<PAGE>
Rules 424(b)(3) and 424(c)
Registration No. 333-60053
PROSPECTUS SUPPLEMENT
To Prospectus dated March 16, 1999
[Building One Logo Appears Here]
Building One Services Corporation has prepared this Prospectus Supplement to
update certain information contained in its Prospectus dated March 16, 1999.
This Prospectus Supplement supersedes the Prospectus Supplement dated March
23, 1999.
Set forth below is (i) a summary of the modification to our tender offer,
commenced on February 19, 1999, pursuant to which we are increasing the number
of shares we are offering to repurchase and decreasing the price we are
offering to pay and of our financing agreement with Boss Investment LLC, an
affiliate of Apollo Management, L.P., pursuant to which Boss Investment will
invest $100 million in exchange for convertible notes and (ii) our unaudited
pro forma financial statements, which give effect to (a) the modified tender
offer, (b) our financing of the tender offer through a planned offering of
$200 million of senior subordinated notes, $100 million from a proposed $350
million revolving credit facility and our financing agreement with Boss
Investment, (c) five acquisitions completed subsequent to September 30, 1998
and (d) five pending acquisitions.
The date of this Prospectus Supplement is March 26, 1999.
<PAGE>
Modification of Tender Offer and Agreement with Boss Investment
On March 23, 1999, we announced that we were extending and intend to modify
our previously announced tender offer, which was commenced on February 19,
1999. We are increasing the number of shares of common stock that we are
offering to buy to 25.5 million from 24,365,891 shares and reducing the price
we are offering to pay to $22.50 from $25.00 per share. We are permitting
former owners of businesses that we have acquired to tender shares of our
common stock that are subject to contractual restrictions on transfer. We will
permit such former owners to sell up to 50% of the shares of common stock they
acquired in exchange for their businesses. Key members of our management who
own, as of March 22, 1999, approximately 6.2 million shares of our common
stock have agreed not to transfer the shares they own after the tender offer
for an additional twelve months beyond the terms of their existing contractual
restrictions. Joseph M. Ivey, our president and chief executive officer, has
advised us that he does not intend to tender any of his shares.
In addition, we are accelerating the vesting of stock options having
exercise prices below $22.50 per share. That action will enable optionees to
tender shares of common stock in connection with conditional exercises of
options. As of March 22, 1999, we had outstanding 45,275,052 shares of common
stock and stock options with exercise prices below $22.50 exercisable for
3,385,914 shares. We have extended the expiration, withdrawal and proration
dates relating to our tender offer to April 16, 1999 at 5:00 p.m. Our tender
offer is conditioned on a minimum of 21 million shares of common stock being
tendered, the receipt of financing on acceptable terms and certain other
conditions.
On March 23, 1999, we also announced that we had entered into an agreement
with Boss Investment LLC, an affiliate of Apollo Management, L.P., under which
Boss Investment agreed to invest $100 million in our company in exchange for
convertible notes. Under the agreement with Boss Investment, we will issue
convertible notes that will mature on the thirteenth anniversary of the
issuance of the notes and will provide for interest payments at a rate of 7.5%
per year.
We will pay interest in either additional convertible notes or cash, at our
election but subject to the provisions of our credit agreement, through the
fifth anniversary of the issuance of the convertible notes and in cash
thereafter. The holders of a majority of the outstanding principal amount of
the convertible notes, however, will have the right to require the payment of
interest in cash after the third and through the fifth anniversary of the
issuance of the convertible notes. The holders of convertible notes will also
be entitled to share in any dividends declared on the shares of our common
stock as though they had converted the notes into shares of common stock. Upon
a "change in control," as defined in the indenture for the convertible notes,
we will be required to redeem the notes at the election of the holders, for a
price equal to the principal amount of the notes plus all accrued interest and
all interest that would have otherwise been accrued through the fifth
anniversary of the issuance of the convertible notes.
The notes will be convertible into shares of common stock at an initial
conversion price of $22.50 per share plus all accrued and unpaid interest.
Assuming conversion of the principal amount of the notes and assuming all
interest is paid in cash, Boss Investment will have the right to acquire upon
conversion 4,444,444 shares of our common stock, or approximately 18% of the
outstanding shares of common stock after the tender offer. If the notes are
converted prior to the fifth anniversary of the issuance of the convertible
notes, the amount converted into shares of common stock will include
additional interest that would have accrued or been paid from the date of
conversion through the fifth anniversary of the issuance of the convertible
notes up to the aggregate amount of interest that would have been payable for
30 months. We will adjust the conversion price under certain circumstances,
including the issuance of shares of our common stock at a price below the
conversion price of the convertible notes or below the then fair market value
of the common stock.
The indenture for the convertible notes will restrict our ability to incur
additional indebtedness, pay dividends, repurchase stock or repay certain
other indebtedness. In addition, it will provide certain voting rights to the
holders of the convertible notes, subject to the adoption of amendments to our
restated certificate of incorporation. We have agreed to seek stockholder
approval of an amendment to our restated certificate of
2
<PAGE>
incorporation which would authorize the holders of the convertible notes to
vote together with the holders of our common stock on all of the matters
submitted to our stockholders for a vote. In addition, we have agreed to seek
stockholder approval of an amendment to our restated certificate of
incorporation which would authorize the holders of the convertible notes to
elect three of our directors. At closing, our Board will be increased to
10 directors. The holders of the convertible notes will be entitled to cast
the number of votes that they would be entitled to cast if they converted the
convertible notes into shares of our common stock. The indenture will also
entitle us to redeem the notes at any time after five years after their
issuance at a premium.
Pursuant to our agreement with Boss Investment, we will be precluded from
entering into various types of transactions or making certain changes in our
capital structure, board size or management without the consent of Boss
Investment. In addition, Boss Investment will have the right to acquire shares
of our common stock if we sell shares in a private placement. Finally, Boss
Investment and any other holders of the convertible notes will have certain
rights to require us to register the shares of common stock that they acquire
upon conversion of the convertible notes for sale under the Securities Act of
1933, as amended.
The completion of the transaction with Boss Investment is subject to a
number of conditions. These conditions include our acquisition of 21 million
shares at a price of $22.50 per share through our tender offer and our
appointment or nomination of certain persons to the Board of Directors. In
connection with our sale of the convertible notes to Boss Investment, we will
increase the size of our Board to ten persons, appoint three designees of Boss
Investment to our Board and cause changes in the current membership of the
Board so that we have ten directors.
As a result of the modification of the tender offer and the agreement with
Boss Investment, we expect that our purchase of the 25.5 million shares in the
tender offer will require approximately $600 million of financing (including
fees and expenses). We expect to fund our acquisition of the shares with our
cash on hand (approximately $200 million as of December 31, 1998), $200
million of bond financing, $100 million from the acquisition of convertible
notes by Boss Investment and $100 million from a $350 million revolving credit
facility from Bankers Trust Company. We have received a new commitment letter
from Bankers Trust Company for the $350 million revolving credit facility. Two
hundred and fifty million dollars of the revolving credit facility will be
available for future acquisitions, contingent payments that are required by
the terms of certain acquisition agreements, capital expenditures and other
general corporate purposes. In addition, we have received a new highly
confident letter from BT Alex. Brown relating to the $200 million bond
financing.
We anticipate completing the above transactions shortly after the April 16,
1999 expiration date of the tender offer. The above description is only a
summary of the terms of the agreement that we have entered into with Boss
Investment. For a more complete description of this transaction, you should
refer to the Current Report on Form 8-K that we filed with the Securities and
Exchange Commission on March 23, 1999.
3
<PAGE>
UNAUDITED PRO FORMA
FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
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 elsewhere in this Prospectus. The unaudited pro forma financial
statements give effect to the following: (i) the repurchase of 25,500,000
shares of common stock (24,600,000 shares at a price of $22.50 per share and
an estimated 900,000 shares at a price of $22.50 per share less the exercise
price for employee stock options) (the "Share Repurchase"), (ii) the issuance
of $100,000 7.5% Junior Subordinated Convertible Notes, the planned offering
of $200,000 of senior subordinated notes and borrowings under a $100,000 term
facility (the "New Borrowings") necessary to finance the Share Repurchase,
(iii) five acquisitions completed subsequent to September 30, 1998 (the
"Subsequent Acquisitions"), (iv) five pending acquisitions considered to be
probable (the "Pending Acquisitions") and (v) the repurchase of 1,135,000
shares of Common Stock (the "Treasury Stock") subsequent to September 30,
1998.
The following unaudited pro forma combined balance sheet of the Company
gives effect to the Share Repurchase, the New Borrowings, the Subsequent
Acquisitions, the Pending Acquisitions and the Treasury Stock as if they had
been consummated as of the Company's most recent balance sheet date, September
30, 1998.
The unaudited pro forma combined statements of operations give effect to (i)
the Share Repurchase, (ii) the New Borrowings (iii) the 21 acquisitions
completed during the nine months ending September 30, 1998 which were
accounted for under the purchase method of accounting ("1998 Acquisitions")
and (iv) the Subsequent Acquisitions and the Pending Acquisitions as if they
had been consummated on January 1, 1997.
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
actually have been if such transactions in fact had occurred on the assumed
dates and are not necessarily representative of our Company's consolidated
financial position or results of operations for any future period. The
unaudited pro forma combined financial statements should be read in
conjunction with the other financial statements and notes thereto included
elsewhere in this Prospectus.
4
<PAGE>
5
BUILDING ONE SERVICES CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
September 30, 1998
(In thousands)
<TABLE>
<CAPTION>
Building One
Services Subsequent Pending Combined Purchase Treasury New Share Pro Forma
Corporation Acquisitions Acquisitions Total Accounting Stock Borrowings Repurchase Combined
------------ ------------ ------------ ---------- ---------- --------- ---------- ---------- ---------
ASSETS (A) (B) (C) (D)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current assets:
Cash and cash
equivalents...... $ 272,022 $ 9,587 $ 2,171 $ 283,780 $(84,120) $(14,784) $381,000 $(563,502) $ 2,374
Accounts
receivable,
net.............. 205,502 27,310 17,859 250,671 250,671
Cost and
estimated
earnings in
excess of
billings on
uncompleted
contracts........ 20,410 3,782 4,567 28,759 28,759
Prepaid expenses
and other
current assets... 12,955 3,750 543 17,248 17,248
---------- ------- ------- ---------- -------- -------- -------- --------- --------
Total current
assets......... 510,889 44,429 25,140 580,458 (84,120) (14,784) 381,000 (563,502) 299,052
Property and
equipment, net.... 31,718 3,865 8,993 44,576 44,576
Intangible assets,
net............... 454,862 24 36 454,922 75,357 530,279
Other assets....... 4,643 3,251 934 8,828 19,000 27,828
---------- ------- ------- ---------- -------- -------- -------- --------- --------
Total assets.... 1,002,112 51,569 35,103 1,088,784 (8,763) (14,784) 400,000 (563,502) 901,735
========== ======= ======= ========== ======== ======== ======== ========= ========
LIABILITIES AND
STOCKHOLDERS'
EQUITY
Current
liabilities:
Short-term debt... 3,864 474 1,366 5,704 5,704
Accounts
payable.......... 57,352 13,548 5,519 76,419 76,419
Billings in
excess of costs
and estimated
earnings on
uncompleted
contracts........ 59,361 8,737 5,136 73,234 73,234
Income taxes
payable.......... 7,304 7,304 (2,801) 4,503
Accrued
compensation..... 31,796 862 32,658 32,658
Accrued
liabilities...... 17,597 1,606 4,841 24,044 24,044
---------- ------- ------- ---------- -------- -------- -------- --------- --------
Total current
liabilities.... 177,274 25,227 16,862 219,363 (2,801) 216,562
Long-term debt..... 3,094 419 2,636 6,149 400,000 406,149
Other liabilities.. 4,497 1,988 6,485 (3,193) 3,292
---------- ------- ------- ---------- -------- -------- -------- --------- --------
Total
liabilities.... 184,865 27,634 19,498 231,997 (3,193) 400,000 (2,801) 626,003
Stockholders'
equity:
Common stock...... 44 95 105 244 (196) (1) (25) 22
Convertible non-
voting common
stock............ 1 1 (1)
Additional paid-
in capital....... 814,791 3,336 60 818,187 30,570 (600,428) 248,329
Treasury stock.... (27,048) (78) (27,126) 78 (14,783) 41,831
Retained
earnings......... 30,083 20,504 15,518 66,105 (36,022) (2,078) 28,005
Accumulated other
comprehensive
income (loss).... (624) (624) (624)
---------- ------- ------- ---------- -------- -------- -------- --------- --------
Total
stockholders'
equity ........ 817,247 23,935 15,605 856,787 (5,570) (14,784) (560,701) 275,732
---------- ------- ------- ---------- -------- -------- -------- --------- --------
Total
liabilities and
stockholders'
equity......... $1,002,112 $51,569 $35,103 $1,088,784 $ (8,763) $(14,784) $400,000 $(563,502) $901,735
========== ======= ======= ========== ======== ======== ======== ========= ========
</TABLE>
<PAGE>
BUILDING ONE SERVICES CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Building
One
Services
Corporation
-----------
<S> <C>
Revenues......... $ 70,101
Cost of
revenues........ 58,857
----------
Gross profit.... 11,244
Selling, general
and
administrative
expenses........ 11,776
Goodwill amortization..
----------
Operating income
............... (532)
Other (income)
expense:
Interest
expense........ 208
Interest
income......... (2,056)
Other, net...... (221)
----------
Income before
provision for
income taxes.... 1,537
Provision for
income taxes.... 94
----------
Net income ...... $ 1,443
==========
Net income per
share--Basic.... $ 0.25
==========
Net income per
share--Diluted.. $ 0.25
==========
Weighted average
shares
outstanding--
Basic (Note 3).. 5,683,464
==========
Weighted average
shares
outstanding--
Diluted
(Note 3)........ 5,865,550
==========
<CAPTION>
1998 Acquisitions
-----------------------------------------------------------------------------------------------
Service Garfield Riviera Tri-City Town &
Management SKC and Electric Electrical Country Wilson Taylor Regency
USA, Inc. Electric Indecon Construction Contractors Electric Electric Electric Electric
---------- --------- --------- ------------ ----------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues......... $26,266 $23,482 $24,498 $37,049 $79,493 $48,726 $71,009 $19,193 $60,283
Cost of
revenues........ 19,856 16,971 19,587 31,607 63,551 39,701 59,036 13,799 44,556
---------- --------- --------- ------------ ----------- --------- --------- --------- ---------
Gross profit.... 6,410 6,511 4,911 5,442 15,942 9,025 11,973 5,394 15,727
Selling, general
and
administrative
expenses........ 3,832 4,200 2,981 3,999 9,925 7,006 10,514 1,272 5,448
Goodwill amortization..
---------- --------- --------- ------------ ----------- --------- --------- --------- ---------
Operating income
............... 2,578 2,311 1,930 1,443 6,017 2,019 1,459 4,122 10,279
Other (income)
expense:
Interest
expense........ 53 102 229 53 75 110 587
Interest
income......... (168) (156) (113) (416)
Other, net...... 6 (40) (16) (119) 26 (113) 77 (43) 29
---------- --------- --------- ------------ ----------- --------- --------- --------- ---------
Income before
provision for
income taxes.... 2,519 2,351 1,844 1,333 6,106 2,057 1,428 4,278 10,079
Provision for
income taxes.... 52 1,150 771 462 894 625
---------- --------- --------- ------------ ----------- --------- --------- --------- ---------
Net income ...... $ 2,467 $ 1,201 $ 1,073 $ 1,333 $ 5,644 $ 1,163 $ 803 $ 4,278 $10,079
========== ========= ========= ============ =========== ========= ========= ========= =========
Net income per
share--Basic....
Net income per
share--Diluted..
Weighted average
shares
outstanding--
Basic (Note 3)..
Weighted average
shares
outstanding--
Diluted
(Note 3)........
<CAPTION>
1998 Acquisitions
-------------------------------------------------------------------------------
Insignificant Subsequent Pending Combined Pro Forma Pro Forma
Acquisitions Acquisitions Acquisitions Total Adjustments Combined
------------- ------------ ------------ ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues......... $543,640 $151,824 $116,499 $1,272,063 $ $ 1,272,063
Cost of
revenues........ 446,296 129,446 97,445 1,040,708 1,040,708
------------- ------------ ------------ ----------- -------------- ------------
Gross profit.... 97,344 22,378 19,054 231,355 231,355
Selling, general
and
administrative
expenses........ 78,117 16,691 12,610 168,371 (33,711)(A)
4,000 (C) 138,660
Goodwill amortization.. 13,425 (E) 13,425
------------- ------------ ------------ ----------- -------------- ------------
Operating income
............... 19,227 5,687 6,444 62,984 16,286 79,270
Other (income)
expense:
Interest
expense........ 2,392 128 366 4,303 36,701 (G) ...........
1,900 (B) 42,904
Interest
income......... (1,266) (311) (98) (4,584) 4,584 (H)
Other, net...... (2,292) 206 (239) (2,739) (848)(1) (3,587)
------------- ------------ ------------ ----------- -------------- ------------
Income before
provision for
income taxes.... 20,393 5,664 6,415 66,004 (26,051) 39,953
Provision for
income taxes.... 4,184 2,263 834 11,329 10,024 (J) 21,353
------------- ------------ ------------ ----------- -------------- ------------
Net income ...... $ 16,209 $ 3,401 $ 5,581 $ 54,675 $(36,075) $ 18,600
============= ============ ============ =========== ============== ============
Net income per
share--Basic.... $ 0.86
============
Net income per
share--Diluted.. $ 0.86
============
Weighted average
shares
outstanding--
Basic (Note 3).. 21,608,154
============
Weighted average
shares
outstanding--
Diluted
(Note 3)........ 26,068,775
============
</TABLE>
6
<PAGE>
BUILDING ONE SERVICES CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
Building
One
Services 1998 Subsequent Pending Combined Pro Forma Pro Forma
Corporation Acquisitions Acquisitions Acquisitions Total Adjustments Combined
----------- ------------ ------------ ------------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues................ $ 478,595 $379,288 $118,807 $102,863 $1,079,553 $ $1,079,553
Cost of revenues........ 376,318 309,591 99,022 84,263 869,194 869,194
---------- -------- -------- -------- ---------- -------- ----------
Gross profit........... 102,277 69,697 19,785 18,600 210,359 210,359
Selling, general and
administrative
expenses............... 59,786 55,111 13,826 14,070 142,793 (22,952)(A) 119,841
Goodwill asset
amortization........... 4,584 234 4,818 5,244 (E) 10,062
Non-recurring pooling
costs.................. 768 768 (768)(D)
---------- -------- -------- -------- ---------- -------- ----------
Operating income....... 37,139 14,352 5,959 4,530 61,980 18,476 80,456
Other (income) expense:
Interest expense....... 565 1,764 73 335 2,737 27,563 (G)
(675)(F)
1,425 (B) 31,050
Interest income........ (16,043) (1,483) (252) (41) (17,819) 17,688 (H) (131)
Other, net............. (134) (1,574) 346 (56) (1,418) (1,687)(I) (3,105)
---------- -------- -------- -------- ---------- -------- ----------
Income before provision
for income taxes....... 52,751 15,645 5,792 4,292 78,480 (25,838) 52,642
Provision for income
taxes.................. 22,460 4,665 2,261 453 29,839 (5,249)(J) 24,590
---------- -------- -------- -------- ---------- -------- ----------
Net income.............. $ 30,291 $ 10,980 $ 3,531 $ 3,839 $ 48,641 $(20,589) $ 28,052
========== ======== ======== ======== ========== ======== ==========
Net income per share--
Basic.................. $ 0.79 $ 1.30
========== ==========
Net income per share--
Diluted................ $ 0.77 $ 1.19
========== ==========
Weighted average shares
outstanding--Basic
(Note 3)............... 38,298,295 21,608,154
========== ==========
Weighted average shares
outstanding--Diluted
(Note 3)............... 39,368,321 26,379,790
========== ==========
</TABLE>
7
<PAGE>
BUILDING ONE SERVICES CORPORATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
(Dollars in thousands, except share data)
NOTE 1--UNAUDITED PRO FORMA BALANCE SHEET ADJUSTMENTS
(A) Adjustment to reflect the Subsequent Acquisitions and the Pending
Acquisitions for consideration of approximately $84,120 in cash (excluding
related professional fees) and 2,634,773 shares of common stock resulting
in excess purchase price over the fair value of net assets acquired of
$75,357. Such allocations are preliminary in nature, pending the outcome
of a detailed analysis being performed by our 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) Adjustment to reflect the Treasury Stock purchase of 1,135,000 shares of
the Company's common stock for a total of $14,784 which occurred
subsequent to September 30, 1998.
(C) Adjustment to reflect the issuance of $100,000 of convertible notes at a
rate of 7.5%, the planned offering of $200,000 of senior subordinated
notes at an assumed interest rate of 10.5%, and borrowings under a
$100,000 term facility at an assumed rate of 8.25% necessary to finance
the Share Repurchase and the Pending Acquisitions. Additionally,
adjustment reflects approximately $19,000 of debt issue costs which will
be capitalized and amortized over the life of the debt.
(D) Adjustment to reflect the use of cash to repurchase 25,500,000 of the
shares of common stock (24,600,000 shares at a price of $22.50 per share
and an estimated 900,000 shares at a price of $22.50 per share less the
exercise price for employee stock options), including applicable
transaction fees of $3,000. The funds to finance the repurchase are
expected to be obtained from the following sources: the Company's cash
balances, $100,000 of convertible notes, $200,000 in senior subordinated
notes and a $100,000 term facility.
For purposes of the Share Repurchase, the Company will accelerate the
vesting of employee stock options and permit optionees to tender Shares in
connection with Conditional exercises of the options. As a result of the
Company allowing for the tender of an estimated 900,000 Shares that underly
employee stock options in the Share Repurchase, compensation expense is
recorded to the extent that the optionholder exercises the stock option for
the net cash payments made upon exercise. Upon completion of the Repurchase,
stock options not exchanged will revert to fixed option awards with terms
identical to those prior to the commencement of the Repurchase. The Company
estimates that the compensation expense related to the option shares
purchased in the Share Repurchase will approximate $3,464, based on
management's estimate of options that will be exchanged. For purposes of the
pro forma balance sheet, the Company has reflected the after-tax
compensation expense of $2,078 ($3,464 before 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 $2,049. The
Company has not included these items as compensation expense in the
unaudited pro forma combined statement of operations because they are of a
non-recurring nature and are directly related to the Share Repurchase.
8
<PAGE>
BUILDING ONE SERVICES CORPORATION
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS--(Continued)
(Dollars in thousands)
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 Acquisitions, the Subsequent Acquisitions and the
Pending Acquisitions to which they have agreed prospectively.
(B) Adjustment to reflect the amortization of debt issuance costs incurred in
connection with the issuance of $100,000 convertible notes, $200,000 of
senior subordinated notes and the $100,000 term facility over the terms of
the respective borrowings.
(C) Adjustment to reflect an increase in general and administrative expenses
associated with Building One Services Corporation's management and
corporate activities.
(D) 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.
(E) Adjustment to reflect the increase in amortization expense relating to
goodwill recorded in connection with the 1998 Acquisitions, the Subsequent
Acquisitions and the Pending Acquisitions for the periods prior to the
date of acquisition. The goodwill is being amortized over an estimated
life of 40 years.
(F) Adjustment to reflect reduction in interest expense associated with debt
paid in conjunction with the acquisition of one of the 1998 Acquisitions.
(G) Adjustment to reflect the increase in interest expense in connection with
the $100,000 of convertible notes at a rate of 7.50%, $200,000 of senior
subordinated notes at an estimated rate of 10.5%, and the $100,000 term
facility at an estimated rate of 8.25%. Depending on market conditions at
the time the senior notes are offered and the term and credit facilities
obtained, the interest rates may vary from those indicated herein.
(H) Adjustment to eliminate interest income relating to the cash consideration
used in the acquisition of the 1998 Acquisitions and cash used in the
Share Repurchase.
(I) Adjustment to reflect the elimination of minority interest associated with
the acquisition of the remaining interest in one of the Pending
Acquisitions.
(J) Adjustment to reflect the incremental provision for federal and state
income taxes assuming a combined federal and state statutory rate of
approximately 40% and the non-deductibility of certain goodwill
amortization.
9
<PAGE>
BUILDING ONE SERVICES CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS--(Continued)
NOTE 3--SHARES USED TO COMPUTE EARNINGS PER SHARE
Basic pro forma earnings per share is calculated based upon 21,608,154
weighted average shares of common stock outstanding for the year ended
December 31, 1997 and the nine months ended September 30, 1998. This amount
represents the common stock outstanding subsequent to the Share Repurchase of
24,600,000 shares as well as the repurchase of an estimated 900,000 shares
from the exercise of certain employee stock options.
Diluted earnings per share is calculated based upon the weighted average
shares of common stock outstanding of 21,608,154 the incremental shares
assuming the convertible notes convert into common shares and the dilution
attributable to stock options and warrants outstanding subsequent to the
transaction.
The weighted average shares outstanding used to calculate pro forma earnings
per share for the year ended December 31, 1997 and the nine months ended
September 30, 1998 are as follows:
<TABLE>
<CAPTION>
Year ended Nine months ended
December 31, 1997 September 30, 1998
----------------- ------------------
<S> <C> <C>
Basic earnings per share:
Net income............................... $ 18,600 $ 28,052
Pro forma weighted average common shares
outstanding -- Basic.................... 21,608,154 21,608,154
----------- -----------
Net income per share -- Basic............ $ 0.86 $ 1.30
=========== ===========
Diluted earnings per share:
Net income .............................. $ 18,600 $ 28,052
Plus: Interest expense on 7 1/2%
convertible notes....................... 4,500 3,375
----------- -----------
Net income on an as if converted basis... 23,100 31,427
----------- -----------
Pro forma weighted average common shares
outstanding -- Basic.................... 21,608,154 21,608,154
Dilution attributable to stock options
and warrants............................ 16,177 327,192
Convertible notes, on an as if converted
basis................................... 4,444,444 4,444,444
----------- -----------
Pro forma weighted average shares
outstanding -- Diluted.................. 26,068,775 26,379,790
----------- -----------
Net income per share -- Diluted........... $ 0.86 $ 1.19
=========== ===========
</TABLE>
10
