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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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Form 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
October 20, 1999
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Date of Report (Date of earliest event reported)
STAFF BUILDERS, INC.
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(Exact name of Registrant as Specified in its Charter)
Delaware 0-11380 11-2650500
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(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1983 Marcus Avenue, Lake Success, New York 11042
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(Address of Principal Executive Offices) (Zip Code)
(516) 358-1000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report) (Zip Code)
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ITEM 2 ACQUISITION OR DISPOSITION OF ASSETS
On October 20, 1999, Staff Builders, Inc. (the "Registrant") completed
the spin-off of its home health care business to holders of shares of Class A
and Class B common stock, par value $.01 per share, of the Registrant, by means
of a distribution (the "Distribution") to such holders of all outstanding shares
of common stock, par value $.01 per share, of Tender Loving Care Health Care
Services, Inc. ("TLC"), then a wholly-owned Delaware subsidiary of the
Registrant (the "TLC Common Stock"). As of October 20, 1999, TLC began
operations as an independent, separately traded, publicly-held company.
Information regarding TLC can be found in TLC's Registration Statement of Form
10, as amended (File No. 000-25777), as filed with the Securities and Exchange
Commission (the "Registration Statement"). The Registrant expects that the TLC
Common Stock will be quoted shortly on the OTC Bulletin Board under the symbol
"TLCS".
The Distribution was made without the payment of any consideration or
the exchange of any shares by the Registrant's stockholders. In the
Distribution, Registrant's stockholders of record on October 12, 1999 received
one share of TLC Common Stock for every two shares of Class A and Class B common
stock of the Registrant owned on such date. The Registrant has instructed its
distribution agent, American Stock Transfer & Trust Company, to deliver to the
Registrant's stockholders the stock certificates representing such shares of TLC
Common Stock.
In connection with the Distribution, the Registrant and TLC entered
into a Distribution Agreement, a Tax Allocation Agreement, a Transitional
Services Agreement, a Trademark License Agreement, a Sublease and an Employee
Benefits Agreement, each of which is filed herewith as an exhibit.
Registrant is not aware of any material relationship between TLC and
the Registrant or any of its affiliates, any director or officer of the
Registrant or any associate of any such director or officer that existed at the
date of the Distribution, except as disclosed in the Registration Statement.
ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS.
(b) Pro Forma Financial Information
2
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UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated balance sheet as of
August 31, 1999 and unaudited pro forma consolidated statements of operations of
Staff Builders, Inc. for the six months ended August 31, 1999 and for the fiscal
year ended February 28, 1999 (collectively, the "Pro Forma Statements") are
based on the historical consolidated financial statements of Staff Builders,
Inc. as adjusted to give effect to the Distribution. The pro forma consolidated
balance sheet gives effect to the Distribution as if it occurred on August 31,
1999 and the pro forma consolidated statements of operations give effect to the
Distribution as if it occurred on the first day of each respective period.
3
<PAGE> 4
STAFF BUILDERS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEETS
AUGUST 31, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
STAFF PRO FORMA
BUILDERS ADJUSTMENTS PRO FORMA
HISTORICAL (A) CONSOLIDATED
---------- ----------- ------------
<S> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 1,867 $ (1,698)(B) $ 169
Accounts receivable, net 77,472 (52,436)(B) 25,036
Prepaid expenses and other current assets 4,108 (2,618)(B) 1,490
--------- --------- -------
Total current assets 83,447 (56,752) 26,695
FIXED ASSETS, net 29,185 (27,933)(B) 1,252
INTANGIBLE ASSETS, net 26,845 (17,969)(B) 8,876
OTHER ASSETS 3,580 (3,446)(B) 134
--------- --------- -------
TOTAL ASSETS $ 143,057 $(106,100) $36,957
========= ========= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 37,614 (30,348)(B) $ 7,266
Accrued payroll and related expenses 26,297 (23,994)(B) 2,303
Current portion of Medicare and
Medicaid liabilities 29,690 (29,690)(B) --
Current portion of long-term debt 46,307 (35,210)(B) 11,097
Income taxes payable -- 353 (B) 353
--------- --------- -------
Total current liabilities 139,908 (118,889) 21,019
--------- --------- -------
LONG-TERM DEBT 16,911 (16,911)(B) --
--------- --------- -------
LONG-TERM MEDICARE AND MEDICAID LIABILITIES 24,934 (24,934)(B) --
--------- --------- -------
OTHER LIABILITIES 5,336 (5,311)(B) 25
--------- --------- -------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Class A common stock 233 -- 233
Class B common stock 3 -- 3
Additional paid in capital 69,055 (54,443)(B) 14,612
Retained earnings (113,323) 114,388 (B) 1,065
--------- --------- -------
Total stockholders' equity (44,032) 59,945 15,913
--------- --------- -------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 143,057 $(106,100) $36,957
========= ========= =======
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements
4
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STAFF BUILDERS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED AUGUST 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
STAFF BUILDERS ADJUSTMENTS PRO FORMA
HISTORICAL (A) CONSOLIDATED
-------------- ----------- ------------
<S> <C> <C> <C>
REVENUES:
Home health care $135,297 $(135,297)(B) $ --
Supplemental staffing 75,317 (16,784)(B) 58,533
-------- --------- -------
Total service revenues 210,614 (152,081) 58,533
Sales of licenses and fees, net 542 (529)(B) 13
-------- --------- -------
Total revenues 211,156 (152,610) 58,546
-------- --------- -------
COSTS AND EXPENSES:
Operating costs 144,529 (99,424)(B) 45,105
General and administrative expenses 67,836 (56,689)(B) 11,147
Amortization of intangible assets 569 (517)(B) 52
Interest expense 3,167 (1,986)(B) 1,181
Interest (income) (378) 374 (B) (4)
Other (income) expense, net (330) 264 (B) (66)
-------- --------- -------
Total costs and expenses 215,393 (157,978) 57,415
-------- --------- -------
INCOME (LOSS) BEFORE INCOME TAXES (4,237) 5,368 1,131
PROVISION FOR INCOME TAXES 436 (326)(C) 110
-------- --------- -------
NET INCOME (LOSS) (4,673) 5,694 1,021
======== ========= =======
EARNINGS (LOSS) PER COMMON SHARE:
Basic $ (0.20) $ 0.04
======== =======
Diluted $ (0.20) $ 0.04
======== =======
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING
Basic 23,619 -- 23,619
======== ========= =======
Diluted 23,619 -- 23,619
======== ========= =======
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements
5
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STAFF BUILDERS INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE FISCAL YEAR ENDED FEBRUARY 28, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
PRO FORMA
STAFF BUILDERS ADJUSTMENTS PRO FORMA
HISTORICAL (A) CONSOLIDATED
-------------- ----------- ------------
<S> <C> <C> <C>
REVENUES:
Home health care $310,297 $(310,297)(B) $ --
Supplemental staffing 124,867 (30,362)(B) 94,505
-------- --------- -------
Total service revenues 435,164 (340,659) 94,505
Sales of licenses and fees, net 2,424 (2,234)(B) 190
-------- --------- -------
Total revenues 437,588 (342,893) 94,695
-------- --------- -------
COSTS AND EXPENSES:
Operating costs 299,057 (225,154)(B) 73,903
General and administrative expenses 150,169 (130,659)(B) 19,510
Amortization of intangible assets 1,314 (1,190)(B) 124
Interest expense 4,233 (2,951)(B) 1,282
Interest (income) (1,061) 986 (B) (75)
Other (income) expense, net 464 (315)(B) 149
Medicare and Medicaid audit adjustments 29,000 (29,000)(B) --
Restructuring costs 20,464 (20,464)(B) --
-------- --------- -------
Total costs and expenses 503,640 (408,747) 94,893
-------- --------- -------
LOSS BEFORE INCOME TAXES (66,052) 65,854 (198)
PROVISION (BENEFIT) FOR INCOME TAXES 7,034 (7,105)(C) (71)
-------- --------- -------
NET LOSS (73,086) 72,959 (127)
======== ========= =======
LOSS PER COMMON SHARE:
Basic $ (3.16) 0.00
======== =======
Diluted $ (3.16) 0.00
======== =======
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING:
Basic 23,162 -- 23,162
======== ========= =======
Diluted 23,162 -- 23,162
======== ========= =======
</TABLE>
See Notes to Pro Forma Consolidated Financial Statements
6
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NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(A) Pro forma adjustments to reflect the Distribution.
(B) Pro forma adjustments to remove assets, liabilities, revenues and expenses
of TLC.
(C) Pro forma adjustment to give effect to the computation of income taxes as
if separate income tax returns were filed.
7
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(c) Exhibits
10.1 Distribution Agreement between Staff Builders, Inc. and Tender
Loving Care Health Care Services, Inc., dated October 20, 1999. (A)
10.2 Tax Allocation Agreement between Staff Builders, Inc. and
Tender Loving Care Health Care Services, Inc., dated October 20, 1999. (A)
10.3 Transitional Services Agreement between Staff Builders, Inc.
and Tender Loving Care Health Care Services, Inc., dated October 20, 1999. (A)
10.4 License Agreement between Staff Builders, Inc. and Tender
Loving Care Health Care Services, Inc, dated October 20, 1999. (A)
10.5 Sublease between Staff Builders, Inc.(NY) and ATC Healthcare
Services, Inc., dated October 20, 1999. (A)
10.6 Employee Benefits Agreement between Staff Builders, Inc. and
Tender Loving Care Health Care Services, Inc., dated October 20, 1999. (A)
99. Press Release, dated October 20, 1999.
(A) Incorporated by reference to Tender Loving Care Health Care
Services, Inc.'s Report on Form 10-Q for the Fiscal Quarter ended August 31,
1999 (File No. 0-25777), filed with the Commission on October 20, 1999.
8
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Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
STAFF BUILDERS, INC.
Dated: October 20, 1999 By: /s/ Stephen Savitsky
---------------------------------
Stephen Savitsky
Chairman of the Board and
Chief Executive Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description of Exhibit
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<S> <C>
10.1 Distribution Agreement between Staff Builders, Inc. and Tender
Loving Care Health Care Services, Inc., dated October 20, 1999. (A)
10.2 Tax Allocation Agreement between Staff Builders, Inc. and Tender
Loving Care Health Care Services, Inc., dated October 20, 1999. (A)
10.3 Transitional Services Agreement between Staff Builders, Inc. and
Tender Loving Care Health Care Services, Inc., dated October 20,
1999. (A)
10.4 Trademark License Agreement between Staff Builders, Inc. and
Tender Loving Care Health Care Services, Inc., dated October 20,
1999. (A)
10.5 Sublease between Staff Builders, Inc. (NY) and ATC Healthcare
Services, Inc., dated October 20, 1999. (A)
10.6 Employee Benefits Agreement between Staff Builders, Inc. and
Tender Loving Care Health Care Services, Inc. dated October 20,
1999. (A)
99. Press Release, dated October 20, 1999.
</TABLE>
(A) Incorporated by reference to Tender Loving Care Health Care
Services, Inc.'s Report on Form 10-Q for the Fiscal Quarter ended August 31,
1999 (File No. 0-25777), filed with the Commission on October 20, 1999.
<PAGE> 1
EXHIBIT 99
Staff Builders, Inc. (SBLI)
Tender Loving Care(R) Health Care Services, Inc. (TLCS)
Press Release
Stephen Savitsky, Chairman and CEO - TLCS and SBLI (516) 358 1000
Website: staffbuilders.com
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Dale R. Clift, President & Chief Operating Officer - TLCS (516) 358 1000
Will Derr, Chief Financial Officer TLCS (516) 358 1000
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David Savitsky, President & Chief Operating Officer - SBLI (516) 358 1000
Joseph Murphy, Chief Financial Officer - SBLI
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INVESTOR/MEDIA RELATIONS: Anne Gregory, National Director, Corporate
Communications (281) 679 0400 #12
STAFF BUILDERS ANNOUNCES SPIN-OFF OF HOME HEALTH CARE DIVISION
STAFF BUILDERS, INC. REPORTS SECOND QUARTER AND FIRST HALF RESULTS FOR FISCAL
YEAR 2000
FOR IMMEDIATE RELEASE
HIGHLIGHTS
o On October 20, 1999, Staff Builders, Inc. completed the spin-off of its home
health care division.
o Revenues for the supplemental staffing division ("SBLI") increased 27.6% for
the six months ended August 31, 1999 to $75.3 million from $59.0 million for
the same period in the prior year.
o Revenues for the home health care division ("TLCS") decreased 17.1% for the
six months ended August 31, 1999 to $135.3 million from $163.1 million for
the same period in the prior year.
LAKE SUCCESS, NY, OCTOBER 21, 1999 ... Staff Builders, Inc., (OTC BB: SBLI) one
of the nation's largest home health care and staffing providers, today announced
the completion of its spin-off of the home health care division, and reported
results for the second quarter of fiscal 2000, ended August 31, 1999.
HOME CARE DIVISION SPIN-OFF COMPLETED
Staff Builders, Inc. has distributed to Staff Builders' stockholders of record
on October 12, 1999, all of the outstanding common stock of its wholly-owned
subsidiary, Tender Loving Care(R) Health Care Services, Inc. ("TLCS"). This
distribution completes Staff Builders' previously announced spin-off of its home
heath care division.
The spin-off is the culmination of the plan announced last spring by Staff
Builders to separate its home health care business, which as of yesterday will
be conducted by TLCS. The supplemental staffing business will remain with Staff
Builders.
Staff Builders instructed American Stock Transfer & Trust Company, its transfer
and distribution agent, to deliver stock certificates for shares of TLCS common
stock to Staff Builders' stockholders of record on October 12, 1999. One share
of TLCS common stock was distributed for every two shares of Staff Builders
(SBLI) Class A and Class B common stock outstanding.
The Company expects that the TLCS common stock will soon be quoted on the OTC
Bulletin Board under the symbol "TLCS."
<PAGE> 2
"We are excited to have completed the spin-off of the home health division as
Tender Loving Care(R) Health Care Services, Inc., a separate publicly held
company," said Stephen Savitsky, who remains Chairman and Chief Executive
Officer for both Staff Builders and Tender Loving Care(R). "We believe it will
enable financial analysts and institutional investors to better understand and
evaluate the intricacies of each of our two businesses: home health care and
supplemental staffing."
STAFF BUILDERS, INC. STAFFING BUSINESS GROWTH CONTINUES
"The $72 billion staffing services industry, which continues to grow, offers a
wealth of opportunity for our staffing business. The supplemental staffing
business will remain with SBLI and be operated as ATC Health Care Services, Inc.
("ATC"). ATC continues to be a health care niche market leader, again showing
growth in revenue this quarter," said Stephen Savitsky, Chairman and CEO.
Supplemental staffing service revenues for the current quarter were $37.8
million, a 19% increase over $31.8 million reported in the second quarter of
fiscal 1998. Supplemental staffing revenues increased 28% for the six months
ended August 31, 1999 to $75.3 million from $59.0 million for the same period in
the prior year. The supplemental staffing revenues include the information
technology division which was recently sold, as previously announced. Without
the sales which were generated by this sold division, the SBLI staffing business
revenues were $58.2 million for the six months ended August 31, 1999, an
increase of 32%, as compared to $44.1 million in the same period in the prior
year.
CONSOLIDATED FINANCIALS FOR STAFF BUILDERS, INC.
Total revenues for the second quarter of fiscal 2000 were $103.5 million, a
decrease of $8.2 million or 7.3%, for the current quarter from $111.7 million
for the year ago quarter. Net loss for the second quarter of fiscal year 2000
was ($2.6 million), or ($.11) per share, compared to net income of $135
thousand, or $.01 per share, for the prior year period. Total revenues for the
six months ended August 31, 1999 were $211.1 million, down 5.3%, compared to
$222.9 million for the same period in the prior year. Net loss for the six
months ended August 31, 1999 was ($4.7 million), or ($.20) per share, compared
to a net profit of $36 thousand for the same period in the prior year.
STAFF BUILDERS, INC. provides supplemental staffing personnel under contractual
arrangements to hospitals, nursing homes, clinics and other health care
facilities with 57 locations in 27 states.
TENDER LOVING CARE(R) HOME HEALTH CARE SERVICES, INC. is an international
provider of home health care services with 107 locations in 25 states and the
District of Columbia, as well as master franchises in Japan, Spain and Brazil.
The Company's web address is www.staffbuilders.com.
Except for historical information contained herein, the statements made in this
release constitute forward-looking statements that involve certain risks and
uncertainties. Certain factors may cause actual results to differ materially
from those contained in the forward looking statements, including those risks
detailed in Staff Builders Inc.'s Form 10-Q for the period ended August 31, 1999
filed with the Securities and Exchange Commission on October 20, 1999, in Tender
Loving Care Health Care Services Inc.'s Form 10-Q for the period ended August
31, 1999 filed with the Securities and Exchange Commission on October 20,1999,
in Staff Builders Inc.'s Form 10-K as of February 28, 1999 and for the year then
ended filed with the Securities and Exchange Commission on June 11,1999 and in
Tender Loving Care Health Care Services Inc.'s Registration Statement on Form
10.
Table Follows
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STAFF BUILDERS, INC. (SBLI)
TENDER LOVING CARE(R) HEALTH CARE SERVICES, INC. (TLCS)
CONDENSED STATEMENTS OF CONSOLIDATED OPERATIONS
(Unaudited) (In thousands, except per share data)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
AUGUST 31, AUGUST 31,
---------------------- ----------------------
1999 1998 1999 1998
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
REVENUES
Service revenues:
Home health care $ 65,370 $ 79,539 $ 135,297 $ 163,146
Supplemental staffing 37,759 31,761 75,317 59,017
--------- --------- --------- ---------
Total service revenues 103,129 111,300 210,614 222,163
Sales of licensees and fees, net 362 368 542 783
--------- --------- --------- ---------
Total Revenues 103,491 111,668 211,156 222,946
--------- --------- --------- ---------
COSTS AND EXPENSES
Operating costs 70,679 74,185 144,529 150,568
General and administrative expenses 33,428 36,116 67,836 70,143
Amortization of intangible assets 345 318 569 630
Interest expense 1,924 852 3,167 1,904
Interest (income) (280) (214) (378) (562)
Other (income) expense, net (316) 168 (330) 195
--------- --------- --------- ---------
TOTAL COSTS AND EXPENSES 105,780 111,425 215,393 222,878
--------- --------- --------- ---------
INCOME (LOSS) BEFORE INCOME TAXES (2,289) 243 (4,237) 68
PROVISION FOR INCOME TAXES 277 108 436 32
--------- --------- --------- ---------
NET INCOME (LOSS) $ (2,566) $ 135 $ (4,673) $ 36
--------- --------- --------- ---------
WEIGHTED AVERAGE NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES:
Basic 23,619 22,526 23,619 23,090
--------- --------- --------- ---------
Diluted 23,619 22,563 23,619 23,190
--------- --------- --------- ---------
INCOME (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE:
Basic $ (.11) $ .01 $ (.20) $ .00
--------- --------- --------- ---------
Diluted $ (.11) $ .01 $ (.20) $ .00
--------- --------- --------- ---------
</TABLE>
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