<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 11, 1998
THE ZIEGLER COMPANIES, INC.
---------------------------
(Exact name of Registrant as specified in its charter)
Wisconsin 1-10854 39-1148883
--------- ------- ----------
(State of incorporation) (Commission File No.) (I.R.S. Employer Id. No.)
215 North Main Street
West Bend, Wisconsin 53095-3317
-------------------------------
(Address of principal executive offices) (Zip Code)
(414) 334-5521
--------------
(Registrant's telephone number, including area code)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On December 11, 1998, The Ziegler Companies, Inc. ("Ziegler" or the
"Company") announced that its wholly owned subsidiary ZACQ Corp., a Colorado
corporation (the "Purchaser"), had accepted for payment all shares of common
stock, par value $.01 per share, including fractional shares represented by
scrip (the "Common Shares") of PMC International, Inc., a Colorado corporation
("PMC") and all shares of preferred stock, without par value (the "Preferred
Shares" and together with the Common Shares, the "Shares") which had been
tendered pursuant to the Purchaser's tender offer (the "Offer") to purchase all
outstanding Common Shares at a price of $0.60 per Common Share, net to the
seller in cash, without interest thereon and all outstanding Preferred Shares at
a price of $2.50 per Preferred Share, net to the seller in cash, without
interest thereon. The Offer expired, as scheduled, on December 10, 1998.
Pursuant to the Offer and the exercise by Ziegler of certain conversion rights
and options granted by PMC to Ziegler, the Purchaser and Ziegler acquired in
the aggregate approximately 95% of the outstanding Common Shares and 89% of the
outstanding Preferred Shares, respectively. Ziegler subsequently acquired
40,300 shares of Preferred Stock for $141,050 and holds approximately 97% of the
outstanding Preferred Stock as of December 25, 1998.
The Offer and the Merger
The Offer was made pursuant to the Agreement and Plan of Merger, dated as
of November 3, 1998, among the Purchaser, Ziegler and PMC (the "Merger
Agreement"). The Merger Agreement provides that, among other things, as soon as
practicable after the purchase of the Shares pursuant to the Offer and the
satisfaction of the other conditions set forth in the Merger Agreement, the
Purchaser will be merged with and into PMC (the "Merger") in accordance with the
relevant provisions of the Colorado Business Corporation Act ("CBCA"). Because,
following the consummation of the Offer and later purchases, the Purchaser and
Ziegler together own more than 90% of the outstanding Common Shares and of the
Preferred Shares under the CBCA the Purchaser and Ziegler voting together can
approve and effect the Merger without the affirmative vote of any other holders
of Shares.
The Merger will be consummated by filing with the Colorado Secretary of
State articles of merger (the time of such filing being the "Effective Time").
At the Effective Time (estimated to be December 31, 1998), each outstanding
Common Share not tendered pursuant to the Offer will be canceled and
extinguished and each such Common Share (other than Common Shares owned by PMC,
Ziegler, or any affiliate of either, including the Purchaser, and other than any
Common Shares held by holders who have properly exercised dissenters' rights
with respect thereto in accordance with Article 113 of Title 7 of the CBCA) will
be converted into the right to receive $0.60 per Common Share in cash (without
interest). At the Effective Time, each outstanding Preferred Share not tendered
pursuant to the Offer will be canceled and extinguished and each such Preferred
Share (other than Preferred Shares owned by PMC, Ziegler, or any affiliate of
either, including the Purchaser, and other than any Preferred Shares held by
holders who have properly exercised dissenters' rights with respect thereto in
accordance with Article 113 of Title 7 of the CBCA) will be converted into the
right to receive $2.50 per Preferred Share in cash (without interest). Each
outstanding share of common stock of the Purchaser, at the Effective Time, will
be converted into one Common Share of PMC. The purpose of the Merger is to
complete the acquisition of the entire equity interest in, and control of, PMC
by Ziegler pursuant to the Merger Agreement.
The $0.60 per Common Share and $2.50 per Preferred Share cash price in the
Offer and the Merger, and the other terms of the Merger Agreement, were the
result of arms-length negotiations between Ziegler and PMC prior to the
execution of the Merger Agreement and the consummation of the Offer. A total of
4,213,795.05 and 86,550 outstanding Common Shares and Preferred Shares were
acquired as a result of the Offer. Former holders of Shares who do not wish to
accept the cash payments of $0.60 per Common Share or $2.50 per Preferred Share,
as appropriate, pursuant to the Merger are entitled to assert dissenters' rights
under the CBCA and to seek an appraisal of, and be paid the "fair value" for,
their Shares as provided in the CBCA.
<PAGE>
As contemplated by the Merger Agreement, on December 11, 1998, following
the purchase by the Purchaser of Shares pursuant to the Offer, five of the six
remaining members of the Board of Directors of PMC resigned. The sole remaining
Board member filled the positions vacated by electing one person designated by
Ziegler and then resigned. The Ziegler designated director then appointed the
remaining six persons designated by Ziegler as directors of PMC.
Upon consummation of the Offer a filing was made with the Securities and
Exchange Commission (the "Commission") to suspend PMC's reporting obligations
and terminate the registration of the Common Shares under the Securities
Exchange Act of 1934, as amended.
PMC's Annual Report on Form 10-KSB for the year ended December 31, 1997
described PMC's business as follows:
Founded in 1986, the Company is an independent sponsor of privately
managed accounts and asset allocation and wrap programs. The majority
of the Company's revenues are derived from its individually managed
wrap program, which the Company created and has administered since
1987. In addition to the its traditional wrap program, since 1994 the
Company has invested in developing a range of related technology-based
services and has added staff to develop and support the Company's new
products. The Company's products and services are designed to assist
professional financial consultants in their efforts to market high
quality, fully diversified portfolio management products. Through the
use of technology, the Company assists third-party financial advisors
such as banks, insurance companies and brokerage firms (collectively,
"Institutional Channels") and independent financial planners
("Independent Channels") in allocating and diversifying a customer's
investment portfolio across multiple asset classes and investments. In
respect to Institutional Channels, the Company's products allow for a
repeatable sales process which helps increase sales productivity while
ensuring compliance with the Institutional Channels' corporate and
regulatory policies.
Ziegler is undertaking a thorough review of PMC's operations and studying
the manner in which the operations of the two companies can best be optimized,
and intends to take such actions as a result of this review as may be deemed
appropriate under the circumstances. Ziegler currently intends to continue the
primary business operations of PMC, and to continue to use the PMC physical
assets of such primary business operations for that purpose, while integrating
such operations with its own, but reserves the right to take other actions.
Financing of the Offer and the Merger
The total amount of funds required to consummate the Offer and the Merger
is currently estimated to be approximately $4.4 million, including related fees
and expenses. This amount has been or will be funded from Ziegler's working
capital.
Additional Information
Further information concerning the Offer and the Merger is contained in the
Tender Offer Statement on Schedule 14D-1 filed by Ziegler and the Purchaser with
the Commission on November 10, 1998, as amended (the "Schedule 14D-1"), which
includes the Offer to Purchase, dated November 9, 1998 (the "Offer to
Purchase"), and in the Solicitation/Recommendation Statement on Schedule 14D-9,
dated November 9, 1998, as amended, filed by PMC with the Commission on November
10, 1998. The Merger Agreement, the Offer to Purchase and certain related
documents are described in and filed as exhibits to the Schedule 14D-1 and are
incorporated herein by reference. The descriptions of those documents contained
herein do not purport to be complete and are qualified in their entirety by
reference to the provisions of the respective documents.
-2-
<PAGE>
Item 5.
The Company has retained First Analysis Securities Corp., an investment
banking firm specializing in the environmental industry, to advise it on the
possible sale of WRR Environmental Services Co., the Company's environmental
services subsidiary ("WRR"). WRR, which is the Company's only non-financial
services business, had 1997 revenues and operating income of approximately $12.4
million and $.6 million, respectively. Company management believes both the
Company and WRR could benefit from an exclusive focus on their respective
businesses.
On December 28, 1998, the Company announced that it expects to incur an
after tax charge against fourth quarter earnings of approximately $1.6 million
primarily related to a reduction in scale of its taxable fixed income trading
department, and $240,000 for additional environmental reserves relating to WRR.
Although the Company had invested significantly in expansion of the taxable
fixed income operations in late 1997 and early 1998, adverse conditions in the
taxable fixed income markets and other factors have resulted in operating losses
from these activities. The fourth quarter charge related to these operations
includes the expenses of a reduction in the size of the taxable fixed income
department to a level at which previous operations were profitable. These
charges are expected to more than offset a strong fourth quarter by the
Company's investment banking, asset management and retail brokerage business
segments.
While a final determination by the Board of Directors will not be decided
or announced until January 19, 1999, it is the present intention of the Board of
Directors to declare a $.13 per share regular dividend for the fourth quarter,
and not declare an extra dividend for 1998.
Statement Regarding Forward Looking Disclosure
Except for the historical information contained in this Report, certain
matters discussed herein contain forward looking statements that involve risks
and uncertainties, including (without limitation) the effect of economic and
market conditions, such as demand for investment banking and brokerage services
in the market served by Ziegler, pricing of services, environmental matters,
successful management of financial and legal risks which necessarily accompany
various segments of the Ziegler's business, profitable operations of the
recently expanded institutional trading desks, Year 2000 issues and competition
in the financial services industry. The forward looking statements and
statements based on Ziegler's beliefs represent Ziegler's attempt to measure
activity in, and to analyze the many factors affecting, the markets for its
products. There can be no assurance that: (i) Ziegler has correctly measured or
identified all of the factors affecting these markets or the extent of their
likely impact; (ii) the publicly available information with respect to these
factors on which Ziegler's analysis is based is complete or accurate or (iii)
Ziegler's analysis is correct.
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Businesses Acquired:
The following financial statements of PMC (Commission File No.
0-14937) are incorporated herein by reference to pages F-1 through F-20 of
PMC's Annual Report on Form 10-KSB, as amended, for the year ended December
31, 1997:
Consolidated Statements of Operations for the years ended December 31,
1997 and 1996
Consolidated Balance Sheets as of December 31, 1997 and 1996
Consolidated Statements of Changes in Shareholders' Equity (Deficit)
for the years ended December 31, 1997 and 1996
Consolidated Statements of Cash Flows for the years ended December 31,
1997 and 1996
Notes to Consolidated Financial Statements
Independent Auditors' Report
The following unaudited consolidated financial statements of PMC are
incorporated herein by reference to pages 3 through 9 of its Quarterly
Report on Form 10-QSB for the quarterly period ended September 30, 1998:
-3-
<PAGE>
Condensed Consolidated Balance Sheet as of September 30, 1998
Condensed Consolidated Statements of Income for the three months and
nine months ended September 30, 1998 and 1997
Condensed Consolidated Statements of Cash Flows for the three months
and nine months ended September 30, 1998 and 1997
Notes to Financial Statements
(b) Pro Forma Financial Information:
The following unaudited pro forma combined financial statements
reflecting the acquisition of PMC are filed herewith:
Introduction
Unaudited Pro Forma Combined Income Statement For Nine Months Ended
September 30, 1998
Unaudited Pro Forma Combined Income Statement for calendar year ended
December 31, 1997
Unaudited Pro Forma Combined Balance Sheet, dated September 30, 1998
Notes to Unaudited Fro Forma Combined Financial Statements
(c) Exhibits:
See the Exhibit Index following the Signature page of this report,
which is incorporated herein by reference.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE ZIEGLER COMPANIES, INC.
Date: December 23, 1998 By: /s/ Dennis Wallestad
------------------------
Dennis Wallestad
Senior Vice President
<PAGE>
INTRODUCTION TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
As described under Item 2 of this Form 8-K, Ziegler formed a new wholly owned
subsidiary and, pursuant to the Offer and other purchases, acquired
approximately 95% of PMC's outstanding common stock and 97% of PMC's Preferred
Stock as of December 25, 1998. Effective December 31, 1998, Ziegler and PMC
will be combined through a merger of Ziegler's newly created, wholly owned
subsidiary into PMC. Under the Merger Agreement, all outstanding Common Shares
of PMC will be converted into the right to receive $0.60 per Common share and
all outstanding Preferred Shares will be converted into the right to
receive$2.50 per Preferred Share.
The following Unaudited Pro Forma Combined Balance Sheet and Statements of
Income (the "Pro Forma Statements") give effect to the Merger using the purchase
method of accounting and are based on the estimates and assumptions set forth in
the notes to such Pro Forma Statements. The Pro Forma Statements have been
prepared by Ziegler utilizing the separate historical consolidated financial
statements of Ziegler and PMC. The Unaudited Pro Forma Combined Balance Sheet
has been prepared as if the Merger occurred on September 30, 1998. The Unaudited
Pro Forma Combined Statements of Income have been prepared as if the Merger
occurred on January 1, 1997 and 1998, respectively.
These Pro Forma Statements have been prepared and included herein as required by
the rules and regulations of the Securities and Exchange Commission and are
provided for comparative purposes only. The unaudited Pro Forma Adjustments
described in the accompanying notes are based upon preliminary estimates and
certain assumptions that management of Ziegler believes are reasonable. The Pro
Forma Statements are not necessarily indicative of the future combined financial
position and results of operations or those which would have occurred had the
Merger been consummated as of the dates reflected in the pro forma statements.
The following Pro Forma Financial Statements do not reflect any adjustments for
the various synergies or cost reductions Ziegler expects to achieve as a result
of the Merger, and should be read in conjunction with the audited historical
consolidated financial statements, including the notes thereto, of Ziegler and
PMC.
<PAGE>
THE ZIEGLER COMPANIES, INC. (ZCO) AND
PMC INTERNATIONAL, INC. (PMC)
PRO FORMA COMBINED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
---------------------------------------------------------------------
Total Pro Forma
ZCO PMC Combined Adjustments Combined
--- --- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues:
Investment banking and commission income $40,795,829 - $40,795,829 $40,795,829
Investment management fees 5,411,126 $14,668,348 20,079,474 20,079,474
Interest and dividends 5,100,178 - 5,100,178 (186,000) 4,914,178
Gross profit on chemical products
3,462,731 - 3,462,731 3,462,731
Insurance agency 1,058,047 - 1,058,047 1,058,047
Other 3,865,792 194,366 4,060,158 4,060,158
----------- ----------- ----------- ---------- -----------
Net Revenue $59,693,703 $14,862,714 $74,556,417 (186,000) $74,370,417
Expenses:
Employee compensation and benefits $30,874,441 $ 5,039,136 $35,913,577 $35,913,577
Brokerage commission and clearing fees 2,696,170 613,794 3,309,964 3,309,964
Investment manager and other fees - 8,151,912 8,151,912 8,151,912
Software development costs - 272,772 272,772 272,772
Communications 3,002,728 - 3,002,728 3,002,728
Occupancy and equipment 4,874,104 1,708,714 6,582,818 6,582,818
Advertising and Promotion 3,101,815 1,060,930 4,162,745 4,162,745
Professional and regulatory 1,370,304 520,638 1,890,942 1,890,942
Provision for losses 3,900,000 - 3,900,000 3,900,000
Interest 3,325,050 - 3,325,050 3,325,050
Other operating expenses (Including Amortization) 5,993,854 1,317,354 7,311,209 (597,000) 7,908,209
----------- ----------- ----------- -------- -----------
Total Operating Expenses $59,138,466 $18,685,250 $77,823,716 (597,000) $78,420,716
Income from continuing operations before
income tax 555,237 (3,822,536) (3,267,299) (4,050,299)
Provisions for income taxes 201,500 - 201,500 (74,400) 127,100
----------- ------------ ----------- -------- -----------
Net Income $ 353,737 $ (3,822,536) $(3,468,799) (708,600) $(4,177,399)
=========== ============ =========== ======== ===========
Net earnings (loss) per share of common stock: $ 0.15 $ (1.75)
Basic earnings (loss) per share
Diluted earnings (loss) per share $ 0.14 $ (1.70)
Average number of shares outstanding:
Basic 2,387,713 2,387,713
Diluted 2,457,744 2,457,744
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
<PAGE>
THE ZIEGLER COMPANIES, INC. (ZCO) AND PMC INTERNATIONAL, INC. (PMC)
PRO FORMA COMBINED STATEMENT OF INCOME FOR
THE NINE MONTHS ENDED SEPTEMBER 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998
--------------------------------------------------------------------
Total Pro Forma
ZCO PMC Combined Adjustments Combined
--- --- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
Revenues:
Investment banking and commission income $36,570,535 - $ 36,570,535 $ 36,570,535
Investment management fees 6,905,897 $ 15,810,571 22,716,468 22,716,468
Interest and dividends 6,664,632 - 6,664,632 (140,000) 6,524,632
Gross profit on chemical products 2,660,304 - 2,660,304 2,660,304
Insurance agency 928,603 - 928,603 928,603
Other 2,337,688 203,987 2,541,675 2,541,675
----------- ------------ ------------ --------- ------------
Total revenues $56,067,659 $ 16,014,558 $ 72,082,217 (140,000) $ 71,942,217
Expenses:
Employee compensation and benefits $30,585,796 $ 6,104,866 $ 36,690,662 $ 36,690,662
Commissions and clearing fees 4,486,175 466,870 4,953,045 4,953,045
Investment manager and other fees - 9,686,257 9,686,257 9,686,257
Communications 2,848,676 - 2,848,676 2,848,676
Occupancy and equipment 4,289,114 2,450,175 6,739,289 6,739,289
Advertising and Promotion 3,082,686 798,857 3,881,543 3,881,543
Professional and regulatory 964,100 947,180 1,911,280 1,911,280
Interest 5,473,254 - 5,473,254 5,473,254
Amortization of goodwill - 6,143,642 6,143,642 (448,000) 6,591,642
Other operating expenses 4,824,101 1,078,725 5,902,826 5,902,826
----------- ------------ ------------ --------- ------------
Total expenses $56,553,902 $ 27,676,572 $ 84,230,474 $(448,000) $ 84,678,474
----------- ------------ ------------ --------- ------------
Income (loss) before income taxes $ (486,253) $(11,662,014) $(12,148,257) $(588,000) $(12,736,257)
Benefit from income taxes 84,000 - 84,000 56,000 140,000
----------- ------------- ------------ --------- ------------
Net income (Loss) $ (402,243) $(11,662,014) $(12,064,257) $ 532,000 $(12,596,257)
=========== ============ ============ ========= ============
Net (loss) per share of common stock:
Basic (loss) per share: $ (.17) $(5.31)
Diluted (loss) per share: $ (.17) $(5.19)
Average number of shares outstanding: 2,372,090 2,372,090
Basic 2,428,934 2,428,934
Diluted
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this statement.
<PAGE>
THE ZIEGLER COMPANIES, INC. (ZCO) AND
PMC INTERNATIONAL, INC. (PMC)
PRO FORMA COMBINED SEPTEMBER 30, 1998 BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
---------------------------------------------------------------------
Total Pro Forma
ZCO PMC Combined Adjustments Combined
--- --- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Cash and short-term investments $ 29,670,639 $ 289,828 $ 29,960,467 $(4,180,375) $ 25,780,092
Securities inventory 91,127,223 - 91,127,223 91,127,223
Securities purchased under agreements to resell 19,160,049 - 19,160,049 19,160,049
Accounts receivable - other 6,908,782 1,081,080 7,989,862 7,989,862
Investment in and receivable from affiliates 1,660,496 - 1,660,496 1,660,496
Notes receivable 7,531,560 74,350 7,605,910 7,605,910
Other investments 29,635,465 - 29,635,465 29,635,465
Land, buildings and equipment, net 12,194,860 783,052 12,977,912 12,977,912
Software and product development cost - 434,238 434,238 434,238
Deferred income tax benefit 2,847,471 - 2,847,471 2,847,471
Other assets 7,761,304 903,698 8,665,002 8,665,002
Goodwill - 1,251,075 1,251,075 8,952,523 10,203,598
------------ ---------- ------------ ----------- ------------
Total assets $208,497,849 $4,817,321 $213,315,170 $ 4,772,148 $218,087,318
</TABLE>
<PAGE>
THE ZIEGLER COMPANIES, INC. (ZCO) AND PMC INTERNATIONAL, INC. (PMC)
PRO FORMA COMBINED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998
-------------------------------------------------------------------------
Total Pro Forma
ZCO PMC Combined Adjustments Combined
--- --- -------- ----------- ---------------
<S> <C> <C> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term notes payable $ 14,542,839 $ - $ 14,542,839 $ $ 14,542,839
Securities sold under agreements to repurchase 39,788,000 - 39,788,000 39,978,800
Payable to customers 720,426 - 720,426 720,426
Payable to broker-dealers and clearing -
organizations 63,876,205 - 63,876,205 63,876,205
Accounts payable 1,345,316 5,810,327 7,155,643 7,155,643
Deferred revenue - 1,154,179 1,154,179 1,154,179
Securities sold, not yet purchased 19,373,640 - 19,373,640 19,373,640
Notes payable to banks 816,294 2,263,380 3,079,674 3,079,674
Bonds payable 6,922,309 - 6,922,309 6,922,309
Other liabilities and deferred items 9,877,787 361,583 10,239,370 10,239,370
------------ ------------ ------------ ------------ ------------
Total liabilities $157,262,816 $ 9,589,469 $166,852,285 $166,852,285
Shareholders' equity
Common stock $ 3,544,030 $ 44,468 $ 3,588,498 $ (44,468) $ 3,544,030
Preferred stock - 345,455 345,455 (345,455) -
Additional paid-in capital 6,058,808 20,989,816 27,048,624 (20,989,816) 6,058,808
Retained earnings (deficit) 59,626,375 (26,151,887) 33,474,488 26,151,887 59,626,375
Treasury stock, at cost, 1,128,398 and
1,120,257 shares, respectively (17,708,578) - (17,708,578) (17,708,578)
Unearned compensation (285,602) - (285,602) (285,602)
------------ ------------ ------------ ------------ ------------
Total Shareholders' equity
$ 51,235,033 (4,772,148) 46,462,885 4,772,148 51,235,033
------------ ------------ ------------ ------------ ------------
Total liabilities and stockholders' equity $208,497,849 $ 4,817,321 $213,315,170 - $218,087,318
============ ============ ============ ============ ============
</TABLE>
The accompanying notes to consolidated financial statements are an integral part
of this pro forma balance sheet.
<PAGE>
THE ZIEGLER COMPANIES, INC. AND PMC INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
NOTE 1 - PERIODS COMBINED
The unaudited consolidated statements of income for the nine months ended
September 30, 1998 and for the fiscal year ended December 31, 1997 have been
combined with the PMC consolidated statements of income for the nine months
ended September 30, 1998 (unaudited) and for the year ended December 31, 1997.
Ziegler's September 30, 1998 unaudited consolidated balance sheet has been
combined with PMC's September 30, 1998 unaudited consolidated balance sheet.
NOTE 2 - PRO FORMA NET EARNINGS PER SHARE
The unaudited pro forma combined net earnings per common share is based upon the
weighted average number of common shares of Ziegler outstanding for each period.
NOTE 3 - RECLASSIFICATIONS (PMC)
Certain reclassifications, none of which affect net income, have been made to
the PMC statements of income to conform to Ziegler's presentation.
NOTE 4 - PRO FORMA ADJUSTMENTS
The unaudited pro forma statements are based on the following adjustments and
related assumptions. The actual purchase accounting adjustments will be made on
the basis of subsequent information and, therefore, will differ from those
reflected in the unaudited pro forma statements.
A summary of the consideration paid to give effect to the Merger is as follows:
<TABLE>
<CAPTION>
<S> <C>
Cash consideration paid to shareholders: (Note 4)
4,446,942 shares of Common Stock at $0.60 $2,668,165
398,368 shares of Preferred Stock at $2.50 995,920
40,300 shares of Preferred Stock at $3.50 141,050
Legal, accounting and other professional fees (estimated) 375,000
----------
Total cash consideration paid $4,180,135
Net liabilities of PMC assumed by Ziegler $4,772,148
----------
Preliminary estimate of total consideration paid $8,952,283
==========
The purchase accounting adjustments to record the Merger used in the
preparation of the unaudited Pro Forma Condensed Statements of Income for
the nine month period ended September 30, 1998 is: Nine Months Ended
September 30, 1998
------------------
1. Reflects the estimated reduction in interest income from investment
securities liquidated to fund the cash component of the merger
consideration assuming an interest rate of 5.5%. 140,000
2. Reflects the amortization of goodwill arising from this transaction
assuming an estimated life of 15 years straight line. 448,000
The purchase accounting adjustments to record the Merger used in the
preparation of the unaudited Pro Forma Condensed Statements of Income for Year Ended
the year ended December 31, 1997 is: December 31, 1998
-----------------
1. Reflects the estimated reduction in interest income from investment
securities liquidated to fund the cash component of the merger
consideration assuming an interest rate of 5.5% in both years. 186,000
</TABLE>
<PAGE>
<TABLE>
<S> <C>
2. Reflects the amortization of goodwill arising from this transaction
assuming an estimated life of 15 years straight line. 597,000
</TABLE>
NOTE 5: - INCOME TAX EXPENSE
The PMC reserves and write-offs created deferred tax assets at September 30,
1998 relating to tax basis differences arising from the timing of deducting
certain assets and expense for tax purposes. Because of PMC's net operating
loss position, these assets are fully reserved for as of September 30, 1998. To
the extent these timing differences result in future consolidated tax benefits,
these assets may be recoverable. It is not possible to determine at this time
the future tax benefit, if any, that may arise from these deferred tax assets.
<PAGE>
THE ZIEGLER COMPANIES, INC.
(Commission File No. 0-6237)
EXHIBIT INDEX
to
FORM 8-K CURRENT REPORT
Date of Report: December 10, 1998
<TABLE>
<CAPTION>
Incorporated Herein Filed
Exhibit Description by Reference to Herewith
- ------- ----------- ------------------- --------
<C> <S> <C> <C>
2 Agreement and Plan of Merger, dated Exhibit (c)(1) to the Tender Offer
as of November 3, 1998, among The Statement on Schedule 14D-1 filed by
Ziegler Companies, Inc., ZACQ Corp. The Ziegler Companies, Inc. and
and PMC International, Inc. ZACQ Corp. on November 10, 1998
(the "Schedule 14D-1")
23 Consent of Spicer, Jeffries & Co. X
99.1 Consolidated balance sheets of PMC The Annual Report on Form 10-KSB,
International, Inc. and subsidiaries as as amended, filed by PMC
of December 31, 1997 and 1996 and International, Inc. on March 31, 1998
related consolidated statements of
operations, changes in shareholders'
equity (deficit) and cash flows for each
of the two years in the period ended
December 31, 1997, and the related
notes thereto and auditors' report
thereon, incorporated by reference in
Item 7(a) of this report
99.2 Unaudited condensed consolidated The Quarterly Report on Form 10-
balance sheet of PMC International, QSB filed by PMC International, Inc.
Inc. and subsidiaries as of September on November 16, 1998
30, 1998 and the related condensed
consolidated statements of income and
cash flows for the three months and
nine months ended September 30, 1998
and 1997, and the notes thereto,
incorporated by reference in Item 7(a)
of this report
99.3 Offer to Purchase, dated November 9, Exhibit (a)(1) to the Schedule 14D-1
1998
99.4 Letter of Transmittal, dated Exhibit (a)(2) to the Schedule 14D-1
November 9, 1998
99.5 Supplemental Letter #1, dated Exhibit (a)(8) to the Schedule 14D-1
November 23, 1998 filed with Amendment No.1 to the
Schedule 14D-1 by The Ziegler
Companies, Inc. and ZACQ Corp. on
November 23, 1998
99.6 Supplemental Letter #2, dated Exhibit (a)(9) to the Schedule 14D-1
December 3, 1998 filed with Amendment No. 2 to the
Schedule 14D-1 by The Ziegler
Companies, Inc. and ZACQ Corp. on
December 3, 1998
</TABLE>
EI-1
<PAGE>
Exhibit 23
(12/11/98 8-K)
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in the Form 8-K Current Report of
The Ziegler Companies, Inc. dated December 28, 1998, of our report dated March
5, 1998, on our audits of the consolidated financial statements of PMC
International, Inc. as of and for the years ended December 31, 1997 and 1996,
which report is included in the Annual Report on Form 10-KSB of PMC
International, Inc. for the year ended December 31, 1997.
SPICER, JEFFRIES & CO.
Denver, Colorado
December 16, 1998
