on marketable securities, net of applicable taxes.
New Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 establishes standards for
reporting information about operating segments in annual and interim financial
statements. Operating segments are determined consistent with the way
management organizes and evaluates financial information internally for making
decisions and assessing performance. It also requires related disclosures
about products, geographic areas, and major customers. SFAS No. 131 is
effective for fiscal years beginning after December 15, 1997. The Company
intends to adopt SFAS No. 131 for the year ending December 31, 1998.
Implementation of this disclosure standard will not affect the Company's
financial position or results of operations.
6
<PAGE>
BUILDING ONE SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(unaudited)
(Dollars in thousands, except per share amounts)
NOTE 3--TENDER OFFER PLAN
On February 7, 1999, the Company's Board of Directors approved a plan to
repurchase approximately 50% of its outstanding Common Stock at $25 per share
and approximately 50% of employee stock options at $25 per share less the
exercise price of the options (the "Tender Offer"). The Tender Offer replaces
the recapitalization plan announced by the Company on December 23, 1998 (the
"Recapitalization Plan"), under which the Company had intended to, among other
things, repurchase approximately 34.5 million shares of the Company's Common
Stock. The Company plans to finance the Tender Offer through the use of the
Company's cash, the planned issuance of $300,000 of senior subordinated notes
and a planned $100,000 term facility. The Company expects the Tender Offer to
be completed in the second quarter of 1999.
Purchase Accounting Restatement
On August 13, 1998, the Company filed its Quarterly Report on Form 10-Q for
the period ended June 30, 1998 with the Securities and Exchange Commission
which included financial statements that gave retroactive effect to a business
combination with The Lewis Companies, Inc. The acquisition of The Lewis
Companies was consummated during the quarter ended June 30, 1998 and was
originally recorded under the pooling-of-interests method of accounting.
Additionally, on November 13, 1998, the Company filed its Quarterly Report on
Form 10-Q for the period ended September 30, 1998 with the Securities and
Exchange Commission which included financial statements that gave retroactive
effect to a business combination with Robinson Mechanical, Inc. Robinson
Mechanical was consummated during the quarter ended September 30, 1998 and was
originally accounted for under the pooling-of-interests method.
As a result of the announcement of the Recapitalization Plan and as required
by generally accepted accounting principles, the Company has restated its
consolidated financial statements for all periods to account for these
acquisitions under the purchase method of accounting.
NOTE 4--BUSINESS COMBINATIONS
Pooling-of-Interests Method
During the nine months ended September 30, 1998, the Company issued
1,405,840 shares of Common Stock to acquire three companies in business
combinations accounted for under the pooling-of-interests method ("the Pooled
Companies"). The Company's consolidated financial statements give retroactive
effect to the acquisitions of the Pooled Companies for all periods presented.
The following presents the separate results, in each of the periods
presented, of Building One Services Corporation (excluding the results of
Pooled Companies prior to the dates on which they were acquired), and the
Pooled Companies up to the dates on which they were acquired:
<TABLE>
<CAPTION>
Building One Pooled
Services Companies Combined
------------ --------- --------
<S> <C> <C> <C>
For the three months ended September 30, 1997
Revenues..................................... $ -- $ 17,538 $ 17,538
Net income................................... $ -- $ 299 $ 299
For the three months ended September 30, 1998
Revenues..................................... $252,324 $ -- $252,324
Net income................................... $ 15,164 $ -- $ 15,164
For the nine months ended September 30, 1997
Revenues..................................... $ -- $ 52,410 $ 52,410
Net income................................... $ -- $ 943 $ 943
For the nine months ended September 30, 1998
Revenues..................................... $451,873 $ 26,722 $478,595
Net income................................... $ 30,076 $ 215 $ 30,291
</TABLE>
7
<PAGE>
BUILDING ONE SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(unaudited)
(Dollars in thousands, except per share amounts)
Purchase Method
During the nine months ended September 30, 1998, the Company completed 21
business combinations that were accounted for under the purchase method of
accounting. The consolidated financial statements include the results of these
acquired entities from their respective dates of acquisition. The aggregate
consideration paid for these acquisitions consisted of 14,443,040 shares of
Common Stock, 403,389 options assumed in an acquisition and having an exercise
price below fair market value, $228,715 in cash, including applicable
professional fees, and the assumption of approximately $33,847 in debt, which
was paid at closing.
The aggregate purchase price does not include the potential payment of
contingent consideration of up to approximately $122,845 in cash and in shares
of Common Stock based upon the performance of the businesses acquired.
The total purchase price was allocated to the fair value of the net assets
acquired, resulting in goodwill of approximately $458,518. 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 accounting purposes, the value
of the shares on certain acquisitions was determined in consideration of
restrictions on the sale and transferability of the shares issued. The shares
generally are subject to the following restrictions on resale: up to one-third
of the shares may be resold beginning twelve months after their date of
acquisition, the first one-third and an additional one-third may be resold
beginning eighteen months after their date of acquisition and the first two-
thirds and the remaining one-third may be resold beginning twenty-four months
after their date of acquisition.
The following presents the unaudited pro forma results of operations of the
Company for the three- and nine-month periods ended September 30, 1998 and
1997, respectively, as if all of the acquisitions of the Purchased Companies
had been consummated as of January 1, 1997. The pro forma results of
operations reflect certain pro forma adjustments primarily related to goodwill
amortization and compensation adjustments for shareholders.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------- -----------------
1998 1997 1998 1997
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 301,380 $ 251,510 $857,884 $733,380
Net income $ 16,438 $ 8,936 $ 44,920 $ 25,774
Net income per share--Basic $ 0.36 $ 0.28 $ 0.95 $ 0.75
Net income per share--Diluted $ 0.35 $ 0.28 $ 0.93 $ 0.74
</TABLE>
The pro forma results of operations are prepared for comparative purposes
only and do not necessarily reflect the results that would have occurred had
the acquisitions occurred as of January 1, 1997 or the results that may occur
in the future.
8
<PAGE>
BUILDING ONE SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(unaudited)
(Dollars in thousands, except per share amounts)
NOTE 5--COST AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
<TABLE>
<CAPTION>
September 30, 1998
------------------
<S> <C>
Costs incurred on uncompleted contracts.................... $740,367
Estimated earnings......................................... 161,223
--------
901,590
Less: Billings to date..................................... 940,541
--------
$(38,951)
========
Included in the accompanying balance sheet under the following captions:
<CAPTION>
September 30, 1998
------------------
<S> <C>
Costs and estimated earnings in excess of billings on
uncompleted contracts..................................... $ 20,410
Billings in excess of costs and estimated earnings on
uncompleted contracts..................................... 59,361
--------
$(38,951)
========
</TABLE>
NOTE 6--STOCK PURCHASE AND AWARD PLANS
In connection with business combinations consummated during the period from
January 1, 1998 through September 30, 1998, the Company has granted options
for approximately 1,520,844 shares of the Company's Common Stock, and is
expected to issue options for an additional 107,764 shares of the Company's
Common Stock, under the Company's Long-Term Incentive Plan. All of the options
vest over a four-year period from date of grant. These options have been, or
will be, granted with an exercise price equal to the market price of the
Company's Common Stock on the date of grant.
During the three-months ended September 30, 1998, the Company issued 16,299
shares of common stock to employees under the Company's Employee Stock
Purchase Plan.
9
<PAGE>
BUILDING ONE SERVICES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(unaudited)
(Dollars in thousands, except per share amounts)
NOTE 7--NET EARNINGS PER SHARE
The Company has adopted SFAS No. 128 "Earnings Per Share" which became
effective for financial statements issued for periods ending after December
15, 1997. SFAS No. 128 requires presentation of basic and diluted earnings per
share ("EPS") and restatement of EPS data for all prior periods. Basic EPS
includes no dilution and is computed by dividing net income by the Company's
weighted average shares of Common Stock outstanding. Diluted EPS is computed
by dividing net income by the Company's weighted average shares of Common
Stock outstanding and dilutive Common Stock equivalents. The following table
reconciles the numerators and denominators of the basic and diluted EPS
computations for the three- and nine- month periods ended September 30, 1998
and 1997.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
1998 1997 1998 1997
----------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Basic earnings per share:
Net income...................... $ 15,164 $ 299 $ 30,291 $ 943
Weighted average shares
outstanding--Basic............. 43,122,092 3,590,724 38,298,295 3,102,079
----------- ---------- ----------- ----------
Net income per share--Basic..... $ 0.35 $ 0.08 $ 0.79 $ 0.30
=========== ========== =========== ==========
Diluted earnings per share:
Net income...................... $ 15,164 $ 299 $ 30,291 $ 943
=========== ========== =========== ==========
Weighted average shares
outstanding--Basic............. 43,122,092 3,590,724 38,298,295 3,102,079
Convertible Non-Voting Common
Stock.......................... 500,000 -- 500,000
Common stock equivalents from
stock options and warrants..... 192,711 115,116 389,347 115,116
Contingently issuable shares.... 440,852 -- 180,679 --
----------- ---------- ----------- ----------
Total weighted average shares
outstanding--Diluted........... 44,255,655 3,705,840 39,368,321 3,217,195
----------- ---------- ----------- ----------
Net income per share--Diluted... $ 0.34 $ 0.08 $ 0.77 $ 0.29
=========== ========== =========== ==========
</TABLE>
Outstanding stock options and warrants to purchase 6,255,774 shares of
Common Stock as of September 30, 1998 were not included in the computation of
diluted earnings per share because the options' exercise prices were higher
than the average market price of the Common Stock during the period.
NOTE 8--SUBSEQUENT EVENTS
Subsequent to September 30, 1998, the Company completed five acquisitions
for an aggregate consideration of $65,537 in cash and shares of Common Stock.
These acquisitions are to be accounted for under the purchase method of
accounting. Additionally, there is the potential for the payment of up to an
additional $14,500 in cash and shares of Common Stock in connection with
contingent consideration arrangements.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
INTRODUCTION
The following discussion should be read in conjunction with the consolidated
historical financial statements, including the related notes thereto,
appearing elsewhere in this Quarterly Report on Form 10-Q/A, as well as
the Company's audited consolidated financial statements for the year ended
December 31, 1997 as filed on Form 8-K with the Securities and Exchange
Commission on February 18, 1999.
Founded in February 1997, Building One Services Corporation is consolidating
the facilities services industry with the corporate goal of becoming a
national single-source provider of facilities services. The Company completed
its initial public offering ("IPO") in December 1997 raising net proceeds of
approximately $527 million. The proceeds have been used by the Company
primarily in its acquisition program, although some were used to fund
operations of the Company.
On February 7, 1999, the Company's Board of Directors approved a plan to
repurchase approximately 50% of its outstanding common stock at $25 per share
and approximately 50% of certain employee stock options at $25 per share less
the exercise price of the options (the "Tender Offer"). The Tender Offer
replaces the recapitalization plan announced by the Company on December 23,
1998 (the "Recapitalization Plan"), under which the Company had intended to,
among other things, repurchase approximately 34.5 million shares of the
Company's Common Stock. The Company plans to finance this Tender Offer through
the use of the Company's cash, the planned issuance of $300 million of senior
subordinated notes and a planned $100 million term loan. The Tender Offer is
subject to a number of conditions, including the execution of a definitive
credit agreement. The Company expects the Tender Offer to be completed in the
second quarter of 1999.
As a result of our acquisition program, our financial condition and results
of operations have changed dramatically from our inception and IPO in December
1997 to September 30, 1998. We completed 24 business combinations during the
nine months ended September 30, 1998. Twenty-one of the business combinations
completed during the nine months ended September 30, 1998 have been accounted
for under the purchase method of accounting. Prior to the announcement of the
Recapitalization Plan, two of these 21 business combinations had been
accounted for previously under the pooling-of-interests method. Following the
announcement of the Recapitalization Plan and, as required by generally
accepted accounting principles, the Company restated its historical
consolidated financial statements to account for these two business
combinations under the purchase method. The Company's consolidated financial
statements give retroactive effect to three business combinations accounted
for under the pooling-of-interests method during the nine months ended
September 30, 1998 and include the results of the companies acquired in
business combinations accounted for under the purchase method from their
respective acquisition dates.
Subsequent to September 30, 1998 and through February 18, 1998, the Company
completed five acquisitions for aggregate consideration of $65.5 million in
cash and shares of Common Stock. Additionally, there is the potential for the
payment of up to an additional $11.5 million in cash and shares of Common
Stock in connection with contingent consideration arrangements.
Due to the Company's growth through acquisitions, comparisons of the
historical results of the Company's operations have been and will continue to
be affected primarily by the addition of acquired companies. Increases in the
various revenues and expense components of the Company's results are due
primarily to growth from acquisitions. Neither the magnitude nor the source of
such changes is necessarily indicative of changes that will occur in the
future.
11
<PAGE>
The Company's revenues are derived primarily from the providing of
janitorial and maintenance management services, electrical installation and
maintenance services and mechanical installation and maintenance services. For
the three months ended September 30, 1998, approximately 18%, 73% and 9% of
the Company's revenues were derived from janitorial and maintenance management
services, electrical installation and maintenance services and mechanical
installation and maintenance services, respectively. For the nine months ended
September 30, 1998, approximately 22%, 73% and 5% of the Company's revenues
were derived from janitorial maintenance management services, electrical
installation and maintenance services and mechanical installation and
maintenance services, respectively.
The Company's revenues are recognized as services are performed for
maintenance and service contracts. Additionally, the Company utilizes the
percentage-of-completion method of accounting for installation contracts.
Under this method, revenues are recognized according to the ratio of costs
incurred to estimated total contract costs. Changes in job performance, job
conditions, estimated profitability and final contract settlements may result
in revisions to costs and income and are recognized in the period in which the
revisions are determined.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 establishes standards for
reporting information about operating segments in annual and interim financial
statements. Operating segments are determined consistent with the way
management organizes and evaluates financial information internally for making
decisions and assessing performance. It also requires related disclosures
about products, geographic areas, and major customers. SFAS No. 131 is
effective for fiscal years beginning after December 15, 1997. The Company
intends to adopt SFAS No. 131 for the year ending December 31, 1998.
Implementation of this disclosure standard will not affect the Company's
financial position or results of operations.
CONSOLIDATED RESULTS OF OPERATIONS
Three months ended September 30, 1998 compared to the three months ended
September 30, 1997
Revenues. Consolidated revenues for the three months ended September 30,
1998 increased $234.8 million, or 1338.7%, to $252.3 million from $17.5
million for the three months ended September 30, 1997. This increase was a
result of the acquisition of the Purchased Companies during the nine months
ended September 30, 1998, which have been included since their respective
dates of acquisition.
Gross profit. Gross profit for the three months ended September 30, 1998
increased $52.5 million, or 1921.9%, to $55.2 million from $2.7 million for
the three months ended September 30, 1997. This increase was a result of the
acquisition of the Purchased Companies and, to a lesser extent, the increased
gross profit of the Pooled Companies. Gross profit as a percentage of revenues
("gross margin") increased to 21.9% for the three months ended September 30,
1998 from 15.6% for the three months ended September 30, 1997. This increase
in the gross margin was attributable to the higher gross margins of the
Purchased Companies, as well as an increase in the gross margins of the Pooled
Companies.
Selling, general and administrative. Selling, general and administrative
expenses for the three months ended September 30, 1998 increased $27.8
million, or 1185.5%, to $30.1 million from $2.3 million for the three months
ended September 30, 1997. This increase was primarily attributable to the
selling, general and administrative expenses of the Purchased Companies, and
the general and administrative costs of the Company's corporate activities.
Selling, general and administrative expenses as a percentage of revenues
decreased slightly to 11.9% for the three months ended September 30, 1998 from
13.4% for the three months ended September 30, 1997.
Goodwill amortization. Goodwill amortization increased to $2.6 million for
the three months ended September 30, 1998 as a result of the goodwill
recorded in conjunction with the Purchased Companies.
Other income, net. Other income, net for the three months ended September
30, 1998 increased $4.0 million, or 4338.5%, to $3.9 million from other
expense of $.1 million for the three months
12
<PAGE>
ended September 30, 1997. This increase was primarily attributable to the
interest income of $4.3 million generated from the investment of the proceeds
raised in the Company's initial public offering in December 1997.
Provision for income taxes. The provision for income taxes for the three
months ended September 30, 1998 increased to $11.2 million from $.0 for the
three months ended September 30, 1997, reflecting an effective tax rate of
42.5% at September 30, 1998. The increase in the effective rate was primarily
attributable to the increase in income generated from entities which were
subject to C corporation taxes, versus certain of the Pooled Companies which
had elected to be treated as subchapter S corporations for tax purposes prior
to their being acquired by the Company. Additionally, the 42.5% effective rate
reflects the non-deductibility of goodwill amortization associated with
certain acquisitions.
Nine months ended September 30, 1998 as compared to the nine months ended
September 30, 1997
Revenues. Consolidated revenues for the nine months ended September 30, 1998
increased $426.2 million, or 813.2%, to $478.6 million from $52.4 million for
the nine months ended September 30, 1997. This increase was a result of the
acquisition of the Purchased Companies during the nine months ended
September 30, 1998, which have been included since their respective dates of
acquisition.
Gross profit. Gross profit for the nine months ended September 30, 1998
increased $94.0 million, or 1,132.6%, to $102.3 million from $8.3 million for
the nine months ended September 30, 1997. This increase was a result of the
acquisition of the Purchased Companies and, to a lesser extent, the increased
gross profit of the Pooled Companies. Gross margin increased to 21.4% for the
nine months ended September 30, 1998, from 15.8% for the nine months ended
September 30, 1997. This increase in the gross margin was primarily
attributable to the higher gross margins of the Purchased Companies.
Selling, general and administrative. Selling, general and administrative
expenses for the nine months ended September 30, 1998 increased $52.6 million,
or 727.7%, to $59.8 million from $7.2 million for the nine months ended
September 30, 1997. This increase was primarily attributable to the selling,
general and administrative expenses of the Purchased Companies, and the
general and administrative costs of the Company's corporate activities.
Selling, general and administrative expenses as a percentage of revenues
decreased to 12.5% for the nine months ended September 30, 1998 from 13.8% for
the nine months ended September 30, 1997.
Goodwill amortization. Goodwill amortization increased to $4.6 million for
the nine months ended September 30, 1998 as a result of the goodwill recorded
in conjunction with the Purchased Companies.
Non-recurring acquisition costs. Non-recurring acquisition costs of $.8
million consist of costs incurred in conjunction with the business
combinations accounted for under the pooling-of-interests method. These costs
include legal and accounting fees, broker fees and other costs directly
attributable to the business combination.
Other income, net. Other income, net for the nine months ended September 30,
1998 increased $15.7 million from $.1 million for the nine months ended
September 30, 1997. This increase is primarily attributable to the interest
income of $16.0 million generated from the investment of the proceeds raised
in the Company's initial public offering in December 1997.
Provision for income taxes. The provision for income taxes for the nine
months ended September 30, 1998 increased to $22.5 million from $.01 million
for the nine months ended September 30, 1997, reflecting an effective tax rate
of 42.6% and .7% respectively. The increase in the effective rate was
primarily attributable to the increase in income generated from entities which
were subject to C corporation taxes, versus certain of the Pooled Companies
which had elected to be treated as subchapter S corporations for tax purposes
prior to their being acquired by the Company. Additionally, the 42.6%
effective rate reflects the non-deductibility of goodwill amortization
associated with certain acquisitions.
13
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
During the nine months ended September 30, 1998, net cash provided by
operating activities was approximately $34 million. Net cash used in investing
activities for the nine months ended was $201 million, which primarily
consisted of $195 million used for acquisitions. Additionally, the
acquisitions completed during the nine months ended September 30, 1998 of the
Purchased Companies also provide for the potential payment of approximately
$123 million in cash and shares of the Company's Common Stock based upon the
performance of the Purchased Companies.
Net cash used in financing activities for the nine-months ended September
30, 1998 was $90 million, which consisted primarily of net payments on short-
term debt of $36 million, payments on long-term debt of $29 million, which
primarily consists of debt assumed in acquisitions, and $27 million of cash
used to repurchase 1,855,000 shares of the Company's Common Stock. These
shares were repurchased in accordance with a stock repurchase program covering
3,100,000 shares which was announced on August 24, 1998. The number of shares
to be repurchased was determined based upon the number of shares issued in
connection with acquisitions accounted for under the purchase method of
accounting. Subsequent to September 30, 1998, the Company repurchased an
additional 1,135,000 shares for approximately $14.8 million.
As previously discussed, the Company's Board of Directors recently approved
the Tender Offer in which the Company expects to repurchase 24,365,891 shares
of its Common Stock at $25.00 per share.
Assuming that the Company purchases 24,365,891 shares of its Common Stock,
the estimated aggregate cost to complete the Tender Offer, including fees and
expenses, will be approximately $600 million. The Company plans to finance the
Tender Offer through the use of the Company's cash, the planned issuance of
$300 million of senior subordinated notes ("Senior Notes") and a planned $100
million term loan. The Tender Offer is subject to a number of conditions,
including the execution of a definitive credit agreement. The Company expects
the Tender Offer to be completed in the second quarter of 1999. The Company
anticipates that the total debt balance subsequent to the Tender Offer to
approximate $400 million.
The Company has received a highly confident letter from BT Alex Brown
Incorporated to manage the offering of the $300 million in Senior Notes and a
commitment letter for the $100 million term loan ("Term Loan") as well as a
revolving credit facility of $250 million ("Revolving Credit Facility").
The Term Facility and Revolving Credit Facility will likely include a number
of significant covenants that impose restrictions on the Company and its
subsidiaries. These covenants include, among others, restrictions on the
Company's ability to incur additional indebtedness, mergers, acquisitions and
disposition of assets, sale-lease back transactions and capital lease
payments, dividends and other distributions and voluntary prepayments on the
Senior Notes and other indebtedness. In addition, the Company will be required
to comply with financial covenants with respect to minimum interest coverage
and maximum leverage ratios. The Term Loan and Revolving Credit Facility will
be guaranteed by the Company's subsidiaries and secured by a first priority
lien on substantially all of the assets of the Company and its subsidiaries.
The commitment will terminate on June 30, 1999, unless definitive credit
documents have been executed.
Additionally, the Company expects that the indenture governing the Senior
Notes will also contain certain covenants that will restrict, among other
things, the Company's ability to incur indebtedness, pay dividends, incur
liens and to sell or otherwise dispose of a substantial portion of its assets
or to merge or consolidate with another entity.
The Company anticipates that after the Tender Offer is completed, its cash
flow from operations and borrowings available under the Revolving Credit
Facility will be sufficient to meet its liquidity requirements for its
operations, capital expenditures, contingent consideration agreements and for
its acquisition program.
14
<PAGE>
FLUCTUATIONS IN QUARTERLY RESULTS OF OPERATIONS
Quarterly results may be materially affected by the timing of acquisitions,
the timing and magnitude of costs related to such acquisitions, variations in
services provided by the Company and the timing of these services, general
economic conditions. Moreover, the operating margins of companies acquired by
the Company may differ substantially from those of the Company, which could
contribute to the further fluctuation in its quarterly operations. Therefore,
results for any quarter are not necessarily indicative of the results that the
Company may achieve for any subsequent fiscal quarter or for a full fiscal
year.
INFLATION
The Company does not believe that inflation has had a material impact on its
results of operations during the three or nine months ended September 30,
1998.
YEAR 2000 ISSUE
The Year 2000 issue refers to a number of date-related problems that may
affect information technology and non-information technology systems,
including codes embedded in chips and other hardware devices. These problems
include systems that identify a year by two digits and not four so that a date
using "00" would be recognized as the year "1900" rather than "2000." This
could result in system failures, miscalculations or errors causing disruptions
of operations or other business problems, including, among others, a temporary
inability to process transactions, send invoices or engage in normal business
activities. The Year 2000 issue is a significant issue for most, if not all
companies, with far reaching implications, some of which cannot be anticipated
or predicted with any degree of certainty.
State of Readiness. Since its IPO in December 1997, the Company has acquired
26 companies offering mechanical, electrical and janitorial services. The due
diligence relating to the Year 2000 issue that was performed on these
companies did not reveal any significant internal operating systems issues. In
addition, such due diligence revealed that most of the acquired companies have
addressed the Year 2000 issue, but are in different phases of assessment and
remediation. Accordingly, the Company is currently in the process of
completing a comprehensive survey to be completed by management of the
Company's operating subsidiaries to ensure that the Company's operating
subsidiaries are adequately addressing, or have adequately addressed, the Year
2000 issue.
The survey mentioned above is expected to cover the following areas: (i) the
Company's information technology and operating systems, including job-costing,
billing, payroll and accounting systems; (ii) the Company's non-information
technology systems, such as buildings, plant, equipment and other
infrastructure systems that may contain embedded microcontroller technology;
(iii) the systems of its major vendors, insofar as they relate to the
Company's business; and (iv) the systems of its major customers for which the
Company has performed installation and maintenance services. This survey is
expected to be completed during the first quarter of 1999.
Costs Related to the Year 2000 Issue. As part of the survey mentioned above,
the Company will be requesting an estimate from each operating subsidiary of
the material historical and estimated costs of assessment and remediation.
Accordingly, such costs, including, among other things, the costs of
assessment, software upgrade fees, hardware changes and general implementation
of a Year 2000 action plan, are not known at this time. The projected effort
for the majority of the systems is expected to include sending letters to
substantially all of the Company's significant hardware, software and other
equipment vendors, third party providers and other material service providers
requesting detailed, written information relating to Year 2000 compliance and,
where necessary, upgrades to recent vendor software releases that are fully
Year 2000 compliant.
15
<PAGE>
The Company is also embarking on an initiative to develop standard
information systems for use throughout the organization for its overall
information needs that will be free of any Year 2000 limitations. However, no
assurances can be made that such systems will be in place prior to the Year
2000.
Contingency Plan. Until the Company completes the survey described above, the
Company will not be able to develop its most reasonably likely worst case Year
2000 scenarios. The Company intends to complete its determination of worst
case scenarios after it has received and analyzed responses to the survey and
to all of the inquiries it has made to its vendors.
Risks Related to the Year 2000 Issue. Although the Company's Year 2000 efforts
are intended to minimize the adverse effects of the Year 2000 issue on the
Company's business and operations, the actual effects of the issue cannot be
known until the Year 2000. Due to the fact that the Company's operations are
primarily service oriented and are not heavily dependent on complex
information systems, the Company believes that non-information technology
systems (i.e. embedded technology such as microcontrollers) do not represent a
significant area of risk relative to Year 2000 readiness. In addition, the
Company's operations do not include capital intensive equipment with embedded
microcontrollers.
However, failure by the Company or its major vendors and customers to
adequately address their respective Year 2000 issues generally in a timely
manner (insofar as they relate to the Company's business) could result in,
among other things, the Company's inability to obtain equipment that it is
obligated to install in a timely manner, reductions in the quality of
materials used in the Company's business, reductions, delays or cancellations
of customer projects, delays in payments by customers for services performed,
or a general inability to record, track and consummate business transactions.
Any or all of these events could have a material adverse effect on the
Company's business, results of operations and financial condition.
FACTORS AFFECTING THE COMPANY'S BUSINESS
This Quarterly Report on Form 10-Q contains forward-looking statements that
involve risks and uncertainties. When used in this Report, the words
"anticipate," "believe," "estimate," "intend," "may," "will," "expect" and
similar expressions as they relate to the Company or its management are
intended to identify such forward-looking statements. The Company's actual
results, performance or achievements could differ materially from the results
expressed in, or implied by, these forward-looking statements. Factors that
could cause or contribute to such differences include those discussed under
the heading "Risk Factors" in the Company's Registration Statement on Form S-4
(File No. 333-60053) filed with the Securities and Exchange Commission on
August 3, 1998 and in other public filings. The Company does not undertake any
obligation to revise these forward-looking statements to reflect any future
events or circumstances.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable
16
<PAGE>
PART II-OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds.
(i) Pursuant to Item 701(f) of Regulation S-K, the following information is
being furnished to disclose certain information regarding the uses of the
proceeds received by the Company in its IPO:
(1) The Registration Statement for the IPO (File No. 333-36193) was
declared effective on November 25, 1997.
(2) The offering commenced on November 25, 1997 and terminated when all
of the shares were sold in December 1997.
(3) The managing underwriter was Friedman, Billings, Ramsey & Co., Inc.
(4) In the IPO, the Company registered and sold an aggregate of
27,850,000 shares of Common Stock, par value $.001 per share, and
500,000 shares of Convertible Non-Voting Common Stock, par value
$.001 per share, which is convertible into Common Stock.
(5) The aggregate offering price of the shares sold was $567,000,000.
(6) The following expenses were incurred in connection with the IPO:
<TABLE>
<S> <C>
Underwriting discounts and commissions........................ $38,640,000
Expenses paid to or for underwriters.......................... 60,000
Accountants' fees............................................. 100,000
Legal fees.................................................... 315,000
Printing expenses............................................. 255,000
Miscellaneous filing fees and expense......................... 466,000
-----------
$39,836,000
===========
</TABLE>
Except as described under "Certain Relationships and Related
Transactions" in the Company's annual report on Form 10-K, the payments
referred to above were not made directly or indirectly to officers,
directors, general partners of the issuer or their associates, or to
any person owning 10% or more of any class of securities of the issuer,
or to any officers of the issuer and were not direct or indirect
payments to others.
(7) The net offering proceeds were approximately $527,000,000.
(8) From the effective date of the IPO registration statement to
September 30, 1998, the amount of net offering proceeds used for any
purpose for which at least 5% of the offering proceeds or $100,000
(whichever is less) was used is as follows:
<TABLE>
<S> <C>
Cash used in acquisitions, net of cash acquired.............. $201,752,000
Repurchase of shares of Common Stock......................... $ 27,050,000
Repayment of indebtedness owed to Jonathan Ledecky........... 309,000
------------
Total........................................................ $229,111,000
============
</TABLE>
Corporate expenses of the Company have been funded in part by
interest income on the investment of the IPO proceeds.
17
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders.
The annual meeting of the Company's stockholders was held on September 15,
1998. All nominees for Director were elected pursuant to the following votes:
<TABLE>
<CAPTION>
Authority
Nominee For Witheld
------- --- ---------
<S> <C> <C> <C>
Mary K. Bush 34,876,575 1,481,605
Vincent W. Eades 34,876,575 1,481,605
Thomas D. Heule 34,872,689 1,485,491
David Ledecky 34,876,575 1,481,605
Jonathan J. Ledecky 34,913,275 1,444,905
William P. Love, Jr. 34,891,275 1,466,905
W. Russell Ramsey 34,913,275 1,444,905
M. Jude Reyes 34,929,527 1,428,653
</TABLE>
The stockholders approved the amendment to, and restatement of, the
Company's Restated Certificate of Incorporation to change the name of the
Company to Building One Services Corporation.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
35,082,636 1,242,303 33,241
</TABLE>
The stockholders approved the adoption of the Company's 1998 Long-Term
Incentive Plan.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
22,151,584 13,551,120 638,468
</TABLE>
The stockholders ratified the Board of Directors' selection of
PricewaterhouseCoopers LLP as the Company's independent accountants to audit
the Company's consolidated financial statements for the fiscal year ending
December 31, 1998.
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
<S> <C> <C> <C>
36,166,431 159,961 31,788
</TABLE>
Item 5. Other Events
On October 7, 1998, Joe Ivey, the President of the Building One Mechanical
group, was elected to the Board of Directors of the Company. Mr. Ivey, the
former owner of Ivey Mechanical Company, which was acquired by the Company in
September 1998, has previously served as the national President of the
Associated Builders and Contractors ("ABC"), a national building industry
trade association representing over 18,000 members. In 1996, Mr. Ivey was
selected by ABC National as "Contractor of the Year."
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11.1Statement regarding computation of net income per share
27Financial Data Schedule
(b) Reports on Form 8-K. During the period covered by this report, the
Company filed the following Current Reports on Form 8-K:
i. Form 8-K dated June 24, 1998 and filed with the Commission on July 8,
1998 reporting information under Items 2 and 7. The financial statements
otherwise required had been previously filed and were not filed as part of
this Form 8-K.
ii. Form 8-K dated August 24, 1998 and filed with the Commission on
August 28, 1998 reporting information under Items 5 and 7.
iii. Form 8-K dated September 15, 1998 and filed with the Commission on
September 22, 1998 reporting information under Items 2 and 7.
18
<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 thereunto duly authorized.
Consolidation Capital Corporation
Jonathan J. Ledecky
February 18, 1999 By:__________________________________
- -----------
Jonathan J. Ledecky
Date
Chief Executive Officer
Timothy C. Clayton
February 18, 1999 By:__________________________________
- -----------
Timothy C. Clayton
Date
Chief Financial Officer
19
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Exhibit Page
--- ------------------------------------------------------- ----
<C> <S> <C>
11.1 Statement regarding computation of net income per share
27 Financial Data Schedule
</TABLE>
20
<PAGE>
EXHIBIT 11.1
BUILDING ONE SERVICES CORPORATION
COMPUTATION OF NET INCOME PER SHARE
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Basic earnings per share:
Net income................................................ $ 15,164 $ 299 $ 30,291 $ 943
Weighted average shares outstanding - Basic............... 43,122,092 3,590,724 38,298,295 3,102,079
----------- ----------- ----------- -----------
Net income per share - Basic.............................. $ 0.35 $ 0.08 $ 0.79 $ 0.30
=========== =========== =========== ===========
Diluted earnings per share:
Net income................................................ $ 15,164 $ 299 $ 30,291 $ 943
----------- ----------- ----------- -----------
Weighted average shares outstanding - Basic............... 43,122,092 3,590,724 38,298,295 3,102,079
Convertible Non-Voting Common Stock....................... 500,000 500,000
Common stock equivalents from stock options and warrants.. 192,711 115,116 389,347 115,116
Contingently issuable shares.............................. 440,852 180,679
----------- ----------- ----------- -----------
Total weighted average shares outstanding - Diluted....... 44,255,655 3,705,840 39,368,321 3,217,195
----------- ----------- ----------- -----------
Net income per share - Diluted............................ $ 0.34 $ 0.08 $ 0.77 $ 0.29
=========== =========== =========== ===========
</TABLE>
Outstanding stock options and warrants to purchase 6,255,774 shares of common
stock as of September 30, 1998 were not included in the computation of diluted
earnings per share because the options' exercise prices were greater than the
average market price of the common shares during the period.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's consolidated financial statements included in the Company's Quarterly
Report on Form 10-Q and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 272,022
<SECURITIES> 0
<RECEIVABLES> 207,153
<ALLOWANCES> (1,651)
<INVENTORY> 0
<CURRENT-ASSETS> 510,889
<PP&E> 31,718
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,002,112
<CURRENT-LIABILITIES> 177,274
<BONDS> 0
0
0
<COMMON> 44
<OTHER-SE> 817,203
<TOTAL-LIABILITY-AND-EQUITY> 1,002,112
<SALES> 252,324
<TOTAL-REVENUES> 252,324
<CGS> 197,086
<TOTAL-COSTS> 197,086
<OTHER-EXPENSES> 32,719
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 239
<INCOME-PRETAX> 26,376
<INCOME-TAX> 11,212
<INCOME-CONTINUING> 15,164
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 15,164
<EPS-PRIMARY> .35
<EPS-DILUTED> .34
</TABLE>
