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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 earliest event reported) September 30, 1996
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PERSONNEL GROUP OF AMERICA, INC.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 001-13956 56-1930691
- ---------------------------- ------------------------ ------------------
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
6302 Fairview Road, Suite 201
Charlotte, North Carolina 28210
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(Address of Principal Executive Offices)
(Zip Code)
(704) 442-5100
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former name or address, if changed from last report)
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Item 7. Financial Statements.
Financial Statements
Filed herewith is the pro forma financial information required to be
filed by Item 7 of Form 8-K in connection with the Company's acquisition of
substantially all the assets of Business Enterprise Systems and Technology,
Inc., doing business as BEST Consulting ("BEST"), as reported in the Current
Report on Form 8-K filed with the Commission on October 15, 1996 (the "Original
Report"), to which this Amendment No. 1 relates:
Unaudited Pro Forma Financial Statements
Unaudited Pro Forma Balance Sheet as of June 30, 1996
Notes to Unaudited Pro Forma Balance Sheet
Unaudited Pro Forma Income Statements of Income for the Year Ended
December 31, 1995 and the Six Months Ended June 30, 1996
Notes to Unaudited Pro Forma Statements of Income
The historical financial statements required to be filed by Item 7 of
Form 8-K in connection with the acquisition of BEST were filed with the
Original Report.
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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.
Date: November 7, 1996
PERSONNEL GROUP OF AMERICA, INC.
By: /s/ Michael P. Bernard
-----------------------------------
Chief Financial Officer and
Treasurer
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INDEX TO FINANCIAL STATEMENTS
Documents filed under Item 7
Unaudited Pro Forma Financial Statements
Unaudited Pro Forma Balance Sheet as of June 30, 1996
Notes to Unaudited Pro Forma Balance Sheet
Unaudited Pro Forma Income Statements of Income for the Year Ended
December 31, 1995 and the Six Months Ended June 30, 1996
Notes to Unaudited Pro Forma Statements of Income
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UNAUDITED PRO FORMA FINANCIAL STATEMENTS
The following unaudited pro forma financial statements (the Unaudited
Pro Forma Financial Statements) have been derived by the application of pro
forma adjustments to historical consolidated financial statements of the Company
and pro forma financial statements previously filed on July 3, 1996 in a Current
Report on Form 8-K. The unaudited pro forma statements of income for the year
ended December 31, 1995, and the six-month period ended June 30, 1996, give
effect to the initial public offering (the IPO) in September 1995, the
acquisitions of Allegheny Personnel Services, Profile Temporary Services, Judith
Fox Staffing Companies and The Computer Resources Group, Inc. and the conversion
of three (3) previously franchised Nursefinders offices to Company-owned offices
(collectively, the Transactions or the Acquired Companies) along with the
acquisition of Business Enterprise Systems and Technology, Inc. (BEST) as if the
IPO, the Transactions and the acquisition of BEST were consummated as of January
1, 1995. The unaudited pro forma balance sheet gives effect to the acquisition
of BEST as if the transaction had occurred on June 30, 1996. The Company's
historical balance sheet as of June 30, 1996, includes the assets of the
Acquired Companies as those acquisitions were completed prior to such date.
Unaudited pro forma financial statements for the Transactions as of March 31,
1996, and for the year ended December 31, 1995, and the three-month period ended
March 31, 1996, were included in the Company's Registration Statement on Form
S-1 dated June 11, 1996, and incorporated by reference into the Company's
Current Report on Form 8-K filed July 3, 1996.
The Unaudited Pro Forma Financial Statements should not be considered
indicative of actual results that would have been achieved had the IPO, the
Transactions and the acquisition of BEST been consummated on the date or for
the periods indicated and do not purport to indicate balance sheet data or
results of operations as of any future date or for any future period. The
Unaudited Pro Forma Financial Statements should be read in conjunction with the
historical financial statements of the Company and the notes thereto.
The pro forma adjustments were applied to the historical financial
statements to reflect and account for the Transactions and the acquisition of
BEST as purchases. Accordingly, the pro forma data reflect the preliminary
allocation of the purchase price paid for the Acquired Companies and BEST based
on the estimated fair value of the tangible and intangible assets and
liabilities. Management believes that the final allocation will not vary
significantly from such preliminary allocation.
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PERSONNEL GROUP OF AMERICA, INC.
UNAUDITED PRO FORMA BALANCE SHEET
JUNE 30, 1996
(in thousands)
<TABLE>
<CAPTION>
BEST Pro Forma
PGA Transaction Adjustments Pro Forma
--- ----------- ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 48,249 $ 850 $(24,000)b $ 25,099
Accounts receivable 46,736 8,770 - 55,506
Prepaid expenses 3,756 883 - 4,639
Deferred income taxes 3,527 - - 3,527
--------- -------------------------------------
Total current assets 102,268 10,503 (24,000) 88,771
Property and equipment, net 5,213 1,115 - 6,328
Excess of cost over fair value of - -
net assets acquired, net 96,983 7,539 78,649 a,b 183,171
Other intangibles, net 2,571 2,363 (1,363)a,b 3,571
Other assets 661 156 - 817
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Total assets $ 207,696 $ 21,676 $ 53,286 $ 282,658
========= =====================================
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 1,337 3,781 (2,818)a $ 2,300
Accrued liabilities 21,213 3,643 785 a,b 25,641
Current maturities of notes payable - 2,438 - 2,438
Income taxes payable 135 - - 135
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Total current liabilities 22,685 9,862 (2,033) 30,514
Notes payable 1,374 4,333 62,800 b 68,507
Deferred income taxes payable 8,252 - - 8,252
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Total liabilities 32,311 14,195 60,767 107,273
Shareholders' equity:
Preferred stock - - - -
Common stock 120 4,990 (4,990)b 120
Additional paid-in capital 169,179 - - 169,179
Retained earnings 6,086 2,491 (2,491)b 6,086
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Total shareholders' equity 175,385 7,481 (7,481) 175,385
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Total liabilities and shareholder's equity $ 207,696 $ 21,676 $ 53,286 $ 282,658
========= =====================================
</TABLE>
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PERSONNEL GROUP OF AMERICA, INC.
NOTES TO UNAUDITED PRO FORMA BALANCE SHEET
As of June 30, 1996
The accompanying pro forma balance sheet as of June 30, 1996, was prepared
to reflect the financial position of the Company as if the acquisition of BEST
had occurred on June 30, 1996. This acquisition has been accounted for using
the purchase method of accounting. The Company's historical balance sheet as
of June 30, 1996, includes the assets and liabilities of the Acquired Entities
and the conversion of the Nursefinders franchises, as these acquisitions and
conversions were completed prior to such date.
a) These adjustments reflect the reduction of certain assets not acquired
and liabilities not assumed from the acquisition of BEST.
b) The pro forma adjustment to net assets represents management's
preliminary allocation of the purchase price as follows (dollars in thousands):
<TABLE>
<CAPTION>
BEST
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<S> <C>
Purchase Price $86,800
Fees and expenses 1,218
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Total purchase price 88,018
Less:
Net assets acquired (830)
Value assigned to noncompetition agreements (1,000)
-------
Excess of cost over fair value of net asset acquired $86,188
=======
</TABLE>
The acquisition of BEST provides for additional purchase price
consideration upon attainment of certain earnings targets over the next three
years. Any additional consideration paid will be recorded as additional
purchase price, allocated to excess of cost over fair value of net assets
acquired and amortized over the remaining life of the asset.
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PERSONNEL GROUP OF AMERICA, INC.
UNAUDITED PRO FORMA INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1995
(in thousands, except for per share data)
<TABLE>
<CAPTION>
------------------------------------------------------------------------
Results through
Dec. 31, 1995 for entities previously Pro Forma
Reported on Form S-1 BEST Adjustments Pro Forma
-------------------- ---- ----------- ---------
<S> <C> <C> <C> <C>
Revenues
Staffing services $ 182,501 $ - $ - $ 182,501
Information Technology 24,554 56,921 - 81,475
Health care services 118,485 - - 118,485
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Total revenues 325,540 56,921 - 382,461
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Operating expenses: -
Direct cost of services 233,709 37,715 271,424
Selling, general, and administrative 65,509 11,930 (743)a 76,696
License fees 4,420 - - 4,420
Depreciation and amoritization 5,525 770 1,851 b 8,146
Other - 5,333 (5,333)f -
Interest Income/Expense 3,359 1,897 3,623 c 8,879
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Total operating expenses 312,522 57,645 (602) 369,565
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Income (loss) before income taxes 13,018 (724) 602 12,896
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Provision for income taxes 5,593 - (49)d 5,544
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Net income (loss) $ 7,425 $ (724) $ 651 $ 7,352
========= ========================= =========
Weighted average
shares outstanding (e) 8,000 8,000
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Pro forma net income per share (e) $ 0.93 $ 0.92
========= =========
</TABLE>
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PERSONNEL GROUP OF AMERICA, INC.
UNAUDITED PRO FORMA INCOME STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(in thousands, except for per share data)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------
Results through
June 30, 1996 for entities previously Pro Forma
Reported on Form S-1 BEST Adjustments Pro Forma
-------------------- ---- ----------- ---------
<S> <C> <C> <C> <C>
Revenues
Staffing services $ 95,659 $ - $ - $ 95,659
Information Technology 15,718 30,690 - 46,408
Health care services 61,944 - - 61,944
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Total revenues 173,321 30,690 - 204,011
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Operating expenses:
Direct cost of services 127,854 20,135 - 147,989
Selling, general, and administrative 30,760 6,670 (162) (a) 37,268
License fees 3,270 - - 3,270
Depreciation and amoritization 2,552 743 727 (b) 4,022
Other - 1,712 (1,712) (f) -
Interest Income/Expense 1,491 406 1,674 (c) 3,571
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Total operating expenses 165,927 29,666 527 196,120
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Income before income taxs 7,394 1,024 (527) 7,891
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Provision for income taxes 3,129 - 199 (d) 3,328
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Net income $ 4,265 $ 1,024 (726) 4,563
========== ======================== =========
Weighted average
shares outstanding (e) 8,403 8,403
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Pro forma net income per share (e) $ 0.51 $ 0.54
========== =========
</TABLE>
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PERSONNEL GROUP OF AMERICA, INC.
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1995, AND THE
SIX-MONTH PERIOD ENDED JUNE 30, 1996
The accompanying pro forma statements of income for the year ended
December 31, 1995, and the six-month period ended June 30, 1996, have been
prepared to reflect the operations of the Company as if the IPO, the
Transactions and the acquisition of BEST had occurred on January 1, 1995.
(a) The adjustments to selling, general and administrative expense
include the following (in thousands):
<TABLE>
<CAPTION>
FOR THE YEAR ENDED FOR THE SIX MONTHS
DECEMBER 31, 1995 ENDED JUNE 30, 1996
<S> <C> <C>
Adjust compensation $(730) $(162)
Other (13) -
Total $(743) $(162)
</TABLE>
The adjustment to compensation reflects the reduction of certain officers'
compensation and employee bonuses following the Transactions and the
termination of employment of certain owner/officers, a result of selected
officers of the Acquired Companies terminating their employment concurrent with
the acquisitions.
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(b) This adjustment reflects the increase in amortization expense
related to the excess of cost over fair value of net assets acquired, and other
intangible assets added as a result of the Transactions. The excess of cost
over fair value of net assets acquired and other intangible assets will be
amortized on a straight-line basis over 40 years and four to five years,
respectively.
(c) This adjustment reflects the increase in interest expense for
notes payable at an interest rate of 6.5% related to the acquisition of BEST.
The effect on pro forma interest expense and pro forma net income of a 1/8%
variance in interest rates would not be material.
(d) This adjustment reflects the impact on income tax expense of
the pro forma adjustments to income before provision for income taxes and to
provide income taxes for BEST, which was an S Corporation, as if it was a
C Corporation for federal income tax purposes based on a combined federal and
state tax rate of 40%.
(e) Pro forma net income per share was computed by dividing pro
forma net income, after giving effect to each of the Transactions, by the
weighted average number of shares outstanding during the year ended December
31, 1995, and the six months ended June 30, 1996. Pro forma net income per
share, as adjusted, was computed by dividing pro forma net income, as adjusted
for the impact of the stock offering, by the weighted average number of shares
that would have been outstanding for the year ended December 31, 1995, and the
six months ended June 30, 1996, as if
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this offering had occurred on January 1, 1995. The effect of stock options on
pro forma net income per share is not material.
(f) This adjustment reflects the elimination of the compensation
expense related to a variable stock option plan that will be terminated
following the consummation of the BEST transaction.
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