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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported) January 31, 2000
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CENTURY BUSINESS SERVICES, INC.
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(Exact name of registrant as specified in its charter)
Delaware 22-2769024
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(State of other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
0-25890
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(Commission File Number)
6480 Rockside Woods Blvd., South, Suite 330
Cleveland, Ohio 44131
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code (216) 447-9000.
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Item 5. Other Events
On January 31, 2000, the Registrant issued a press release to report
lower-than-expected fourth quarter 1999 earnings, that the Registrant terminated
its engagement with Merrill Lynch to explore strategic alternatives in order to
focus on integration and growth of its core business, and that Fred M. Winkler,
its President and Chief Operating Officer and a Director, resigned.
Item 7. Exhibits
The following document is filed as part of this report.
c) Exhibits
99.1 Press Release issued by the Registrant on January 31, 2000.
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 hereunto duly authorized.
CENTURY BUSINESS SERVICES, INC.
Date: February 1, 2000 /s/ Charles D. Hamm, Jr.
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Charles D. Hamm, Jr.
Chief Financial Officer
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Exhibit 99.1
[CBIZ LOGO] CENTURY BUSINESS SERVICES, INC. PRESS RELEASE
FOR IMMEDIATE RELEASE CONTACT: DAN CLARK
Vice President, Corporate Relations
Cleveland, Ohio
(216) 447-9000
CENTURY BUSINESS SERVICES TO REPORT LOWER-THAN-EXPECTED
FOURTH-QUARTER EARNINGS
CBIZ TERMINATES ENGAGEMENT WITH MERRILL LYNCH, FOCUSES ON INTEGRATION AND
GROWTH OF ITS CORE BUSINESS
PRESIDENT AND COO RESIGNS
Cleveland, Ohio (January 31, 2000)--Century Business Services, Inc.
(NASDAQ:CBIZ) ("CBIZ") today reported that its fourth-quarter earnings will be
significantly lower than the Company's budget and analysts' estimates. CBIZ will
hold an investor conference call today, details of which are at the end of this
release.
Preliminary indications are that gross profit (income from continuing core
operations before corporate overhead, the previously announced integration and
consolidation charge, interest, and goodwill amortization) will be in the range
of $18 million to $21 million for the fourth quarter, versus the Company's
budget of $36 million. Revenue for the fourth quarter will be approximately $137
million, down from the Company's budget of $150 million. EBITDA for the fourth
quarter will be in the range of $10 million to $14 million for the quarter, down
from the Company's budget of $30 million. After corporate overhead, interest,
and accelerated goodwill amortization, and before the previously announced
integration and consolidation charge and discontinued operations, this will
result in earnings per share for the fourth quarter of between ($0.02) and $0.02
per share, compared with analysts' estimates of $0.12 to $0.14 per share.
The lower-than-expected revenue and income for the fourth quarter of 1999 appear
to result largely from CBIZ's focus during the fourth quarter on exploring
strategic alternatives, including the merger or sale of the Company (announced
on October 5, 1999), which diverted senior management's attention from CBIZ core
operations. The strategic search not only distracted management at the corporate
level but also affected field operations, due to lack of certainty about their
future and the future of CBIZ, as a vast majority of CBIZ's business unit
leaders coast-to-coast hold substantial stakes in the Company. This was further
complicated by the gradual decline in the Company's share price (due to market
conditions for similarly situated companies) since the October 5 announcement,
which caused business unit leaders further concern and affected their focus on
operations.
With input from business unit leaders, CBIZ has decided to discontinue efforts
directed toward exploring strategic alternatives through Merrill Lynch.
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6480 Rockside Woods Blvd., South - Suite 330 - Cleveland, OH 44131 - Phone (216)
447-9000 - Fax (216) 447-9007
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"We have decided to terminate the engagement of Merrill Lynch and refocus our
attention on our core operations," stated Michael G. DeGroote, Chairman and CEO.
"Though CBIZ may consider an alliance with a financial or strategic partner in
the future, this will no longer be our immediate focus. Our corporate management
and field leaders are positive that we can best enhance shareholder value at
this time by restoring confidence after this temporary setback and by focusing
on our core operations. CBIZ's Board and management team remain confident of the
longer-term opportunities in this industry and of the Company's direction."
Despite the disappointing fourth-quarter 1999 results, CBIZ still anticipates
generating between $95 million and $100 million in EBITDA for 1999 from
continuing core operations (before the previously announced integration and
consolidation charge), up from $73 million for 1998. The final fourth-quarter
and year-end results will be announced at the close of market on February 29,
after the year-end audit of the Company has been completed.
Effective immediately, President and Chief Operating Officer, Fred M. Winkler,
has resigned to pursue other interests. CBIZ has appointed Jerome P. (Jerry)
Grisko, Senior Vice President, Mergers & Acquisitions and Legal Affairs, as
interim President of the Company until a new President and COO is found, a
process that will start immediately. Before joining CBIZ in September 1998, Mr.
Grisko was a partner at Baker & Hostetler, LLP, which he joined in 1987.
CBIZ has also appointed Eldon Walter as President of the Accounting and Tax
Group, which is the largest division of the Company's Business Solutions
segment. Mr. Walter was Vice President of this Group and a managing partner of
the Company's largest accounting company, MHM Business Services, which merged
with CBIZ in September 1998.
In light of the fourth-quarter setback, the Company is currently reviewing with
each of its subsidiaries their year 2000 forecasts. This will likely result in a
downward revision to the Company's internal EBITDA forecast.
Mr. DeGroote commented, "Even in difficult market conditions characterized by
depressed stock prices, CBIZ has remained profitable with strong cash flows and
has delivered attractive organic and overall growth and a strong balance sheet.
In the near term, CBIZ will regain its focus on operating performance. While
much work remains to be done, our management team and Board are absolutely
committed to improving our financial performance and enhancing shareholder
value."
CONFERENCE CALL
CBIZ WILL HOLD A CONFERENCE CALL to answer questions related to issues addressed
in this release today, JANUARY 31, 2000, AT 10:30 A.M. (EST). To participate in
the call, please dial 1-800-547-5079 several minutes before 10:30 a.m. (EST). If
dialing from outside the United States, please dial 1-612-288-0340. If you are
unable to participate in the call at the scheduled time, you may listen to a
digitized replay by dialing 1-800-475-6701 (or 1-320-365-3844 if dialing from
outside the United States). The replay will be available from 1:00 p.m. (EST) on
January 31, 2000 through midnight, February 4, 2000. The access code for the
replay is 499293.
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6480 Rockside Woods Blvd., South - Suite 330 - Cleveland, OH 44131 - Phone (216)
447-9000 - Fax (216) 447-9007
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Recently ranked the seventh-largest accounting company in the country by
Accounting Today, and one of the 100 fastest-growing companies in the nation by
Fortune magazine, Century Business Services, Inc. is a leading provider of
outsourced business services to small and medium-sized companies throughout the
United States. The Company provides integrated services in the following areas:
accounting, advisory, tax, and valuation; litigation advisory services; benefits
administration and insurance; human resources and payroll; performance
consulting; specialty insurance; and information technology through its CBIZ
Interactive division. These services are provided throughout a network of more
than 200 Company offices in 37 states, as well as through its subsidiary,
Century Small Business Solutions, a franchisor of accounting services with more
than 560 offices in 47 states. The Company services approximately 110,000
business clients, of which approximately 45,000 are serviced through the Century
Small Business Solutions network. Management estimates that its clients employ
more than 2.4 million employees, including 400,000 employed by clients of the
Century Small Business Solutions network.
Forward-looking statements in this release are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from those projected. Such risks
and uncertainties include, but are not limited to, the Company's ability to
acquire and finance additional businesses; the Company's ability to adequately
manage its growth; the Company's dependence on the current trend of outsourcing
business services; the Company's dependence on the services of its CEO and other
key employees; the Company's ability to adequately estimate its liability
reserves for its insurance businesses; the possibility of market reverses in its
investment portfolios; competitive pricing pressures; general business and
economic conditions; and changes in governmental regulation and tax laws
affecting its insurance business or its business services operations. A more
detailed description of such risks and uncertainties may be found in the
Company's filings with the Securities and Exchange Commission.
For further information regarding CBIZ, call our Investor Relations Office at
(216) 447-9000 or visit our web site at www.cbiz.com. To receive CBIZ
press releases via e-mail, please write to [email protected].
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