2
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (date of event reported): September 29, 1997.
HEADWAY CORPORATE RESOURCES, INC.
(Exact name of registrant as specified in its charter)
Commission File Number: 0-23170
DELAWARE 75-2134871
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
850 Third Avenue, 11th Floor
New York, NY 10022
(Address of principal executive (Zip Code)
offices)
Registrant's Telephone Number: (212) 508-3560
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
On or about October 14, 1997, Headway Corporate Resources,
Inc. ("Company"), filed a current report on Form 8-K reporting
that the Company acquired on September 29, 1997, substantially
all the assets of Quality OutSourcing, Inc. ("QOS"), a New Jersey
corporation engaged in the business of offering temporary
staffing services. This amendment to that report is filed for
the purpose of presenting the pro forma financial information
required by Item 7(b).
Pro Forma Financial Information
Balance Sheet. Included with this amendment beginning on page P-
2 is the pro forma condensed combined balance sheet as of June
30, 1997, giving effect to the acquisition of QOS.
Income Statements. Included with this amendment beginning on
page P-3 are the pro forma condensed combined statements of
operations of the Company for the year ended December 31, 1996,
and the six months ended June 30, 1997, giving effect to the
acquisition of QOS.
SIGNATURES
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.
HEADWAY CORPORATE RESOURCES, INC.
DATED: November 14, 1997 By: (Signature)
Barry Roseman
President
<PAGE>
Headway Corporate Resources, Inc.
Pro Forma Unaudited Condensed Combined Financial Statements
The following pro forma condensed combined balance sheet as of
June 30, 1997 and the pro forma condensed combined statements of
operations for the year ended December 31, 1996, and the six
months ended June 30, 1997 give effect to Headway Corporate
Resources, Inc. ("Headway" or the "Company") acquiring, through a
wholly-owned subsidiary, substantially all the assets of Quality
Outsourcing, Inc. ("QOS").
On or about April 14, 1997, the Company filed current report on
Form 8-K reporting that on March 31, 1997 the Company acquired
substantially all of the assets of Advanced Staffing Solutions,
Inc. ("Advanced").
On or about August 6, 1997 the Company filed a current report on
Form 8-K reporting that on July 28, 1997, the Company acquired
substantially all of the assets of Administrative Sales
Associates Temporaries, Inc. and Administrative Sales Associates,
Inc. (collectively referred to as "ASA").
The pro forma information is based on the historical financial
statements of the Company, Advanced, ASA and QOS giving effect to
the transactions under the purchase method of accounting and the
assumptions and adjustments in the accompanying notes to the pro
forma financial statements.
The historical balance sheet of the Company as of June 30, 1997
includes Advanced. The pro forma condensed combined balance sheet
as of June 30, 1997 gives effect to the ASA and QOS acquisitions
as if it occurred on June 30, 1997.
The pro forma condensed combined statement of operations for the
year ended December 31, 1996 and the six months ended June 30,
1997 give effect to the acquisitions as if they occurred at the
beginning of the respective periods presented.
The pro forma condensed combined financial statements have been
prepared by the Company's management based upon the historical
financial statements of the Company, Advanced, ASA and QOS These
pro forma condensed combined financial statements may not be
indicative of the results that actually would have occurred if
the acquisitions and related financing had been in effect on the
dates indicated. The pro forma condensed combined financial
statements should be read in conjunction with the historical
financial statements and notes contained in the Company's annual
report on Form 10KSB, the Company's quarterly reports on Form
10QSB, the historical financial statements of Advanced contained
in the Form 8-K dated March 31, 1997, the historical financial
statements of ASA contained in the Company's Form 8-K dated July
28, 1997, and the historical financial statements of QOS
contained in the Company's Form 8-K dated September 29, 1997.
<PAGE>
Headway Corporate Resources, Inc.
Pro Forma Condensed Combined Balance Sheet (Unaudited)
As of June 30, 1997
(In Thousands of Dollars, except Share and Per Share Amounts)
Historical
Headway Pro Forma Adjustments Pro Forma
Consolidated ASA QOS Debit Credit Combined
Assets
Cash and cash
equivalents $ 3,393 $1,019 $ 44 $ - $ 175 (12) $ 2,898
- 125 (13)
1,019 (14)
95 (20)
100 (21)
44 (22)
Accounts
receivable (net) 17,378 3,399 691 3,399 (14) 17,378
691 (22)
Other current assets 1,285 152 37 152 (14) 1,285
37 (22)
Total current assets 22,056 4,570 772 - 5,837 21,561
Property and
equipment, net 2,544 23 - - 3 (14) 2,564
Intangibles, net 17,973 - - 5,106 (12) - 24,109
1,030 (20)
Investments 1,945 - - 1,945
Deferred financing
costs 2,712 - 125 (13) - 2,937
100 (21)
Other assets 2,140 12 51 - 12 (14) 2,140
51 (22)
Total assets $49,370 $4,605 $823 $6,361 $5,903 $55,256
Liabilities and equity
Liabilities:
Notes payable and
line of credit
-current $ 9,743 $ 6 $175 $ 6 (14)$ 775 (12) $10,518
175 (22)
Accrued payroll 5,639 452 - 452 (14) - 5,639
Other current
liabilities 4,795 932 38 932 (14) - 4,795
38 (22)
Total current
liabilities 20,177 1,390 213 1,603 775 20,952
Long-term
liabilities 13,376 - 465 465 (22) 3,676 (12) 17,987
935 (20)
Equity:
Preferred stocks 2,000 - - - - 2,000
Common stock 1 7 10 7 (14) - 1
10 (22)
Additional paid-in
capital 11,484 - - - 500 (12) 11,984
Cumulative translation
adjustment 82 - - - - 82
Notes receivable
-preferred stock (390) - - - - (390)
Retained earnings 2,640 3,208 135 3,208 (14) - 2,640
135 (22)
Total equity 15,817 3,215 145 3,360 500 16,317
Total liabilities
and equity $49,370 $4,605 $823 $5,428 $5,886 $55,256
<PAGE>
Headway Corporate Resources, Inc.
Pro Forma Condensed Combined Statement of Operations (Unaudited)
Six months ended June 30, 1997
(In Thousands of Dollars, except Share and Per Share Amounts)
Historical
Headway Pro Forma Adjustments Pro Forma
Consolidated Advanced* ASA QOS Debit Credit Combined
Revenue:
Human resource
management $56,252 $ 780 $9,146 $4,164 $435 (18) $ - $69,907
Advisory services 1,860 - - - - - 1,860
Total revenue 58,112 780 9,146 4,164 435 - 71,767
Direct costs of
human resource
management 38,586 29 6,527 3,388 - 345 (18) 48,185
License fee - 246 (6) - - - 246
Other operating
expenses 15,742 474 1,346 529 80 (3) 81 (18) 18,243
127 (10)
26 (17)
Operating income 3,784 31 1,273 247 668 426 5,093
Interest and other
expenses (income),
net 89 (1)
17 (2)
192 (8)
13 (9)
7 (16)
(142) 5 14 38 21 (15) - 254
Income before
income taxes 3,926 26 1,259 209 1,007 426 4,839
Provision for
income taxes 1,581 - 126 - 300 (11) 64 (5) 2,010
67 (19)
Net income 2,345 26 1,133 209 1,374 490 2,829
Preferred dividend
requirements (83) - - - - - (83)
Net income
available for
common
stockholders $2,262 $ 26 $1,133 $209 $1,374 $490 $2,746
Primary net income
per common and
common equivalent
share $.28 $.33
Fully diluted net
income per common and
common equivalent
share $.24 $.28
Average common and
common equivalent
shares outstanding:
Primary 8,161,797 8,282,863
Fully diluted 9,917,178 10,038,244
* Represents statement of operations of Advanced for the period
January 1, 1997 to March 31, 1997. On March 31, 1997, substantially
all the assets of Advanced were acquired by Headway and,
accordingly, the consolidated results of operations of Headway
include the results of operations of Advanced from April 1, 1997
through June 30, 1997.
<PAGE>
Headway Corporate Resources, Inc.
Pro Forma Condensed Combined Statement of Operations (Unaudited)
Year ended December 31, 1996
(In Thousands of Dollars, except Share and Per Share Amounts)
Historical
Pro Forma Pro
Headway Adjustments Forma
Consolidated Advanced ASA QOS Debit Credit Combined
Revenue:
Human resource
management $53,389 $3,079 $17,939 $7,836 $ 982(18) $ - $81,261
Advisory services 3,808 - - - - - 3,808
Total revenue 57,197 3,079 17,939 7,836 982 - 85,069
Direct costs of
human resource
management 29,703 170 13,580 6,257 - 752(18) 48,958
License fee - 926(6) - - - - 926
Stock compensation - 850(7) - - - - 850
Other operating
expenses 318(3) 425(4)
255(10)
24,551 2,127 2,994 992 52(17) 189(18) 30,675
Operating income
(loss) 2,943 (994) 1,365 587 1,607 1,366 3,660
Interest and other
expenses 352(1)
66(2)
379(8)
25(9)
82(15)
1,061 16 41 39 14(16) - 2,075
Income (loss) before
income taxes 1,882 (1,010) 1,324 548 2,525 1,366 1,585
Provision for
income taxes 700 - 145 - 161(11) 528(5) 643
165(19)
Net income (loss) 1,182 (1,010) 1,179 548 2,851 1,894 942
Deemed dividend on
preferred stock (1,470) - - - - - (1,470)
Preferred dividend
requirements (276) - - - - - (276)
Net (loss) available
for common
stockholders $ (564) $(1,010) $1,179 $548 $2,851 $1,894 $(804)
Primary net (loss)
per common and
common equivalent
share $(.08) $(.12)
Average common and
common equivalent
shares outstanding:
Primary 6,643,326 6,764,392
<PAGE>
Headway Corporate Resources, Inc.
Notes to Pro Forma Condensed Combined
Financial Statements (Unaudited)
Advanced
1) To record interest expense on borrowings to finance the
acquisition at an assumed rate of 8.87% for the three months
ended March 31, 1997 (date acquired by Headway) and 8.79%
for the year ended December 31, 1996.
2) To record amortization of loan acquisition costs over
the five year term of related loan.
3) To record amortization of intangibles resulting from
the transaction over 20 years.
4) To eliminate the fee associated with the election by
Advanced to terminate its licensing agreement. Under the
terms of the licensing agreement, the licensor was
responsible for invoicing and collection from clients and
the employment of the temporary workers. The election to
terminate the licensing agreement was made in connection
with the sale of its client list to the Company.
5) To record income tax expense based on a 40% effective
tax rate.
6) These services are now provided by the Company and it
is anticipated that the cost to provide these services will
be reduced.
7) This expense is a one-time charge relating to an option
granted to an officer to purchase shares of common stock.
This value was based on an independent appraisal.
ASA
8) To record interest expense on (i) borrowings to finance
the acquisition at an assumed rate of 8.94% for the six
months ended June 30, 1997 and 8.79% for the year ended
December 31, 1996 and (ii) on the two promissory notes
issued to seller at a rate of 6%.
9) To record amortization of loan acquisition costs over
the five-year term of related loan.
10) To record amortization of intangibles resulting from
the transaction over 20 years.
11) To record income tax expense based on a 46% effective
tax rate.
12) To record purchase price in the amount of $5,126,000
consisting of $4,000,000 of borrowings under the Company's
credit agreement, two promissory notes in the aggregate
amount of $451,000, 121,066 shares of the Company's
restricted common stock valued at $500,000 and $175,000 of
acquisition costs and related goodwill.
13) To record costs incurred in connection with obtaining
financing for the acquisition.
14) To eliminate assets and liabilities of ASA not
acquired.
<PAGE>
Headway Corporate Resources, Inc.
Notes to Pro Forma Condensed Combined
Financial Statements (Unaudited) (continued)
QOS
15) To record interest expense on (i) borrowings to finance
the acquisition at an assumed rate of 8.94% for the six
months ended June 30, 1997 and 8.79% for the year ended
December 31, 1996.
16) To record amortization of loan acquisition costs over
the seven-year term of related loan.
17) To record amortization of intangibles resulting from
the transaction over 20 years.
18) To eliminate the revenues and related expenses
associated with the banking clients of QOS not acquired.
19) To record income tax expense based on a 46% effective
tax rate.
20) To record purchase price in the approximate amount of
$1,030,000 consisting of $935,000 of borrowings under the
Company's credit agreement, acquisition costs of $95,000 and
related goodwill.
21) To record costs incurred in connection with obtaining
financing for the acquisition.
22) To eliminate assets and liabilities of QOS not
acquired.
