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Previous: HI RISE RECYCLING SYSTEMS INC, 8-K, 1997-02-18 |
Next: INHALE THERAPEUTIC SYSTEMS, SC 13D, 1997-02-18 |
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------
FORM 8-K/A2
---------------------
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 30, 1996
THE MORGAN GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation)
1-13586 22-2902315
(Commission File Number) (IRS Employer Identification No.)
2746 Old U.S. 20 West
Elkhart, Indiana 46514-1168
(Address of principal executive offices) (Zip Code)
(219) 295-2200
Registrant's telephone number, including zip code
<PAGE>
This Form 8-KA2 is filed to amend and restate only Item 7(b), Pro Forma
Financial Statements, of the Registrant's Form 8-K for December 30,
1996, filed January 14, 1997 and first amended January 15, 1997. The
remainder of such report is not amended hereby.
Item 7b. Pro Forma Financial Information.
(Refiled to correct information in the Pro Forma Condensed Combined
Statements of Operations for the Nine Months Ended September 30, 1996
(unaudited) and for the Year Ended December 31, 1995 (unaudited))
The Morgan Group, Inc. and Transit Homes of America, Inc. pro forma
condensed combined financial statements (unaudited)
Pro Forma condensed combined balance sheet -
September 30, 1996..............................................Pg. 4-5
Pro Forma condensed statement of operations -
nine months ended September 30, 1996 and year ended
December 31, 1995...............................................Pg. 6-7
Notes to pro forma financial statements........................Pg. 8-10
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The Unaudited Pro Forma condensed Combined Balance Sheet is presented
to give effect to the acquisition of Transit Homes of America, Inc. as if it had
occurred on September 30, 1996 and combines the balance sheet of The Morgan
Group, Inc. with that of Transit Homes of America, Inc. as of September 30,
1996. The Unaudited Pro Forma Condensed Combined Statements of Operations assume
the transaction occurred at the beginning of the fiscal year ended December 31,
1996 and combines the statements of operations of The Morgan Group, Inc. for the
year ended December 31, 1996 and the nine months ended September 30, 1996 with
the statements of operations of Transit Homes of America, Inc. for the year
ended December 31, 1995 and the nine months ended September 30, 1996. The pro
forma information is based upon historical financial statement of Transit Homes
of America, Inc. and The Morgan Group, Inc. after giving effect to the proposed
transaction using the purchase method of accounting and assumptions and
adjustments in the accompanying notes to the pro forma financial statements.
The pro forma statements have been prepared by The Morgan Group, Inc.
based upon the financial statements of Transit Homes of America, Inc. (filed
with this report under Item 7a) which have been provided by Transit Homes of
America, Inc.'s management. These pro forma statements may not be indicative of
the results that would have actually occurred if the combination had been in
effect on the dates indicated or which may be obtained in the future. The pro
forma financial statements should be read in conjunction with the audited
financial statements and notes of Transit Homes of America, Inc. and the audited
financial statements of The Morgan Group, Inc.
<PAGE>
THE MORGAN GROUP, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Sept. 30,
Sept. 30 Sept. 30, Sept. 30, 1996
1996 1996 1996 Condensed
Transit Transit Transit Adj. Morgan Combined
Balance Excluded Balance Balance Proforma Balance
Sheet Assets Sheet Sheet Adjustmens Sheet
----- ------ ----- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $267 ($267) --- $3,126 ($1,592) 2/ $1,534
Trade accounts receivable, less allowance 2,892 (2,892) --- 13,109 --- $13,109
for doubtful accounts of $44,000 in 1996
and $102,000 in 1995
Accounts receivable, other 57 (57) --- 388 --- $388
Prepaid expenses and other current assets 953 (853) 100 2,860 --- $2,960
Deferred income taxes --- --- --- 586 --- $586
----- ----- ----- --- ----- ----
Total current assets 4,169 4,069 100 20,069 (1,592) $18,577
Property and equipment, net 804 50 754 6,575 ($504) 1/ $6,825
Intangible assets, net --- --- --- 5,001 $5,001
Intangible assets, Transit $364 ($364) $442 1/ $3,988
$3,910 2/
Other assets 10 10 --- 607 --- $607
----- ----- ----- --- ----- ----
Total assets $4,983 $4,493 $490 $32,252 $2,256 $34,998
====== ====== ==== ======= ====== =======
</TABLE>
See notes to unaudited pro forma condensed financial statements.
<PAGE>
THE MORGAN GROUP, INC.
PRO FORMA CONDENSED COMBINED BALANCE SHEET
(UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Sept. 30,
Sept. 30 Sept. 30, Sept. 30, 1996
1996 1996 1996 Condensed
Transit Transit Transit Adj. Morgan Combined
Balance Excluded Balance Balance Proforma Balance
Sheet Assets Sheet Sheet Adjustmens Sheet
----- ------ ----- ----- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Liabilities and Stockholders' Equity
Current Liabilities:
Note payable to bank $1,581 ($1,581) --- $2,500 $2,500
Trade accounts payable 1,092 ($1,092) --- 2,622 $160 2/ $2,782
Accrued liabilities 200 ($200) --- 1,691 $800 2/ $2,491
Accrued driver pay --- --- --- 228 $228
Accrued claims payable 2,020 ($2,020) --- 4,169 $200 2/ $4,369
Refundable deposits 336 --- 336 1,768 ($62) 1/ $2,042
Current portion of long-term debt 207 ($157) 50 784 $411 2/ $1,245
------ ------- ---- ------- ------ -------
Total current liabilities 5,436 ($5,050) 386 13,762 $1,509 $15,657
Long-term debt, less current portion 104 --- 104 1,703 $747 2/ $2,554
Deferred income taxes 622 $622
Commitments and contingencies --- ---
Shareholders' equity
Common stock, Transit 145 ($145)
Common stock, $.015 par value
Class A:
Authorized shares - 7,500,000
Issued and outstanding shares -
1,489,010 and 1,449,554 23 $23
Class B:
Authorized shares - 2,500,000
Issued and outstanding shares - 1,200,000 18 $18
Additional paid-in capital 12,441 $12,441
Retained earnings (652) 652 --- 5,160 --- $5,160
------ ------- ---- ------- ------ -------
(507) $507 (0) $17,642 $17,642
Less
- treasury stock, 116,543 shares, at cost (50) 50 --- ($973) ($973)
- loan to officer for purchase of stock --- --- --- ($504) --- ($504)
------ ------- ---- ------- ------ -------
Total shareholders' equity (557) $557 (0) $16,165 --- $16,165
------ ------- ---- ------- ------ -------
Total liabilities and shareholders' equity $4,983 ($4,493) $490 $32,252 $2,256 $34,998
====== ======== ==== ======= ====== =======
</TABLE>
See notes to unaudited pro forma condensed financial statements.
<PAGE>
THE MORGAN GROUP, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1996
(UNAUDITED)
(in thousands)
<TABLE>
<CAPTION>
Pro Forma
Transit Morgan Adjustments Consolidated
------- ------ ----------- ------------
<S> <C> <C> <C> <C>
Operating Revenues:
Manufactured housing outsourcing $17,601 $55,525 $73,126
Specialized transport 1,891 20,991 $22,882
Driver outsourcing --- 17,978 $17,978
Other service revenues 8,003 8,015 $5,250 4/ $10,768
------ ------- ----- -------
Total operating revenues 27,495 102,509 5,250 124,754
Costs and Expenses:
Operating costs 20,381 93,826 ($500) 3/ $113,657
($5,250) 4/
$5,200 4/
Depreciation and amoritzation 0 1,095 $105 3/ $1,321
$121 4/
Selling, general and administrative 6,623 6,170 ($219) 3/ $7,253
($121) 4/
($5,200) 4/
------ ------- ----- -------
Operating income 491 1,418 $614 $2,523
Net interest income (expense) ($185) ($280) $79 ($386)
------ ------- ----- -------
Income before income taxes 306 1,138 $693 2,137
Income taxes $0 $217 $320 $537
------ ------- ----- -------
Net Income $306 $921 $373 $1,600
====== ======= ===== =======
Net Income per share:
Primary $0.34 $0.60
Fully diluated $0.34 $0.60
Average number of common shares and
common stock equivalents 2,682,837 2,682,837
========= =========
</TABLE>
See notes to unaudited pro forma condensed financial statements.
<PAGE>
THE MORGAN GROUP, INC.
PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(UNAUDITED)
(In Thousands)
<TABLE>
<CAPTION>
Pro Forma
Transit Morgan Adjustments Consolidated
------- ------ ----------- ------------
<S> <C> <C> <C> <C>
Operating Revenues:
Manufactured housing outsourcing $25,108 $63,353 $88,461
Specialized transport 2,500 29,494 $31,994
Driver outsourcing 0 19,842 $19,842
Other service revenues 12,139 9,614 8425 4/ $13,328
------- ------ ------ ------
Total operating revenues 39,747 122,303 8,425 153,625
Costs and Expenses:
Operating costs 29,599 110,408 ($1,000) 3/ $139,744
($8,425) 4/
$9,162 4/
Depreciation and amoritzation 0 1,264 $140 3/ $1,560
$156 4/
Selling, general and administrative 11,318 7,260 ($520) 3/ $8,740
($156) 4/
($9,162) 4/
------- ------ ------ ------
Operating income (1,170) 3,371 $1,380 $3,581
Net interest income (expense) ($247) ($87) $85 ($249)
------ ----- --- ------
Income before income taxes (1,417) 3,284 $1,465 $3,332
Income taxes $0 $1,015 $ 100 $1,115
------- ------ ------ ------
Net Income ($1,417) $2,269 $1,365 $2,217
less Preferred Dividends $221 $221
------- ------ ------ ------
Net Income applicable to Common Stock ($1,417) $2,048 $1,365 $1,996
======= ====== ====== ======
Net Income per share:
Primary $0.80 $0.77
Fully diluated $0.80 $0.77
Average number of common shares and
common stock equivalents 2,557,516 2,682,837
========= =========
</TABLE>
See notes to the unaudited pro forma condensed financial statements.
<PAGE>
The Morgan Group, Inc. and Transit Homes of America, Inc.
Notes to Pro Forma Statement of Operations
(Unaudited)
(In Thousands)
Note 1 The following pro forma adjustments are made to reflect estimated fair
value of assets purchased and liabilities assumed as of September 30,
1996.
Decrease in the fair market value of fixed assets $ (504)
Decrease in the refundable deposits assumed 62
--------
Investment in Transit $ 442
========
Note 2 The following pro forma adjustments reflect The Morgan Group, Inc.'s
purchase of Transit Homes of America, Inc.'s business.
Cash $1,592
Current portion of long-term debt 411
Long-term debt 747
Acquisition related payables 160
Unfavorable contracts 800
Cost of closing duplicative facilities 200
------
$3,910
======
<PAGE>
Note 3 The following adjustments are incorporated in the pro forma condensed
combined statements of operations (in thousands):
<TABLE>
<CAPTION>
Year Nine Months
Ended Ended
Dec. 31, Sept. 30,
1995 1996
-------- ------------
Increase/(Decrease)
in Income
<S> <C> <C>
Operating Cost Adjustments
Reduced insurance premium costs $ 400 $ 300
Amortization unfavorable contracts 600 200
----- -----
$1,000 $ 500
===== =====
General & Administrative Adjustments
Elimination of owner's board of directors
fees, life insurance policies, personal truck
payments, and other miscellaneous expenses $ 120 $ 90
Elimination of Transit's consulting costs
associated with the sale of the company --- 54
Elimination of duplicative overhead expenses 400 300
Incentive compensation to seller based upon
profitability --- (225)
----- -----
$ 520 $ 219
===== =====
Depreciation & Amortization - Purchase Price
Adjustments
Amortization over 20 years ($200) ($150)
Decrease in depreciation expense due to
evaluating assets at fair market value 60 45
----- -----
($140) ($105)
===== =====
Interest Expense Adjustments
Elimination of interest expense related to
Transit's line of credit charged at prime plus 5 $ 285 $ 210
Additional interest expense at prime 8.25
(as of September 30, 1996) based upon
closing payment of $1.6 million (137) (100)
Interest expense on seller's note (63) (31)
----- -----
$ 85 $ 79
===== =====
Income Tax Adjustment $(100) ($320)
===== =====
</TABLE>
<PAGE>
Note 4 To adjust and reclassify revenues and cost so pro forma financials are
reported on a basis consistent with Morgan (in thousands):
<TABLE>
<CAPTION>
Year Nine Months
Ended Ended
Dec. 31, Sept. 30,
1995 1996
------------ ----------
<S> <C> <C>
Reduce revenue and operating costs for billing which
should be netted into operating costs $8,425 $5,250
Increase operating cost and reduce general and
administrative expense for cost, Morgan classifies
as operating expenses 9,162 5,200
Reclass Transit depreciation expense from general
and administrative cost 156 121
</TABLE>
Note 5 The Employment Agreement entered into between Morgan Drive Away, Inc.
and Larry Kling provides for incentive payments up to $400,000;
$300,000; $200,000 in year 1997, 1998, and 1999, and $100,000 in year
2000 and 2001. The incentive payments are based upon achieving certain
profit levels in the Company's Manufactured Housing Group. No incentive
compensation was recorded in 1995 due to Transit's losses. Incentive
compensation for the nine months ended September 30, 1996 was recorded
at three-fourths(3/4) of the maximum year two payout of $300,000.
<PAGE>
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 thereunto duly authorized.
THE MORGAN GROUP, INC.
February 18, 1997 By: /s/ Richard B. DeBoer
-------------------------
Richard B. DeBoer
Chief Financial Officer
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