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Previous: KAYE GROUP INC, 10-Q, 1996-08-14 |
Next: KAYE GROUP INC, 10-Q/A, 1996-08-14 |
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
Date of Report (Date of earliest event reported) October 2, 1995
Kaye Group Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-21988 13-3719772
(State of other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
122 East 42nd Street
New York, N.Y. 10168
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (212) 338-2100
Former Name: Old Lyme Holding Corporation
(Former name or former address, if changed since last report)
Exhibit Index on page 4
page 1 of 5 pages
<PAGE>
Kaye Group Inc.
Commission File # 0-21988
Form 8-K / A
Form 8-K/A is being amended to reflect the restatement of the benefit in lieu of
income taxes as presented on the Unaudited Proforma Condensed Combined
Statement of Income for the six months ended June 30, 1995.
Accordingly, Item 7 is hereby amended to read in its entirety as follows:
2
<PAGE>
Item 7. Financial Statements, Proforma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
i) The following financial statements for the acquired business
(The Kaye Brokerage Business) are attached hereto
(Attachment I):
Unaudited Combined Balance Sheet as of June 30, 1995
Unaudited Combined Statements of Income and Changes in
Deficit for the six months ended June 30, 1995 and 1994
Unaudited Combined Statements of Cash Flows for the six
months ended June 30, 1995 and 1994
Note to the Consolidated Combined Financial Statements
Financial Statements of the Kaye Brokerage Business as of
March 31, 1995 and December 31, 1994 and 1993 and for the
years ended December 31, 1994, 1993 and 1992, and for the
three month period ended March 31, 1995 and 1994 have been
previously reported in the Registrant's Proxy Statement
filed August 10, 1995.
(b) Proforma Financial Information.
i) The following Unaudited Proforma Financial statements are
attached hereto (Attachment II):
Unaudited Proforma Condensed Combined Balance Sheet as of
June 30, 1995
Unaudited Proforma Condensed Combined Statement of Income
for the six months ended June 30, 1995 and 1994
Notes to the Unaudited Proforma Condensed Combined Financial
Statements
The Unaudited Proforma Condensed Combined Financial
Statements as of March 31, 1995 and for the years ended
December 31, 1994, 1993 and 1992, and for the three month
period ended March 31, 1995 and 1994 have been previously
reported in the Registrant's Proxy Statement filed August
10, 1995.
(c) Exhibits.
2.1 Acquisition Agreement, dated as of August 3, 1995, among Kaye
Group Inc. (formerly Old Lyme Holding Corporation), Kaye
International L.P., certain individuals and Kaye Holding Corp.
(Incorporated by reference from Form 8-K dated October 16, 1995.)
3
<PAGE>
EXHIBIT INDEX
Exhibit No. Document Page
- ----------- -------- ----
2.1 Acquisition Agreement, dated as of August 3,
1995, among Kaye Group Inc. (formerly Old Lyme
Holding Corporation), Kaye International L.P.,
certain individuals and Kaye Holding Corp.
(Incorporated by reference from Form 8-K dated
October 16, 1995.)
4
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
KAYE GROUP INC.
By: /s/ Michael P. Sabanos
------------------------
Name: Michael P. Sabanos
Title: Senior Vice President &
Chief Financial Officer
Dated: August 12, 1996
5
<PAGE>
<TABLE>
<CAPTION>
Attachment I
Index to Combined Financial Statements for the Kaye Brokerage Business
Page
----
<S> <C>
Unaudited Interim Financial Statements:
Combined Balance Sheet as of June 30, 1995 ............................................ I-2
Combined Statements of Income and Changes in Deficit for the six months ended
June 30, 1995 and 1994 ................................................................ I-3
Combined Statements of Cash Flows for the six months ended June 30, 1995
and 1994 .............................................................................. I-4
Note to Combined Financial Statements.................................................. I-5
</TABLE>
<PAGE>
THE KAYE BROKERAGE BUSINESS
COMBINED BALANCE SHEET
As of June 30, 1995
(in thousands)
(unaudited)
<TABLE>
<S> <C>
ASSETS:
Current assets:
Cash and cash equivalents (including short-term investments and funds held $ 28,898
in a fiduciary capacity of $26,767)
Accounts receivable (net of allowance of $184) 52,285
Accounts receivable - Program Brokerage Corp. 9,305
Prepaid expenses and other assets 447
---------
Total current assets 90,935
Fixed assets (net of accumulated depreciation of $5,882) 2,675
Expiration lists (net of accumulated amortization of $1,046) 2,646
Organization costs (net of accumulated amortization of $1,944) 707
Other assets 1,148
---------
Total combined assets $ 98,111
=========
LIABILITIES:
Current liabilities:
Premiums payable $ 88,687
Premiums payable - Program Brokerage Corp. 3,627
Notes payable - Old Lyme Holding Corp. 1,400
- Others 395
Other current liabilities 6,923
---------
Total current liabilities 101,032
Notes payable - Old Lyme Holding Corp. 5,700
- Kaye International L.P. 6,000
- Others 792
---------
Total combined liabilities 113,524
---------
COMMITMENTS AND CONTINGENCIES
DEFICIT:
Combined deficit (15,413)
---------
Total combined deficit (15,413)
---------
Total combined liabilities and deficit $ 98,111
=========
</TABLE>
See accompanying note to combined financial statements.
I-2
<PAGE>
THE KAYE BROKERAGE BUSINESS
COMBINED STATEMENTS OF INCOME AND CHANGES IN DEFICIT
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30
-------------------------------
1995 1994
-------- --------
(unaudited) (unaudited)
<S> <C> <C>
Revenues:
Commissions and fees, net $ 12,149 $ 15,750
Commissions and fees, net - related parties 667 1,068
Interest and dividends 530 358
-------- --------
Total revenues 13,346 17,176
-------- --------
Expenses:
Salaries and benefits 9,783 11,024
Other operating expenses 6,048 5,919
-------- --------
Total expenses 15,831 16,943
-------- --------
Operating income (loss) (2,485) 233
Interest expense 729 670
-------- --------
Loss before income taxes and cumulative
effect of change in accounting principle (3,214) (437)
Provision for income taxes
-------- --------
Loss before cumulative effect of change in
accounting principle (3,214) (437)
Cumulative effect of change in accounting principle 1,652
-------- --------
Net income (loss) (3,214) 1,215
Combined deficit, beginning of the period (11,782) (11,439)
Increase in net advances from KILP 194 272
Decrease in contributed capital, non-cash (611)
-------- --------
Combined deficit, end of the period $(15,413) $ (9,952)
======== ========
</TABLE>
See accompanying note to combined financial statements.
I-3
<PAGE>
THE KAYE BROKERAGE BUSINESS
COMBINED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
--------------------------
1995 1994
-------- --------
(unaudited) (unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net (loss) income $ (3,214) $ 1,215
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Depreciation and amortization 835 874
Decrease (increase) in assets:
Accounts receivable 34,146 8,748
Prepaid expenses and other current assets 393 1,593
Other assets 304 934
Increase (decrease) in liabilities:
Premiums payable (12,556) (12,726)
Other liabilities (1,627) (255)
-------- --------
Net cash provided by operating activities 18,281 383
-------- --------
Cash flows from investing activities:
Purchase of fixed assets (197) (409)
-------- --------
Net cash used for investing activities (197) (409)
-------- --------
Cash flows from financing activities:
Repayment of loan principal (7,152) (1,000)
Proceeds from borrowings - Old Lyme Holding Corp. 7,100 0
Repayment of finance company notes (175) (64)
Proceeds from borrowings - finance company notes 168 138
Increase in net advances from KILP 194 272
-------- --------
Net cash provided by (used for) financing activities 135 (654)
-------- --------
Increase (decrease) in cash and cash equivalents 18,219 (680)
Cash and cash equivalents, beginning of period 10,679 14,874
-------- --------
Cash and cash equivalents, end of period $ 28,898 $ 14,194
======== ========
Supplemental cash flow disclosure:
Interest paid $ 847 $ 683
======== ========
</TABLE>
See accompanying note to combined financial statements.
I-4
<PAGE>
NOTE TO COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
1. General
These combined financial statements include all adjustments (consisting
only of normal recurring accruals) which are, in the opinion of management,
considered necessary for a fair presentation of the results of the periods
presented. The reported results for the six month period ended June 30, 1995 are
not necessarily indicative of the results to be expected for the full year.
These financial statements should be read in conjunction with the combined
financial statements of the Kaye Brokerage Business as of December 31, 1994 and
for each of the three years in the period ended December 31, 1994 which
financial statements are included as an annex to the Proxy Statement filed
previously with the Securities and Exchange Commission.
I-5
<PAGE>
<TABLE>
<CAPTION>
Attachment II
Index to Unaudited Proforma Condensed Combined Financial Statements
Page
----
<S> <C>
Unaudited Proforma Condensed Combined Financial Statements:
Unaudited Proforma Condensed Combined Balance Sheet as of
June 30, 1995 ....................................................................... II-2
Unaudited Proforma Condensed Combined Statement of Income for the
six months ended June 30, 1995 ...................................................... II-3
Unaudited Proforma Condensed Combined Statement of Income for the
six months ended June 30, 1994 ...................................................... II-4
Notes to Unaudited Proforma Condensed Combined Financial Statements.................. II-5
</TABLE>
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
JUNE 30, 1995
(in thousands)
<TABLE>
<CAPTION>
Kaye
The Brokerage Pro Forma
Company Business Total Adjustments Pro Forma
--------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments $ 38,386 $ 38,386 $ 38,386
Cash and cash equivalents 11,055 $ 28,898 39,953 39,953
Interest and dividends receivable 1,019 1,019 1,019
Premium balances receivable 16,768 61,590 78,358 $ (12,932)(1) 65,426
Funds held under deposit contracts 7,908 7,908 7,908
Deferred acquistion cost 2,097 2,097 2,097
Deferred income taxes 855 855 2,238 (2) 3,093
Other assets 4,252 7,623 11,875 11,875
--------- --------- --------- --------- ---------
Total assets $ 82,340 $ 98,111 $ 180,451 $ (10,694) $ 169,757
========= ========= ========= ========= =========
LIABILITIES :
Unpaid losses and loss expenses $ 13,995 $ 13,995 $ 13,995
Unearned premium reserves 6,345 6,345 6,345
Premiums payable 16,315 $ 92,314 108,629 $ (12,932)(1) 95,697
Notes payable 7,100 14,287 21,387 (7,100)(4) 14,287
Deposit - reinsurance 6,947 6,947 6,947
Other liabilities 2,338 6,923 9,261 1,000 (3) 10,751
490 (5)
--------- --------- --------- --------- ---------
Total liabilities 53,040 113,524 166,564 (18,542) 148,022
--------- --------- --------- --------- ---------
Minority interest in equity of Acquisition Sub 3,827 (6) 3,827
--------- ---------
STOCKHOLDERS' EQUITY (DEFICIT):
Combined common stockholders' equity 29,300 (15,413) 13,887 2,238 (2) 17,908
(1,000)(3)
7,100 (4)
(490)(5)
(3,827)(6)
--------- --------- --------- --------- ---------
Total stockholders' equity (deficit) 29,300 (15,413) 13,887 4,021 17,908
--------- --------- --------- --------- ---------
Total liabilities and
stockholders' equity (deficit) $ 82,340 $ 98,111 $ 180,451 $ (10,694) $ 169,757
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to the unaudited pro forma condensed
combined financial statements.
II-2
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1995
(in thousands except per share data)
<TABLE>
<CAPTION>
Kaye
The Brokerage Pro Forma
Company Business Total Adjustments Pro Forma
-------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues
Net premiums earned $ 9,640 $ 9,640 $ 9,640
Commissions and fees $ 12,816 12,816 $ (667)(1) 12,149
Interest and dividends 1,496 530 2,026 (79)(1) 1,947
Net realized losses on investments (31) (31) (31)
-------- -------- -------- -------- --------
Total revenues 11,105 13,346 24,451 (746) 23,705
-------- -------- -------- -------- --------
Expenses
Salaries and benefits 1,562 9,783 11,345 (412)(1) 10,933
Other operating expenses 3,620 6,048 9,668 (255)(1) 9,413
Losses and loss expenses 2,049 2,049 2,049
-------- -------- -------- -------- --------
Total expenses 7,231 15,831 23,062 (667) 22,395
-------- -------- -------- -------- --------
Operating income (loss) 3,874 (2,485) 1,389 (79) 1,310
Interest expense (729) (729) 79 (1) (650)
-------- -------- -------- -------- --------
Income (loss) before income taxes and
minority interest 3,874 (3,214) 660 660
Provision for income taxes (1,097) (1,097) (1,097)
Benefit in lieu of income taxes 912 (3) 912
-------- -------- -------- -------- --------
Income (loss) before minority interest 2,777 (3,214) (437) 912 475
Minority interest (84)(2) (84)
-------- -------- -------- -------- --------
Net income (loss) $ 2,777 $ (3,214) $ (437) $ 828 $ 391
======== ======== ======== ======== ========
Earnings per Share:
Historical $ 0.40
========
Reflecting (charge) benefit in lieu of
income taxes $ 0.40 $ 0.06
======== ========
Weighted average shares outstanding: 7,020 7,020
======== ========
</TABLE>
See accompanying notes to unaudited pro forma
condensed combined financial statements
II-3
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1994
(in thousands except per share data)
<TABLE>
<CAPTION>
Kaye
The Brokerage Pro Forma
Company Business Total Adjustments Pro Forma
-------- -------- -------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Revenues
Net premiums earned $ 9,302 $ 9,302 $ 9,302
Commissions and fees $ 16,818 16,818 $ (1,068)(1) 15,750
Interest and dividends 1,370 358 1,728 1,728
Net realized losses on investments (3) (3) (3)
-------- -------- -------- -------- --------
Total revenues 10,669 17,176 27,845 (1,068) 26,777
-------- -------- -------- -------- --------
Expenses
Salaries and benefits 1,340 11,024 12,364 (695)(1) 11,669
Other operating expenses 2,617 5,919 8,536 (373)(1) 8,163
Losses and loss expenses 2,538 2,538 2,538
-------- -------- -------- -------- --------
Total expenses 6,495 16,943 23,438 (1,068) 22,370
-------- -------- -------- -------- --------
Operating income (loss) 4,174 233 4,407 0 4,407
Interest expense (670) (670) (670)
-------- -------- -------- -------- --------
Income (loss) before income taxes and
minority interest 4,174 (437) 3,737 3,737
Provision for income taxes (1,236) (1,236) (1,236)
Benefit in lieu of income taxes 0 149 (3) 149
-------- -------- -------- -------- --------
Income (loss) before minority interest 2,938 (437) 2,501 149 2,649
Minority interest (466)(2) (466)
-------- -------- -------- -------- --------
Income (loss) before cumulative effect of
change in accounting principl*e $ 2,938 $ (437) $ 2,501 $ (318) $ 2,183
======== ======== ======== ======== ========
Cumulative effect of change in accounting
principle: 1,652 1,652
-------- -------- --------
Net income (loss) $ 2,938 $ 1,215 $ 4,153
======== ======== ========
Earnings per Share:
Income before cumulative effect of
change in accounting principle
Historical $ 0.42
========
Reflecting (charge) benefit in lieu of
income taxes $ 0.42 $ 0.31
======== ========
Weighted average shares outstanding: 7,020 7,020
======== ========
</TABLE>
See accompanying notes to unaudited pro forma
condensed combined financial statements
II-4
<PAGE>
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
Basis of Presentation. The Company will combine the Brokerage Business with its
operations. This combination will be accomplished as follows:
(1) Old Lyme will transfer to Acquisition Sub all of the outstanding stock
of the Insurance Companies and its two other direct wholly-owned
subsidiaries, Program Brokerage and Claims Administration, and its other
assets, in exchange for (i) 824,000 shares of Acquisition Sub Common Stock,
representing 82.4% of the total outstanding Acquisition Sub Common Stock,
and (i) the assumption by Acquisition Sub of Old Lyme's liabilities.
(2) KILP will transfer all of its interests in the Brokerage Partnerships
and certain related assets to Acquisition Sub in exchange for (i) 172,000
shares of Acquisition Sub Common Stock, representing 17.2% of the total
outstanding Acquisition Sub Common Stock, and (i) the assumption by
Acquisition Sub of certain KILP liabilities.
(3) Certain individuals will transfer to Acquisition Sub all of their
interests in the Brokerage Corporations in exchange for 4,000 shares of
Acquisition Sub Common Stock representing 0.4% of the total outstanding
Acquisition Sub Common Stock.
(4) Acquisition Sub will contribute its interests in the Brokerage
Partnerships to the Brokerage Corporations thereby causing the dissolution
of the Brokerage Partnerships.
The unaudited proforma condensed combined financial statements ("proforma
financial statements") are presented for illustrative purposes only, giving
effect to the Transaction and therefore are not necessarily indicative of the
financial results or position that might have been achieved had the Transaction
occurred as of an earlier date, nor are they necessarily indicative of the
financial results or position which may occur in the future.
The proforma financial statements give effect to the Transactions as a
transfer and exchange between companies under common control. Accordingly, the
assets and liabilities of the Brokerage Business will be combined with the
Company at their historical costs in a manner similar to a pooling-of-interests.
Upon restatement of the historical balance sheet, the initial period presented
will reflect the net deficit of the Brokerage Business as of that date as a
decrease in combined equity.
The unaudited proforma condensed combined balance sheet is presented as of
June 30, 1995, and includes, in accordance with reporting rules of the
Securities and Exchange Commission (the"Commission"), the impact of all items
directly related to the Transactions, whether of a recurring or non-recurring
nature, that can be reasonably estimated and should be reported as of that date.
II-5
<PAGE>
Proforma Adjustments-Balance Sheet at June 30, 1995. The unaudited proforma
condensed combined balance sheet gives effect to the Transactions as if they had
been consummated on June 30, 1995. The adjustments are as follows:
(1) To eliminate intercompany receivables and payables of $12,932,000
related to premiums on business produced by the Brokerage Partnerships on behalf
of the Company.
(2) To record a net deferred tax asset on an assumed change in tax status
of the Brokerage Partnerships at June 30, 1995 of $2,238,000. The Brokerage
Partnerships and Brokerage Corporations are either limited partnerships or S
Corporations under the Internal Revenue Code, and therefore, the individual
partners or shareholders, rather than the companies, are liable for income
taxes. Effective upon the Closing, the income or loss of the Brokerage Business
will be included in the consolidated federal income tax return of the Company.
The tax effect of the change in tax status of $2,238,000, reflected in the
accompanying unaudited proforma balance sheet, represents net deferred tax
benefits with respect to temporary differences (at June 30, 1995) between the
financial reporting and tax bases of assets and liabilities of the Brokerage
Business, principally amortization of expiration lists and deferred
compensation, and accrual adjustment for commission income.
SFAS 109 requires a valuation allowance reducing the deferred tax asset if it is
more likely than not that some portion of the assets will not be realized.
Management believes it is more likely than not that all deferred tax assets are
realizable based upon the past earnings history of the combined entity.
(3) To record an estimate of the legal, investment banking, accounting,
printing and other transaction costs directly related to the Acquisition of
$1,000,000.
(4) To eliminate intercompany loan of $7,100,000.
(5) In accordance with statement of Financial Accounting Standards No.87 -
"Employers Accounting for Pensions", KILP recorded an additional minimum
liability of $490,000 with a corresponding charge directly to equity related to
its defined benefit plan. At the Closing, Acquisition Sub will assume all
obligations under the employee pension and benefit plans sponsored by KILP, in
which the employees and officers of the Company and the Brokerage Partnerships
presently participate.
(6) To adjust for the minority interests in Acquisition Sub in the amount
of $3,827,000 to be held by KILP and the individuals which are a party to the
Acquisition Agreement. Such amount is based on the total combined equity before
proforma adjustments of $13,887,000 plus net proforma adjustments of $7,848,000
times 17.6% (see Basis of presentation in these Notes to Unaudited Proforma
Condensed Combined Financial Statements).
II-6
<PAGE>
Proforma Adjustments-Statements of Income for the six months ended June 30, 1995
and 1994. The unaudited proforma condensed combined statements of income give
effect to the Transactions as if they were a pooling of interests consummated at
the beginning of 1992. The adjustments are as follows (dollars in thousands):
<TABLE>
<CAPTION>
June 30,
---------------------
1995 1994
---- ----
<S> <C> <C>
(1) To eliminate intercompany transactions and
reclassify commissions on program business.................... $746 $1,068
(2) To adjust for the minority interest in the
earnings of Acquisition Sub after reflecting
(charge) benefit in lieu of income taxes...................... $ 84 $ 466
(3) To record benefit in lieu of income taxes
related to the combined results of operation
based upon 34% of the Kaye Brokerage
Business' (loss) before taxes and to adjust
the effective tax rate to an annualized rate.................. $912 $ 149
</TABLE>
II-7
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