<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
- --------------------------------------------------------------------------------
FORM 8-K/A NO. 1
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) October 31, 1997
TEAM AMERICA CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 0-21533 31-1209872
- ----------------------------- ------- ----------
(State or Other Jurisdiction) (Commission File Number) (IRS Employer
Identification No.)
110 E. Wilson Bridge Road, Worthington Ohio 43085
------------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 848-3995
--------------
Not Applicable
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(former name or former address, if changed since last report)
- 1 -
<PAGE> 2
TEAM AMERICA CORPORATION
FORM 8-K/A
AMENDED REPORT
OCTOBER 31, 1997
TABLE OF CONTENTS
-----------------
DESCRIPTION PAGE NO.
- -------------------------------------------------- ----------
Form 8-K Required Information
Item 2. Acquisitions or Disposition of Assets 3
Item 7. Financial Statements and Exhibits 3
Signature 5
Index to Financial Statements 6
Index to Exhibits 31
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<PAGE> 3
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 31, 1997, TEAM America Corporation, an Ohio corporation ("TEAM
America"), TEAM America of Idaho, Inc., an Ohio corporation and a wholly owned
subsidiary of TEAM America ("TA Idaho"), and Aspen Consulting Group, Inc., an
Idaho corporation ("Aspen"), consummated a merger pursuant to an Agreement and
Plan of Merger, dated as of October 20, 1997 (the "Merger Agreement"), whereby
TA Idaho would be merged with and into Aspen, effective as of October 31, 1997,
with Aspen being the surviving entity as a wholly owned subsidiary of TEAM
America (the "Merger"). Under the terms of the Merger Agreement, holders of
Aspen common stock (the "Aspen Common Stock"), received a combination of cash
and TEAM America common stock, without par value (the "TEAM America Common
Stock"). The total consideration paid to Aspen stockholders in the Merger
consists of $2,000,000 in cash and 727,273 shares of TEAM America Common Stock.
The Merger was accomplished through arms-length negotiations between TEAM
America's management and Aspen's management. There was no material relationship
between Aspen's shareholders and TEAM America or any of TEAM America's
affiliates, any of TEAM America's directors or officers, or any associate of any
such TEAM America director or officer, prior to this transaction. The Merger was
approved by the shareholders of Aspen by unanimous written consent of the
shareholders.
The foregoing information concerning the Merger, insofar as it relates to
matters contained in the Merger Agreement, is qualified in its entirety by
reference to the Merger Agreement which is attached as an exhibit to this report
and incorporated herein by reference. TEAM America's press release issued
October 20, 1997 regarding the Merger Agreement is attached as an exhibit to
this report and is incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Business Acquired:
The acquisition of Aspen is considered significant and based on the
requirements of Regulation S-X, audited financial statements for the most
recent fiscal year and unaudited financial statements as of and for the
nine months ended September 30, 1997 are included herein.
(1) Audited financial statements of Aspen as of and for the year
ended February 28, 1997.
(2) Unaudited balance sheet of Aspen as of September 30, 1997,
unaudited condensed statements of income and cash flows for the
nine month periods ended September 30, 1997 and 1996 and the
unaudited condensed statement of stockholders' equity for the
nine month period ended September 30, 1997.
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<PAGE> 4
(b) Pro Forma Financial Information:
Pro Forma combining financial statements of TEAM America and Aspen are
included as required by Article 11 of Regulation S-X.
(1) Unaudited pro forma combining statement of income for the year
ended December 31, 1996 as if the acquisition occurred as of
January 1, 1996.
(2) Unaudited pro forma combining statement of income for the nine
month period ended September 30, 1997 as if the acquisition
occurred as of January 1, 1996.
(3) Unaudited pro forma combining balance sheet as of September 30,
1997 as if the acquisition occurred as of that date.
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description
------------- ------------------------------------------------------------------------
<S> <C>
2* Agreement and Plan of Merger, dated as of October 20, 1997, among TEAM
America Corporation, TEAM America of Idaho, Inc., and Aspen Consulting
Group, Inc.
2.1 Independent Auditors' Consent
99* Press release of TEAM America Corporation issued October 20, 1997,
regarding the Merger Agreement.
</TABLE>
*Previously filed with Form 8-K
-4-
<PAGE> 5
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 hereunto duly authorized.
TEAM America Corporation
DATED: January 12, 1998 BY: /s/ Michael R. Goodrich
---------------- -----------------------
Michael R. Goodrich
Chief Financial Officer and
Vice President Finance
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<PAGE> 6
TEAM AMERICA CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
ITEM PAGE NO
- ------------------------------------------------------------------------------------ ---------
<S> <C>
Audited Financial Statements:
Independent Auditors' Report 8
Balance Sheet of Aspen Consulting Group, Inc. (Aspen). 9
Statement of Income of Aspen for the Year Ended February 28, 1997. 11
Statements of Stockholders' Equity of Aspen for the Year Ended February 28, 12
1997.
Statements of Cash Flows of Aspen for the Year Ended February 28, 1997. 13
Notes to Financial Statements February 28, 1997. 15
Unaudited Interim Financial Statements:
Unaudited Balance Sheet of Aspen as of September 30, 1997. 20
Unaudited Statements of Income of Aspen for the Nine Months Ended September 22
30, 1997 and 1996.
Unaudited Statement of Stockholders' Equity of Aspen for the Nine Months Ended 23
September 30, 1997.
Unaudited Statements of Cash Flows of Aspen for the Nine Months Ended 24
September 30, 1997 and 1996.
</TABLE>
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<PAGE> 7
TEAM AMERICA CORPORATION
INDEX TO FINANCIAL STATEMENTS
(continued)
<TABLE>
<CAPTION>
ITEM PAGE NO
- ------------------------------------------------------------------------------------ ---------
<S> <C>
Unaudited Pro Forma Combining Financial Statements:
Introduction to Pro Forma Combining Financial Statements. 25
Pro Forma Combining Statement of Operations for the Year Ended December 31, 26
1996.
Pro Forma Combining Statement of Operations for the Nine Months ended 27
September 30, 1997.
Pro Forma Combining Balance Sheet as of September 30, 1997. 28
Notes to Pro Forma Combining Financial Statements. 30
</TABLE>
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<PAGE> 8
INDEPENDENT AUDITORS' REPORT
----------------------------
To the Board of Directors
Aspen Consulting Group, Inc.
Twin Falls, Idaho
We have audited the accompanying balance sheet of Aspen Consulting Group,
Inc. as of February 28, 1997, and the related statements of income,
stockholders' equity, and cash flows for the year then ended. All information
included in these financial statements is the responsibility of the
Corporation's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted the audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Aspen Consulting Group, Inc.
as of February 28, 1997, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.
Louisville, Kentucky
December 12, 1997
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<PAGE> 9
ASPEN CONSULTING GROUP, INC.
BALANCE SHEET
February 28, 1997
<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents (Notes 1 and 8) $ 108,698
Trade accounts receivable (Note 1) 999,450
Advances to employees 1,455
Due from stockholders (Note 7) 1,780
Inventories (Note 1) 2,029
Prepaid withholding taxes 10,000
----------
Total current assets 1,123,412
----------
FURNITURE AND EQUIPMENT, at cost (Note 1)
Furniture and fixtures 8,357
Equipment 59,730
----------
68,087
Less accumulated depreciation 58,329
----------
9,758
----------
OTHER ASSETS
Investment in related corporation (Note 6) 8,000
Investment in securities (Note 2) 95,266
Investment in real estate, net of accumulated
depreciation $3,414 (Note 4) 248,028
Note receivable - related party (Notes 3 and 7) 47,363
----------
398,657
----------
$1,531,827
==========
</TABLE>
See Notes to Financial Statements.
-9-
<PAGE> 10
<TABLE>
<S> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current maturities of long-term debt (Note 4) $ 170,401
Accounts payable 22,628
Accrued payroll and payroll taxes 885,825
Accrued expenses 320,767
Accrued income taxes (Note 1) 12,717
Deferred income taxes (Notes 1 and 9) 4,297
----------
Total current liabilities 1,416,635
----------
COMMITMENTS AND CONTINGENCIES
(Notes 1, 5, 8 and 10)
STOCKHOLDERS' EQUITY
Common stock, no par value, 10,000 shares
authorized, issued and outstanding 300
Retained earnings 114,892
----------
115,192
----------
$1,531,827
==========
</TABLE>
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<PAGE> 11
ASPEN CONSULTING GROUP, INC.
STATEMENT OF INCOME
Year Ended February 28, 1997
<TABLE>
<S> <C>
Net sales $44,086,636
Cost of sales 42,441,901
-----------
Gross profit 1,644,735
Selling and administrative expenses 1,581,412
-----------
Operating income 63,323
-----------
Other income (expense):
Interest income 5,841
Dividend income 2,160
Interest expense (8,621)
Gain on sale of securities 2,216
-----------
1,596
-----------
Net income before income taxes 64,919
Provision for income taxes (Notes 1 and 9) 14,544
-----------
Net income $ 50,375
===========
</TABLE>
See Notes to Financial Statements.
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<PAGE> 12
ASPEN CONSULTING GROUP, INC.
STATEMENT OF STOCKHOLDERS' EQUITY
Year Ended February 28, 1997
<TABLE>
<CAPTION>
Common Retained
Stock Earnings Total
------ -------- -----
<S> <C> <C> <C>
Balances, February 29, 1996 $300 $ 48,364 $ 48,664
Net income 50,375 50,375
Unrealized gains on available-for-sale
securities, net of tax effect of $4,297 16,153 16,153
-------- --------
Balances, February 28, 1997 $300 $114,892 $115,192
==== ======== ========
</TABLE>
See Notes to Financial Statements.
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<PAGE> 13
ASPEN CONSULTING GROUP, INC.
STATEMENT OF CASH FLOWS
Year Ended February 28, 1997
Increase (Decrease) in Cash
<TABLE>
<S> <C>
Cash flows from operating activities:
Cash received from customers $ 44,557,304
Cash paid to suppliers and employees (44,596,633)
Interest paid (8,620)
Interest received 3,479
Dividend received 2,160
Income taxes paid (1,827)
------------
Net cash used in operating activities (44,137)
------------
Cash flows from investing activities:
Purchase of real estate (239,876)
Purchases of equipment (23,262)
Note receivable - related party (10,532)
Payments to stockholders (1,780)
Proceeds from sale of investments 17,229
Purchase of investments (10,586)
Repayment of employees advances 2,000
------------
Net cash used in investing activities (266,807)
------------
Cash flows from financing activities:
Proceeds from note payable 178,500
Principal payments on note payable (8,099)
------------
Net cash provided by financing activities 170,401
------------
Net decrease in cash and cash equivalents (140,543)
Cash and cash equivalents, beginning of year 249,241
------------
Cash and cash equivalents, end of year $ 108,698
============
</TABLE>
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<PAGE> 14
ASPEN CONSULTING GROUP, INC.
STATEMENT OF CASH FLOWS
Year Ended February 28, 1997
<TABLE>
<S> <C>
RECONCILIATION OF NET INCOME TO NET
CASH USED IN OPERATING ACTIVITIES
Net income $ 50,375
---------
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation (Note 1) 17,722
Gain on sale of securities (2,216)
Change in assets and liabilities:
(Increase) decrease in:
Trade accounts receivable 510,654
Inventories (2,029)
Prepaid expenses (10,000)
Increase (decrease) in:
Accounts payable 7,113
Accrued payroll and payroll taxes (671,580)
Accrued expenses 55,824
---------
Total adjustments (94,512)
---------
Net cash used in operating activities $ (44,137)
=========
</TABLE>
See Notes to Financial Statements.
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<PAGE> 15
ASPEN CONSULTING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
Note 1. Nature of Business and Significant Accounting Policies
Nature of business:
The Company is a professional employer organization located in
Twin Falls, Idaho, engaged in the leasing of employees to
companies primarily throughout the Northwestern United States.
Significant accounting policies:
Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those
estimates.
Inventories:
Inventories consist primarily of computer parts and are stated
at the lower of cost or market.
Property and equipment:
Property and equipment is stated at cost. Depreciation is
computed using accelerated methods over the following
estimated useful lives:
Real estate 40
Furniture and fixtures 5-7
Equipment 5-7
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<PAGE> 16
NOTES TO FINANCIAL STATEMENTS
Income taxes:
Income taxes are provided for the tax effects of transactions
reported in the financial statements and consist of taxes
currently due or refundable plus certain accrued expenses for
financial and income tax reporting. The deferred tax assets
and liabilities represent the future tax return consequences
of the differences between the fair market value and cost
basis of investments, which will either be taxable or
deductible when the assets and liabilities are recovered or
settled.
Allowance for bad debts:
The Company considers accounts receivable to be fully
collectible; accordingly, no allowance for doubtful accounts
is required.
Cash equivalents:
The Company considers all highly liquid instruments with a
maturity of three months or less to be cash equivalents.
Note 2. Investment in Securities
The following is a summary of investment securities at February
28, 1997:
<TABLE>
<S> <C>
Available-for-sale securities:
Marketable equity securities, at cost $74,816
Gross unrealized gains 20,450
-------
Marketable equity securities, at fair value $95,266
=======
</TABLE>
Note 3. Receivables from Related Parties
The Company has a 7% interest bearing demand note receivable from a
related party in the amount of $47,363 as of February 28, 1997.
-16-
<PAGE> 17
NOTES TO FINANCIAL STATEMENTS
Note 4. Long-Term Debt
Long-term debt consists of the following:
<TABLE>
<S> <C>
Notepayable to a bank; interest is at the bank's prime rate
plus two and three quarters percent (2.75%) and is payable
in monthly principal installments of $1,867 plus interest;
the interest rate at February 28, 1997 was 7.25%;
collateralized by real estate of the Company. $170,401
Less current maturities 170,401
--------
$ 0
========
</TABLE>
The real estate collateralized is a condominium used for
entertaining clients and rewarding employees. In October 1997, the
company transferred the real estate and related note payable to the
shareholders of the corporation, reporting no gain or loss.
Therefore, the balance of the note is classified as current.
Note 5. Pension Plan
The Company has a Multi-employer 401(k) Retirement plan for those
employees who meet the eligibility requirements set forth in the
plan. Contributions to the plan are made at the discretion of the
Board of Directors. Pension expense for year ended February 28, 1997
was $0.
Note 6. Investment in Related Corporation
The Company purchased a minority interest in a company that is one
third owned by the shareholders. The investment is maintained at
cost. The cost basis as of February 28, 1997 was $8,000. In October
1997, the minority interest was sold to a shareholder of Aspen
Consulting Group, Inc. No gain or loss was recognized with this
transaction.
-17-
<PAGE> 18
NOTES TO FINANCIAL STATEMENTS
Note 7. Related Party Activity
Priority One Staffing Services (Priority One) is a company offering
temporary staffing services on a contract basis. This entity is
owned by the shareholders of the Company and is a client of the
Company. Billings to Priority One for the year ended February 28,
1997 were $491,768. The Company also maintains the accounts
receivable and cash receipts records for Priority One at no charge.
As of February 28, 1997, priority one account receivable balance of
$56,118 was due for client services.
Magic Valley Business Systems (Magic Valley) is an office machine
sales and repair business and is a client of the Company. The
shareholders of the Company own one third of Magic Valley and the
Company holds a minority interest in Magic Valley. Billings to Magic
Valley for the year ended February 28, 1997 were $685,131.
For both of the above entities, client transactions were consummated
on terms equivalent to those that prevail in arm's length
transactions.
The Company leases its facilities from the shareholders of the
Company on a month to month basis. Total rent expense for the year
ended February 28, 1997 was $29,092. As of February 28, 1997, the
Company had receivables from shareholders in the amount of $1,780.
Note 8. Concentration of Credit Risk
The Company maintains its cash accounts in one financial
institution. The total cash balances are insured by the Federal
Deposit Insurance Corporation (FDIC) up to $100,000. A summary of
the total insured and uninsured amounts at February 28, 1997 is as
follows:
<TABLE>
<S> <C>
Cash $108,698
Reconciling items, net 666,440
--------
Total cash held at bank 775,138
Portion insured by FDIC 100,000
--------
Uninsured cash balance $675,138
========
</TABLE>
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<PAGE> 19
NOTES TO FINANCIAL STATEMENTS
Note 9. Income taxes
The provision for income taxes consists of the following:
<TABLE>
<S> <C>
Federal income tax - current $ 9,492
State income tax - current 5,052
-------
$14,544
=======
</TABLE>
The provision for income taxes differs from the expense that would
result from applying federal and state statutory rates to income
before income taxes due to the nondeductibility of meals and
entertainment expenses.
Deferred taxes result from the timing of taxable gains on the sale
of investments.
Note 10. Operating Leases
The Company leases two vehicles under separate operating leases.
Lease expense for the year ended February 28, 1997 was $15,490.
Note 11. Subsequent Events
In September 1997, Priority One Staffing Services, LLC, was
purchased by Aspen Consulting Group, Inc. The consideration for the
assets from Priority One to Aspen was a sum equal to the amount due
and owing to Aspen Consulting Group, Inc. The total due to Aspen as
of September 30, 1997 was $161,095. Goodwill in the amount of
$112,107 was generated from the purchase.
In September, Aspen Consulting Group, Inc. transferred the deed of
the condo valued at approximately $235,000 to shareholders. No gain
or loss was recognized by the Corporation. As a result of this
transaction a dividend in the amount of $93,377 will be recognized.
In October 1997, Team American of Idaho, Inc., a wholly owned
subsidiary of Parent Team American Corporation, a publicly held
corporation, merged into Aspen Consulting Group, Inc. The capital
stock of Aspen Consulting Group, Inc. has been surrendered to the
Parent, Team America Corporation. No gain or loss was recognized due
to the merger.
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<PAGE> 20
ASPEN CONSULTING GROUP, INC.
----------------------------
BALANCE SHEET
-------------
SEPTEMBER 30, 1997
------------------
(unaudited)
<TABLE>
<S> <C> <C>
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $ 381,364
Trade accounts receivable 2,319,677
Prepaid expenses 3,516
----------
2,704,557
PROPERTY AND EQUIPMENT, at cost:
Computer equipment and software 22,932
Furniture and office equipment 84,066
-------
106,998
Less accumulated depreciation (65,558) 41,440
-------
OTHER ASSETS:
Investment in related corporation 8,000
Investment in securities 99,980
Goodwill 89,875 197,855
------- ----------
TOTAL ASSETS $2,943,852
==========
</TABLE>
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<PAGE> 21
ASPEN CONSULTING GROUP, INC.
----------------------------
BALANCE SHEET
-------------
SEPTEMBER 30, 1997
------------------
(unaudited)
(Continued)
<TABLE>
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 8,413
Accrued salaries, wages and payroll taxes 2,304,018
Accrued workers compensation insurance and
employee benefits 419,435
Income taxes payable 35,000
----------
Total current liabilities 2,766,866
STOCKHOLDERS' EQUITY:
Common stock 300
Retained earnings 176,686 176,986
------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $2,943,852
==========
</TABLE>
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<PAGE> 22
ASPEN CONSULTING GROUP, INC.
----------------------------
STATEMENT OF OPERATIONS
-----------------------
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
(unaudited)
<TABLE>
<CAPTION>
1997 1996
----------- -----------
<S> <C> <C>
REVENUES $37,173,922 $29,933,047
DIRECT COSTS:
Salaries, wages and employment taxes of worksite
employees 30,665,098 24,624,919
Health care and workers' compensation 3,450,807 2,846,262
Other 1,540,850 1,276,866
----------- -----------
Total direct costs 35,656,755 28,748,047
GROSS PROFIT 1,517,167 1,185,000
EXPENSES:
Administrative and general 1,421,638 1,126,738
Depreciation and amortization 21,285 7,114
----------- -----------
Total expenses 1,442,923 1,134,752
Income before income taxes 74,244 50,248
INCOME TAXES 15,000 10,050
----------- -----------
Net income $ 59,244 $ 40,198
=========== ===========
</TABLE>
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<PAGE> 23
ASPEN CONSULTING GROUP, INC.
----------------------------
STATEMENT OF STOCKHOLDERS' EQUITY
---------------------------------
NINE MONTHS ENDED SEPTEMBER 30, 1997
------------------------------------
(unaudited)
<TABLE>
<CAPTION>
Common Stock
------------------- Retained
Shares Amount Earnings Total
------ ------ -------- --------
<S> <C> <C> <C> <C>
Balances, December 31, 1996 10,000 $300 $210,820 $211,120
Dividends paid -- -- (93,378) (93,378)
Net income -- -- 59,244 59,244
------ ---- -------- --------
Balances, September 30, 1997 10,000 $300 $176,686 $176,986
====== ==== ======== ========
</TABLE>
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<PAGE> 24
ASPEN CONSULTING GROUP, INC.
----------------------------
STATEMENTS OF CASH FLOWS
------------------------
NINE MONTHS ENDED SEPTEMBER 30
------------------------------
(unaudited)
<TABLE>
<CAPTION>
1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 59,244 $ 33,836
Noncash revenues and expenses included in net
income:
Depreciation and amortization 21,285 7,114
Changes in current assets and liabilities:
(Increase) decrease in accounts receivable (259,768) (559,819)
(Increase) decrease in prepaid expenses 11,151 (14,667)
Increase (decrease) in accounts payable (125,426) 100,203
Increase (decrease) in accrued salaries, wages and
payroll taxes 483,402 630,011
Increase (decrease) in accrued expenses 15,000 10,000
--------- ---------
Net cash flows provided by operating
activities 204,888 206,678
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (39,330) (3,926)
Decrease (increase) in other assets 6,287 (19,000)
--------- ---------
Net cash flows (used) by investing activities (33,043) (22,926)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of long-term debt (8,293) (74,723)
Dividends paid -- (8,992)
--------- ---------
Net cash flows (used) by financing activities (8,293) (83,715)
--------- ---------
INCREASE (DECREASE) IN CASH 163,552 100,037
CASH, beginning of period 217,812 142,870
--------- ---------
CASH, end of period $ 381,364 $ 242,907
========= =========
</TABLE>
-24-
<PAGE> 25
TEAM AMERICA CORPORATION
------------------------
INTRODUCTION TO
---------------
PRO FORMA COMBINING FINANCIAL STATEMENTS
----------------------------------------
(unaudited)
The following unaudited Pro Forma Combining Balance Sheet as of September 30,
1997, and the unaudited Pro Forma Combining Statements of Income for the nine
months ended September 30, 1997, and for the year ended December 31, 1996,
illustrate the effects of the merger of TEAM America of Idaho, Inc., a directly
wholly owned subsidiary of TEAM America Corporation (TEAM America) with and into
Aspen Consulting Group, Inc. (Aspen). The Pro Forma Combining Balance Sheet
assumes that the merger occurred on September 30, 1997, and the Pro Forma
Combining Statements of Income assume that the merger occurred at January 1,
1996. The Pro Forma Combining Financial Statements are presented for comparative
purposes only and are not intended to be indicative of actual results had the
purchase occurred as of the dates indicated above nor do they purport to
indicate results which may be attained in the future.
The merger of Aspen with TEAM America will be accounted for as a purchase
transaction. The costs of the acquisition have been preliminarily allocated to
the assets acquired and liabilities assumed based upon their respective fair
values.
The acquisition of Aspen facilitates TEAM America's market expansion strategy
outside of Ohio. The pro forma financial statements do not reflect all of the
Company's anticipated actions to achieve operating synergies. The impact of such
actions which are dependent on future conditions are not entirely estimable for
purposes of the Pro Forma Financial Statements.
The Pro Forma Combining Financial Statements should be read in conjunction with
the historical consolidated financial statements included in TEAM America's
Annual Report on Form 10-K for the fiscal year ended December 31, 1996 and TEAM
America's Quarterly Report on Form 10-Q for the three and nine months ended
September 30, 1997. Reference should also be made to the Audited Financial
Statements of Aspen for the year ended February 28, 1997 and the Unaudited
Financial Statements of Aspen for the nine months ended September 30, 1997 and
1996 (which are included as part of this Form 8-K/A).
-25-
<PAGE> 26
TEAM AMERICA CORPORATION
------------------------
PRO FORMA COMBINING STATEMENT OF OPERATIONS
-------------------------------------------
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------
(unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma
TEAM Elimin/ Combined
America Aspen Adjust Totals
------- ------- ------- ---------
<S> <C> <C> <C> <C>
REVENUES $95,468 $42,475 $ -- $137,943
------- ------- ----- --------
DIRECT COSTS:
Salaries, wages, payroll taxes, workers'
compensation premiums, employee
benefits and other 90,025 40,837 -- 130,862
------- ------- ----- --------
Gross profit 5,443 1,638 -- 7,081
EXPENSES:
General and administrative expenses 4,029 1,518 -- 5,547
Advertising 272 23 -- 295
Depreciation and amortization 125 1 460(1) 586
------- ------- ----- --------
Total operating expenses 4,426 1,542 460 6,428
Income (loss) from operations 1,017 96 (460) 653
OTHER INCOME (EXPENSE), net 65 (2) (108)(2) (45)
------- ------- ----- --------
Income before income taxes 1,082 94 (568) 608
INCOME TAX EXPENSE (BENEFIT) 458 20 (68)(3) 410
------- ------- ----- --------
NET INCOME (LOSS) $ 624 $ 74 $(500) $ 198
======= ======= ===== ========
EARNINGS (LOSS) PER SHARE $ .29 N/A N/A $ .07
======= ======= ===== ========
WEIGHTED AVERAGE SHARES
OUTSTANDING 2,160 N/A N/A 2,887(4)
======= ======= ===== ========
</TABLE>
The accompanying introduction and notes to the unaudited pro forma combining
statements are an integral part of this statement.
-26-
<PAGE> 27
TEAM AMERICA CORPORATION
------------------------
PRO FORMA COMBINING STATEMENT OF OPERATIONS
-------------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
--------------------------------------------
(unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma
TEAM Elimin/ Combined
America Aspen Adjust Totals
------- ------- ------- ---------
<S> <C> <C> <C> <C>
REVENUES $94,052 $37,174 $ -- $131,226
------- ------- ----- --------
DIRECT COSTS:
Salaries, wages, payroll taxes, workers'
compensation premiums, employee
benefits and other 89,143 35,657 -- 124,800
------- ------- ----- --------
Gross profit 4,909 1,517 -- 6,426
EXPENSES:
General and administrative expenses 3,700 1,393 -- 5,093
Advertising 255 29 -- 284
Depreciation and amortization 146 22 345(1) 495
------- ------- ----- --------
Total operating expenses 4,101 1,444 345 5,872
Income (loss) from operations 808 73 (345) 536
OTHER INCOME (EXPENSE), net 441 -- (81)(2) 360
------- ------- ----- --------
Income (loss) before income
taxes 1,249 73 (426) 896
INCOME TAX EXPENSE 512 15 (50)(3) 477
------- ------- ----- --------
NET INCOME (LOSS) $ 737 $ 58 $(376) $ 419
======= ======= ===== ========
EARNINGS PER SHARE $ .22 N/A N/A $ .10
======= ======= ======= ========
WEIGHTED AVERAGE SHARES OUTSTANDING
3,405 N/A N/A 4,132(4)
======= ======= ======= ========
</TABLE>
The accompanying introduction and notes to the unaudited pro forma combining
statements are an integral part of this statement.
-27-
<PAGE> 28
TEAM AMERICA CORPORATION
------------------------
PRO FORMA COMBINING BALANCE SHEET
---------------------------------
AS OF SEPTEMBER 30, 1997
------------------------
(unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma
TEAM Elimin/ Combined
America Aspen Adjust Totals
------- ------ ------- ---------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 6,954 $ 381 $ -- $ 7,335
Short-term investments 5,701 -- (2,400)(2) 3,112
(189)(2)
Trade receivables and unbilled revenues 5,953 2,320 -- 8,273
Other receivables 183 -- -- 183
Prepaid expenses 485 4 -- 489
Deferred income tax asset 120 -- -- 120
------- ------ ------- -------
Total current assets 19,396 2,705 (2,589) 19,512
------- ------ ------- -------
PROPERTY AND EQUIPMENT, net 900 41 -- 941
OTHER ASSETS:
Goodwill and non-compete agreements,
net 9,762 90 10,467 20,319
Cash surrender value of life insurance
policies 390 -- -- 390
Mandated benefit/security deposits 155 -- -- 155
Deferred income tax asset 102 -- -- 102
Other assets 65 108 -- 173
------- ------ ------- -------
Total other assets 10,474 198 10,467 21,139
------- ------ ------- -------
Total assets $30,770 $2,944 $ 7,878 $41,592
======= ====== ======= =======
</TABLE>
The accompanying introduction and notes to the unaudited pro forma combining
statements are an integral part of this statement.
-28-
<PAGE> 29
TEAM AMERICA CORPORATION
------------------------
PRO FORMA COMBINING BALANCE SHEET
---------------------------------
AS OF SEPTEMBER 30, 1997
------------------------
(unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
Pro Forma
TEAM Elimin/ Combined
America Aspen Adjust Totals
------- ------- ------- ---------
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 481 $ 9 $ -- $ 490
Accrued compensation and payroll taxes 6,162 2,304 -- 8,466
Due for acquisitions 1,954 -- -- 1,954
Accrued workers' compensation premiums 998 419 -- 1,417
Federal and state income taxes payable (43) 35 -- (8)
Other accrued expenses 383 -- 55 (5) 438
Client deposits 504 -- -- 504
Capital lease obligation, current portion 10 -- -- 10
------- ------ ------ -------
Total current liabilities 10,449 2,767 55 13,271
------- ------ ------ -------
CAPITAL LEASE OBLIGATION, net of
current portion 24 -- -- 24
DEFERRED RENT 106 -- -- 106
DEFERRED COMPENSATION LIABILITY 387 -- -- 387
------- ------ ------ -------
Total liabilities 10,966 2,767 55 13,788
------- ------ ------ -------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock -- -- -- --
Common stock, no par value 18,542 1 7,999 (6) 26,542
Excess purchase price (84) -- -- (84)
Retained earnings 1,366 176 (176) 1,366
Less - Treasury stock, at cost (20) -- -- (20)
------- ------ ------ -------
Total shareholders' equity 19,804 177 7,823 27,804
------- ------ ------ -------
Total liabilities and
shareholders' equity $30,770 $2,944 $7,878 $41,592
======= ====== ====== =======
</TABLE>
The accompanying introduction and notes to the unaudited pro forma combining
statements are an integral part of this statement.
-29-
<PAGE> 30
TEAM AMERICA CORPORATION
------------------------
NOTES TO PRO FORMA COMBINING FINANCIAL STATEMENTS
-------------------------------------------------
NOTE 1
- ------
For the year ended December 31, 1996 depreciation and amortization
expense would increase by $460,000 for amortization of goodwill (25
years) and non-compete agreements (5 years) resulting from this
transaction. For the nine months ended September 30, 1997 amortization
from this transaction was $345,000.
NOTE 2
- ------
Represents interest income foregone on the $2,400,000 of cash used to
acquire Aspen including payments for non-competition agreements and other
transaction costs.
NOTE 3
- ------
Represents the tax benefit resulting from foregone interest income and
non-compete amortization. There is no tax benefit associated with the
goodwill amortization because for tax purposes there will be no goodwill
recorded.
NOTE 4
- ------
Weighted average shares were increased by 727,273 for the shares issued
to Aspen shareholders in the merger.
NOTE 5
- ------
Additional distribution owed to former Aspen shareholders.
NOTE 6
- ------
Represents the issuance of 727,273 shares at $11.00.
-30-
<PAGE> 31
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description Page No.
- ----------- ------------------------------------------------------------ ----------
<S> <C> <C>
2 Agreement and Plan of Merger, dated as of October 20, 1997, *
among TEAM America Corporation, TEAM America of Idaho, Inc.,
and Aspen Consulting Group, Inc.
2.1 Consent of Independent Public Accountants 32
99 Press release of TEAM America Corporation issued on October *
20, 1997, regarding the Merger Agreement
</TABLE>
*Previously filed on Form 8-K.
-31-
<PAGE> 1
Exhibit 2.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors and Stockholders
We consent to the inclusion of our report dated December 12, 1997 with respect
to the balance sheet of Aspen Consulting Group, Inc. as of February 28, 1997,
and the related statements of income, stockholders' equity, and cash flows for
the year ended February 28, 1997, which report appears in the Form 8-K/A of TEAM
America Corporation dated October 31, 1997.
Deming, Malone, Livesay & Ostroff
