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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported) - July 16, 1998
THE DWYER GROUP, INC.
(Exact name of registrant as specified in its chapter)
DELAWARE 0 - 15227 73-0941783
(State or other (Commission (IRS employer
jurisdiction of file number) identification no.)
incorporation or
organization)
1010 N. UNIVERSITY PARKS DRIVE
WACO, TEXAS 76707
(Address of principal executive offices)
(254) 745-2400
(Registrant's telephone number,
including area code)
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The Registrant hereby amends its Current Report on Form 8-K, dated July 16,
1998, for the purpose of filing pro forma financial information with regard to
the sale of the majority of the assets of two of its subsidiaries, General
Business Services, Inc. ("GBS") and Edwin K. Williams & Co. ("EKW").
ITEM 2. DISPOSITION OF ASSETS
On July 16, 1998, The Dwyer Group, Inc. (the "Company"), a Delaware corporation,
completed the sale of the majority of the assets of two of its subsidiaries, GBS
and EKW, to Century Business Services, Inc. ("Century"), a Delaware corporation
and a leading provider of outsourced business services to medium sized companies
throughout the United States.
The transaction was effected by means of an Asset Purchase Agreement by and
among the Company, Century, GBS, EKW and GBS Acquisition Corp., an Ohio
corporation and a subsidiary of Century ("Acquisition Sub"), by which
substantially all of the assets of GBS and EKW were sold or assigned to
Acquisition Sub. The Company received an aggregate of $3.8 million in cash and
up to 47,407 unregistered shares of Century common stock (the "Stock") subject
to certain contingencies. The Stock to be received is subject to a two-year
lock-up agreement. One-half of the stock will be earned based on the renewal of
certain GBS franchisees by December 31, 1998. Management believes that the
Company will receive substantially all of this portion of the Stock by May of
1999. The other half of the Stock will be held in escrow for two years and 90
days from the date of the agreement in order to facilitate the payment to
Century of any losses incurred by Century which are subject to indemnification
by the Company. At this time management cannot estimate the amount of this
portion of the Stock which will eventually be received by the Company.
Consideration for the transaction was determined on the basis of arm's length
negotiations by the parties.
Item 7. Pro Forma Financial Information and Exhibits
(a) Pro forma financial information
The following unaudited pro forma condensed financial
statements referenced under the following "Index to Financial
Statements" are filed as part of this report:
<TABLE>
<CAPTION>
Index to Financial Statements Page
<S> <C>
1. Pro Forma Condensed Balance Sheet as of
June 30, 1998 (unaudited) F-1
2. Pro Forma Condensed Statement of Income
For the Year Ended December 31, 1997 (unaudited) F-2
3. Pro Forma Condensed Statement of Income
For the Six Months Ended June 30, 1998 (unaudited) F-3
</TABLE>
The aforementioned pro forma financial statements reflect the financial results
of the Company as if the transaction had been consummated at the beginning of
each accounting period or at the balance sheet date, as applicable. These
statements have been prepared by management of the Company for informational
purposes only and are based upon the historical information included herein and
other financial information. These pro forma statements do not purport to be
indicative of the results which would have occurred had the acquisition been
made at the beginning of each respective period or which may be expected to
occur in the future. The pro forma statements should be read in conjunction with
the financial statements and notes thereto included in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1997, and Quarterly
Reports on Form 10-QSB for the quarters ended March 31, 1998 and June 30, 1998.
(b) Exhibits
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE DWYER GROUP, INC.
Date: October 19, 1998 \s\ Thomas J. Buckley
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Thomas J. Buckley
Chief Financial Officer and Treasurer
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THE DWYER GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL GBS EKW ADJUSTMENTS PRO FORMA
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 1,335,806 $ -- $ -- $ 3,600,000 (a) $ 4,935,806
Marketable securities, available-for-sale 2,121,396 -- -- -- 2,121,396
Trade accounts receivable, net 1,017,000 (168,789) (85,451) -- 762,760
Receivables from related parties 917,669 -- -- -- 917,669
Trade notes receivable, current portio 1,026,652 (85,212) -- -- 941,440
Other current assets 987,640 (228,322) (168,488) -- 590,830
----------- ----------- ----------- ----------- -----------
Total current assets 7,406,163 (482,323) (253,939) 3,600,000 10,269,901
Property and equipment, net 1,235,901 (60,134) (16,644) -- 1,159,123
Notes and accounts receivable from related parties 1,042,004 -- -- -- 1,042,004
Assets held for sale 176,575 -- -- -- 176,575
Trade notes receivable, net 3,266,045 (158,450) (75,420) -- 3,032,175
Purchased franchise rights, net 2,143,646 (650,792) (390,785) -- 1,102,069
Investment, equity method 430,716 -- (430,716) -- --
Net deferred tax asset 448,959 -- -- -- 448,959
Other assets 206,171 -- -- 180,000 (b) 386,171
----------- ----------- ----------- ----------- -----------
TOTAL ASSETS $16,356,180 $(1,351,699) $(1,167,504) $ 3,780,000 $17,616,977
=========== =========== =========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable, trade $ 788,620 $ (120,596) $ (61,366) $ -- $ 606,658
Accounts payable to related parties 13,611 -- -- -- 13,611
Accrued liabilities 1,332,333 (40,542) (21,646) 600,000(c) 1,870,145
Current portion of long-term debt 169,891 (67,974) -- -- 101,917
----------- ---------- ----------- ----------- ------------
Total current liabilities 2,304,456 (229,112) (83,012) 600,000 2,592,332
Long-term debt, less current portion 517,773 (82,672) -- -- 435,101
Deferred franchise sales revenue 1,229,198 -- -- -- 1,229,198
Stockholders' equity:
Preferred stock -- -- -- -- --
Common stock 689,526 -- -- -- 689,526
Additional paid-in capital 9,020,358 -- -- -- 9,020,358
Retained earnings 2,683,684 -- -- 1,055,592(d) 3,739,276
Unrealized gain on available-for-sale securities 5,357 -- -- -- 5,357
Treasury stock, at cost (94,171) -- -- -- (94,171)
----------- ---------- ---------- ----------- ------------
Total stockholders' equity 12,304,754 -- -- 1,055,592 13,360,346
----------- ---------- ---------- ----------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $16,356,181 $ (311,784) $ (83,012) $ 1,655,592 $ 17,616,977
=========== ========== ========== =========== ============
</TABLE>
(a) To record net cash proceeds from transaction.
(b) To record value of stock received in transaction.
(c) To reflect income tax liability resulting from gain on sale of assets.
(d) To record after-tax gain on sale of assets.
F-1
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THE DWYER GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL GBS (1) EKW (1) ADJUSTMENTS PRO FORMA
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES $ 15,510,352 $(2,710,265) $(1,846,177) $ 216,000 (a) $ 11,169,910
COSTS AND EXPENSES:
General, administrative and selling 11,751,752 (1,736,277) (1,232,030) 100,000 (b) 8,883,445
Operating expenses 2,017,775 (1,040,765) (263,812) 713,198
Depreciation and amortization 556,642 (139,864) (25,697) 391,081
Interest 59,108 (9,302) -- 49,806
------------ ----------- ----------- ----------- ------------
Total costs and expenses 14,385,277 (2,926,208) (1,521,539) 100,000 10,037,530
Income before taxes 1,125,075 215,943 (324,638) 116,000 1,132,380
Income tax (expense) benefit (378,299) (73,421) 110,377 (39,440)(c) (380,783)
------------ ----------- ----------- ----------- ------------
Net income $ 746,776 $ 142,522 $ (214,261) $ 76,560 $ 751,597
============ =========== =========== =========== ============
Earnings per share - basic $ 0.11 $ 0.11
============ ============
Earnings per share - diluted $ 0.11 $ 0.11
============ ============
Weighted average common shares 6,774,323 6,774,323
============ ============
Weighted average common shares and
potential dilutive common shares 6,886,458 6,886,458
============ ============
</TABLE>
(1) Entries in this column reflect the elimination of revenues and expenses
associated with assets sold.
Pro Forma Adjustments:
(a) To reflect the amount of interest earned on the cash portion of the sale
proceeds ($3.6 million), calculated at the rate of 6% per annum.
(b) Portion of general and administrative expenses previously allocated to GBS
and EKW which could not be eliminated.
(c) To reflect income tax expense for the net pro forma adjustments.
F-2
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THE DWYER GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
HISTORICAL GBS (1) EKW (1) ADJUSTMENTS PRO FORMA
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
REVENUES $ 7,902,285 $(1,490,053) $(786,576) $ 108,000 (a) $ 5,733,656
COSTS AND EXPENSES:
General, administrative and selling 6,132,480 (780,428) (589,161) 50,000 (b) 4,812,891
Operating expenses 1,500,537 (558,371) (168,183) 773,983
Depreciation and amortization 339,705 (70,739) (54,369) 214,597
Interest 35,862 (21,645) (150) 14,067
----------- ----------- --------- --------- -----------
Total costs and expenses 8,008,584 (1,431,183) (811,863) 50,000 5,815,538
Operating income (loss) (106,299) (58,870) 25,287 58,000 (81,882)
Non-operating income:
Gain on sale of securities 317,374 -- -- -- 317,374
----------- ----------- --------- --------- -----------
Total non-operating income 317,374 -- -- -- 317,374
Income before income taxes 211,075 (58,870) 25,287 58,000 235,492
Income tax expense (benefit) (71,003) 20,016 (8,598) (19,720)(c) (79,305)
----------- ----------- --------- --------- -----------
Net income $ 140,072 $ (38,854) $ 16,689 $ 38,280 $ 156,187
=========== =========== ========= ========= ===========
Earnings per share - basic $ 0.02 $ 0.02
=========== ===========
Earnings per share - diluted $ 0.02 $ 0.02
=========== ===========
Weighted average common shares 6,775,427 6,775,427
=========== ===========
Weighted average common shares and
potential dilutive common shares 6,974,166 6,974,166
=========== ===========
</TABLE>
(1) Entries in this column reflect the elimination of revenues and expenses
associated with assets sold.
Pro Forma Adjustments:
(a) To reflect the amount of interest earned on the cash portion of the sale
proceeds ($3.6 million), calculated at the rate of 6% per annum.
(b) Portion of general and administrative expenses previously allocated to
GBS and EKW which could not be eliminated.
(c) To reflect income tax expense for the net pro forma adjustments.
F-3
