<PAGE>
UNITED STATES
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): June 12, 2000
NESCO, INC.
-----------
(Exact name of Registrant as specified in its charter)
Oklahoma 000-24470 73-1296420
-------- --------- ----------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
12331 East 60/th/ Street
Tulsa, Oklahoma
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(Address of principal executive offices)
74146
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(Zip code)
(918) 250-2227
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(Registrant's telephone number, including area code)
<PAGE>
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired
Hopkins Appraisal Services, Inc.
<TABLE>
<CAPTION>
Page
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<S> <C>
Independent Auditors' Report F-1
Balance Sheet, December 31, 1999 F-2
Statement of Income and Retained Earnings, Year ended December 31, 1999 F-3
Statement of Cash Flows, Year ended December 31, 1999 F-4
Notes to Financial Statements F-5
(b) Interim Financial Statements (Unaudited). The following interim financial
statements of Hopkins Appraisal Services, Inc. are hereby included as part
of this report.
Balance Sheet, June 30, 2000 F-8
Statements of Income and Retained Earnings, six months
Ended June 30, 2000 and 1999 F-9
Statements of Cash Flows, six months ended June 30, 2000 and 1999 F-10
Notes to Interim Financial Statements F-11
</TABLE>
<PAGE>
(c) Pro Forma Financial Information. The following unaudited pro forma
information has been included as required by the rules of the Securities and
Exchange Commission and is provided for comparative purposes only. The
unaudited pro forma information presented is based upon and should be read in
conjunction with the respective historical financial statements and related
notes thereto of each of the Registrant and Hopkins Appraisal Services, Inc.
The pro forma information presented does not purport to represent the actual
results which would have occurred if the acquisition of Hopkins Appraisal
Services, Inc. had been consummated on the dates before the periods indicated,
nor is it indicative of the operating results in any future period.
Page
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Introduction P-1
Pro Forma Statement of
Income - Unaudited, Year Ended December 31, 1999 P-2
Pro Forma Statement of
Income - Unaudited, Six Months Ended June 30, 2000 P-3
Notes to Pro Forma Consolidated Financial
Statements - Unaudited P-4
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused his amendment to the report to be signed on its
behalf by the duly authorized undersigned officer of the Registrant.
NESCO, Inc.
(Registrant)
Date: August 22, 2000
By: Larry G. Johnson
------------------------------
Larry G. Johnson, Vice President
& Secretary-Treasurer & Chief
Financial Officer (Authorized Officer and
Principal Financial Officer)
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholder of
Hopkins Appraisal Services, Inc.
We have audited the accompanying balance sheet of Hopkins Appraisal Services,
Inc. as of December 31, 1999, and the related statements of income and retained
earnings and cash flows for the year then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. 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 Hopkins Appraisal Services,
Inc. as of December 31, 1999, and the results of its operations and its cash
flows for the year then ended in conformity with accounting principles generally
accepted in the United States.
TULLIUS TAYLOR SARTAIN & SARTAIN LLP
Tulsa, Oklahoma
July 25, 2000
F-1
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HOPKINS APPRAISAL SERVICES, INC.
BALANCE SHEET
December 31, 1999
Assets
Current assets:
Cash $ 17,332
Accounts receivable, trade 292,190
Prepaid expenses 27,082
---------
Total current assets 336,604
---------
Property and equipment:
Leasehold improvements 26,929
Equipment 200,205
Furniture, fixtures and other 82,860
---------
309,994
Less accumulated depreciation and amortization (158,193)
---------
Property and equipment, net 151,801
Other 4,118
---------
Total assets $ 492,523
=========
Liabilities and Shareholder's Equity
Current liabilities:
Bank overdraft $ 37,005
Accounts payable 24,234
Accrued liabilities 27,837
Deferred revenue 152,890
Line of credit 45,000
---------
Total current liabilities 286,966
---------
Shareholder's equity:
Common stock, par value $1, authorized
30,000 shares, issued 1,000 shares 1,000
Retained earnings 204,557
---------
Total shareholder's equity 205,557
---------
Total liabilities and shareholder's equity $ 492,523
=========
The accompanying notes are an integral part of the financial statements.
F-2
<PAGE>
HOPKINS APPRAISAL SERVICES, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
Year ended December 31, 1999
Revenue $3,834,073
Cost and expenses 1,686,647
Selling, general and administrative expenses 1,176,647
----------
Income from operations 970,779
Other income, net 8,966
Repurchase of profits interest (175,000)
----------
Net income 804,745
Distributions to shareholder (618,203)
Retained earnings, beginning of year 18,015
----------
Retained earnings, end of year $ 204,557
==========
The accompanying notes are an integral part of the financial statements.
F-3
<PAGE>
HOPKINS APPRAISAL SERVICES, INC.
STATEMENT OF CASH FLOWS
Year ended December 31, 1999
Cash Flows from Operating Activities
Net income $ 804,745
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 55,746
Changes in:
Accounts receivable (108,131)
Prepaid expenses (9,132)
Accounts payable (116,079)
Accrued liabilities (24,541)
Deferred revenue 152,890
Other 14,222
---------
Net cash provided by operating activities 769,720
Cash Flows from Investing Activities
Purchases of property and equipment (131,035)
Cash Flows from Financing Activities
Principal payments on notes payable (9,331)
Distributions to shareholder (618,203)
---------
Net cash used in financing activities (627,534)
---------
Increase in cash 11,151
Cash, beginning of year 6,180
---------
Cash, end of year $ 17,332
=========
The accompanying notes are an integral part of the financial statements.
F-4
<PAGE>
HOPKINS APPRAISAL SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 1- Summary of Significant Accounting Policies
Description of business
Hopkins Appraisal Services, Inc. (the "Company") is a comprehensive appraisal
and consulting company serving the petroleum marketing industry. The company
specializes in the appraisal of petroleum marketing properties including service
stations, convenience stores, truckstops, car washes, fast lube facilities and
combination petroleum marketing properties with quick service restaurants.
Appraisals are prepared by independent contractors who have access to the
Company's significant data base of transactions involving petroleum marketing
properties, and reviewed by company personnel before delivery.
Management 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.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided generally
using accelerated methods over the estimated useful lives. Gains and losses on
retirement of property and equipment are recognized in the period of retirement.
Revenue Recognition
The Company recognizes revenue upon completion and delivery of the appraisal
report. Related appraisal contractor costs are recorded as revenues are
recognized.
Income taxes
The Company is taxed as an S Corporation under the Internal Revenue Code and
applicable state statutes. Under an S Corporation election, the Company's income
flows through to the
F-5
<PAGE>
stockholders to be taxed at the individual level rather than the corporate
level. Accordingly, the Company has no provision for income taxes.
Concentrations of credit risk
Financial instruments which potentially subject the Company to concentration of
credit risk consist principally of trade receivables. Concentrations of credit
risk with respect to trade receivables are limited because a small number of
credit worthy customers make up the Company's customer base, thus limiting the
trade credit risk.
The Company had one customer in 1999 that accounted for 52% of revenue.
Advertising
Advertising is expensed as incurred. The Company paid $58,588 in advertising
expenses in 1999.
Comprehensive income
The company had no other comprehensive income items in 1999.
Note 2 - Line of Credit
The Company has a line of credit due October 7, 2000. Interest is payable
monthly at Wall Street Journal prime rate (8.5% at December 31, 1999). The
Company's accounts receivable collateralize the line of credit.
Subsequent to year end, the maximum borrowings on the line of credit were
increased to $250,000.
Note 3 - Rent
The Company leases office space and equipment. Rent expense is $42,000 in 1999.
Rental commitments are not material.
Note 4 - Retirement Plan
Hopkins maintains a SIMPLE retirement savings plan for the benefit of its
employees. Hopkins contributes up to 3% of employees' annual wages not to exceed
employees' salary reduction contributions. During 1999, Hopkins paid $14,071 in
matching contributions.
F-6
<PAGE>
Note 5 - Repurchase of Profit Interest
When the Company was formed, it borrowed $20,000 with the stipulation that the
borrowing would be repaid, and the Company would also pay the lender 2% of net
income annually. The principal was repaid prior to 1999. The Company repurchased
the 2% profit interest for $175,000 in 1999.
Note 6 - Subsequent Events
On June 12, 2000, the Company was acquired by NESCO, Inc.
F-7
<PAGE>
HOPKINS APPRAISAL SERVICES, INC.
BALANCE SHEET
June 30, 2000
(UNAUDITED)
Assets
Current assets:
Cash $ 27,767
Accounts receivable, trade 580,771
--------
Total current assets 608,538
Property and equipment, net 138,465
Other 3,368
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Total assets $750,371
========
Liabilities and Shareholder's Equity
Current liabilities:
Accounts payable 46,646
Accrued liabilities 14,554
Deferred revenue 55,835
Line of credit 286,497
--------
Total current liabilities 403,532
Shareholder's equity:
Common stock, par value $1, authorized
30,000 shares, issued 1,000 shares 1,000
Retained earnings 345,839
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Total shareholder's equity 346,839
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Total liabilities and shareholder's equity $750,371
========
The accompanying notes are an integral part of the financial statements.
F-8
<PAGE>
HOPKINS APPRAISAL SERVICES, INC.
STATEMENTS OF INCOME AND RETAINED EARNINGS
Six months ended June 30, 2000 and 1999
(UNAUDITED)
2000 1999
-----------------------------
Revenue $1,722,982 $1,750,127
Cost and expenses 835,162 779,771
Selling, general and administrative expenses 628,261 794,269
------------------------------
Income from operations 259,559 176,087
Other income (expense), net (3,644) 1,115
------------------------------
Net income 255,915 177,202
Distributions to shareholder (114,633) (602,889)
Retained earnings, beginning of period 204,557 18,015
------------------------------
Retained earnings, end of period $ 345,839 $ (407,672)
==============================
The accompanying notes are an integral part of the financial statements.
F-9
<PAGE>
HOPKINS APPRAISAL SERVICES, INC.
STATEMENTS OF CASH FLOWS
Six months ended June 30, 2000 and 1999
(UNAUDITED)
<TABLE>
<S> <C> <C>
2000 1999
------------------------------------------
Cash Flows from Operating Activities
Net income $ 255,915 $ 177,203
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 34,803 22,648
Changes in:
Accounts receivable (288,581) (480,591)
Prepaid expenses 27,082 17,950
Accounts payable (14,594) (53,285)
Accrued liabilities (13,283) (45,817)
Deferred revenue (97,055) 1,135,778
Line of credit 241,497 (47,164)
Other 750 10,190
------------------------------------------
Net cash provided by operating activities 146,534 736,912
Cash Flows from Investing Activities
Purchases of property and equipment (21,466) (56,213)
Cash Flows from Financing Activities
Distributions to shareholder (114,633) (602,889)
------------------------------------------
Increase in cash 10,435 77,810
Cash, beginning of period 17,332 6,180
------------------------------------------
Cash, end of period $ 27,767 $ 83,990
==========================================
</TABLE>
The accompanying notes are an integral part of the financial statements.
F-10
<PAGE>
HOPKINS APPRAISAL SERVICES, INC.
NOTES TO INTERIM CONDENSED FINANCIAL STATEMENTS
June 30, 2000 and 1999
(UNAUDITED)
Note 1 - Summary of Significant Accounting Policies
Description of business
Hopkins Appraisal Services, Inc. (the "Company") is a comprehensive appraisal
and consulting company serving the petroleum marketing industry. The company
specializes in the appraisal of petroleum marketing properties including service
stations, convenience stores, truckstops, car washes, fast lube facilities and
combination petroleum marketing properties with quick service restaurants.
Appraisals are prepared by independent contractors who have access to the
Company's significant data base of transactions involving petroleum marketing
properties, and reviewed by company personnel before delivery.
Management 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.
Property and Equipment
Property and equipment are recorded at cost. Depreciation is provided generally
using accelerated methods over the estimated useful lives. Gains and losses on
retirement of property and equipment are recognized in the period of retirement.
Revenue Recognition
The Company recognizes revenue upon completion and delivery of the appraisal
report. Related appraisal contractor costs are recorded as revenues are
recognized.
Income taxes
The Company is taxed as an S Corporation under the Internal Revenue Code and
applicable state statutes. Under an S Corporation election, the Company's
income flows through to the
F-11
<PAGE>
stockholders to be taxed at the individual level rather than the corporate
level. Accordingly, the Company has no provision for income taxes.
Concentrations of credit risk
Financial instruments which potentially subject the Company to concentration of
credit risk consist principally of trade receivables. Concentrations of credit
risk with respect to trade receivables are limited because a small number of
credit worthy customers make up the Company's customer base, thus limiting the
trade credit risk.
The Company had one customer in 1999 that accounted for 52% of revenue.
Comprehensive income
The company had no other comprehensive income items for the six month periods
ended June 30, 2000 or 1999.
F-12
<PAGE>
UNAUDITED PRO-FORMA CONSOLIDATED
FINANCIAL INFORMATION
NESCO, Inc.
and
Hopkins Appraisal Services, Inc.
The following unaudited consolidated pro forma statements of income for the year
ended December 31, 1999 and the six months ended June 30, 2000, give effect to
the acquisition of the operating assets and liabilities of Hopkins Appraisal
Services, Inc. ("Hopkins") by NESCO, Inc. ("NESCO").
The acquisition of Hopkins has been accounted for as a purchase under generally
accepted accounting principles. As a result, the Company has allocated the
total cost of the acquisition to the acquired assets and assumed liabilities,
based on their fair values and will include the results of operations of Hopkins
in NESCO's consolidated financial statements from the effective date.
The pro forma consolidated financial statements do not purport to be indicative
of the results that would actually have been obtained if the combination had
been in effect on the dates indicated, or that may be obtained in the future.
The pro forma calculations presented are for comparative purposes only. The
consolidated pro-forma statements are based upon the financial statements of
NESCO and Hopkins and should be read in conjunction with those financial
statements and related notes.
P-1
<PAGE>
NESCO, INC.
PRO FORMA CONDENSED STATEMENT OF INCOME
December 31, 1999
(In thousands)
(UNAUDITED)
<TABLE>
<CAPTION>
Historical Historical Pro forma Pro forma
NESCO Hopkins Adjustments As adjusted
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $29,567 $3,834 $ - $33,401
Cost and expenses 18,826 1,687 - 20,513
Selling, general and
administrative expenses 6,822 1,176 150 (1) 8,148
------------------------------------------------------------------------------------------------
Income from operations 3,919 971 (150) 4,740
Interest (677) - (240) (2) (917)
Other, net 240 (166) - 74
------------------------------------------------------------------------------------------------
Income before
income taxes 3,482 805 (390) 3,897
Provision for
income taxes 1,318 - 158 (3) 1,476
------------------------------------------------------------------------------------------------
Net income $ 2,164 $ 805 $ (548) $ 2,421
================================================================================================
Basic net income
per share $ 0.24 $ 0.26
======================= =======================
Diluted net income
per share $ 0.23 $ 0.26
======================= =======================
</TABLE>
The accompanying notes are an integral part of the financial statements.
P-2
<PAGE>
NESCO, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
Six months ended June 30, 2000
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Historical Historical Pro forma Pro forma
NESCO Hopkins Adjustments As adjusted
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues $18,972 $1,723 $(423)(4) $20,272
Cost and expenses 11,254 835 (170)(4) 11,919
Selling, general and
administrative expenses 3,658 576 75 (1)
(140)(4) 4,169
------------------------------------------------------------------------------------------------
Income from operations 4,060 312 (188) 4,184
Interest (705) - (120)(2)
10 (4) (815)
Other, net 85 (56) 29
------------------------------------------------------------------------------------------------
Income before
income taxes 3,440 256 (298) 3,398
Provision for
income taxes 1,322 - 23 (3)
(35)(4) 1,310
------------------------------------------------------------------------------------------------
Net income $ 2,118 $ 256 $(286) $ 2,088
================================================================================================
Basic net income
per share $ 0.23 $ 0.23
======================= =======================
Diluted net income
per share $ 0.22 $ 0.22
======================= =======================
</TABLE>
The accompanying notes are an intergral part of the financial statements.
P-3
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
Note 1 -- Basis of Presentation
The pro forma combined condensed consolidated financial statements reflect
NESCO's acquisition of 100% of the common stock of Hopkins Appraisal Services,
Inc. The pro forma combined condensed consolidated financial statements give
effect to the acquisition as if the acquisition occurred as of the beginning of
the periods presented.
Note 2 -- Pro forma Adjustments
The accompanying pro forma condensed consolidated statements of income reflect
the following adjustments:
1) To amortize the purchase price allocated to goodwill over 20 years.
2) To reflect interest expense on the debt used to fund the acquisition.
3) Income taxes imputed at NESCO's effective tax rate. Hopkins is an S-
Corporation for which taxable income is reported by the owners on their
individual tax returns. The pro forma tax adjustment reflects income taxes
on Hopkins' pro forma income at NESCO's effective tax rate.
4) Hopkins operations are included in NESCO's historical financial
information for the period June 12 to 30, and are also included in Hopkins
historical operations. Their pro forma adjustment eliminates the
duplication.
P-4
