UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported): August 30, 2013
CBIZ, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 1-32961 | 22-2769024 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 6050 Oak Tree Boulevard, South, Suite 500 Cleveland, Ohio |
44131 | |||
| (Address of principal executive offices) | (Zip Code) | |||
216-447-9000
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 2.01 | Completion of Acquisition or Disposition of Assets. |
On August 30, 2013, CBIZ, Inc., a Delaware corporation (the “Company”), through its subsidiary CBIZ Operations, Inc., an Ohio corporation, completed the sale of all of the issued and outstanding capital stock of each of CBIZ Medical Management Professionals, Inc., an Ohio corporation, and CBIZ Medical Management, Inc., a North Carolina corporation, and substantially all of the stock of their subsidiary companies, collectively consisting of all of CBIZ’s Medical Management Professionals ongoing operations and business (“MMP”), to Zotec Partners, LLC, an Indiana limited liability company (“Zotec”), pursuant to the Stock Purchase Agreement, dated as of July 26, 2013 (the “Stock Purchase Agreement with Zotec”). Zotec paid a purchase price of $200 million in cash and $1.6 million in notes, subject to any adjustments for working capital. The Company expects net proceeds to be approximately $145 million after taxes and transaction costs.
The proceeds were immediately used to repurchase 3,858,334 shares of the Company’s common stock from its largest shareholder, Westbury (Bermuda) Ltd. (“Westbury”) at a cost of $6.65 per share for a total of $25,657,921 pursuant to a Stock Purchase Agreement among Westbury, Westbury Trust, Michael G. DeGroote and the Company dated July 26, 2013 (the “Stock Purchase Agreement with Westbury”). The remaining proceeds will immediately be used to reduce current borrowing levels.
The information relating to the Stock Purchase Agreement with Zotec set forth in Item 1.01 of the Current Report on Form 8-K filed by CBIZ, Inc. with the Securities and Exchange Commission on August 1, 2013 is incorporated by reference herein.
On September 3, 2013, the Company issued a press release announcing the completion of the sale of MMP. A copy of the press release is furnished herewith as Exhibit 99.1.
Pro forma financial information with respect to the sale of MMP is provided in Item 9.01 of this Current Report on Form 8-K.
2
| Item 8.01 | Other Events. |
On August 30, 2013, the Company completed the purchase of 3,858,334 shares of the Company’s common stock from Westbury, the Company’s largest stockholder, at a price of $6.65 per share resulting in an aggregate purchase price of $25,657,921 pursuant to the Stock Purchase Agreement with Westbury. The remaining shares subject to the Stock and Option Purchase Agreement among Westbury, Westbury Trust, Michael G. DeGroote and the Company, dated September 14, 2010 (the “Option Agreement”), in the amount of 3,858,335 shares will remain subject to the Option Agreement for the remainder of its term.
The information related to the Stock Purchase Agreement with Westbury set forth in Item 1.01 of the Current Report on Form 8-K filed by CBIZ, Inc. with the Securities and Exchange Commission on August 1, 2013 is incorporated by reference herein.
On September 3, 2013, the Company issued a press release announcing the completion of the purchase of Company common stock from Westbury. A copy of the press release is furnished herewith as Exhibit 99.1.
| Item 9.01 | Financial Statements and Exhibits. |
(b) Pro Forma Financial Information
The Unaudited Pro Forma Consolidated Financial Information of CBIZ, Inc. as of and for the six month period ended June 30, 2013, and for the years ended December 31, 2012, 2011 and 2010, which gives effect to the divestiture of MMP.
(d) Exhibits.
| 99.1 | Press Release of CBIZ, Inc. dated September 3, 2013, announcing the completion of the divestiture of its Medial Management Professionals business and the purchase of 3.85 million shares of the Company’s common stock from Westbury. |
| 99.2 | The Unaudited Pro Forma Consolidated Financial Information of CBIZ, Inc. |
Forward-Looking Statements
This Current Report on Form 8-K contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, forecasts and assumptions that are subject to risks and uncertainties, which could cause actual outcomes and results to differ materially from these statements. Such risks and uncertainties include, but are not limited to, the impact of the MMP disposition and Westbury stock repurchase on the Company’s stock price; the anticipated benefits of the disposition and stock repurchase on the Company’s financial results, business performance, and/or product offerings; 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; competitive pricing pressures; general business and economic conditions; and changes in governmental regulation and tax laws affecting the Company’s 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. The information set forth herein speaks only as of the date hereof, and CBIZ disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date hereof.
3
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.
| September 6, 2013 | CBIZ, INC. | |||||
| By: | /s/ Ware H. Grove | |||||
| Name: |
Ware H. Grove | |||||
| Title: |
Chief Financial Officer | |||||
EXHIBIT 99.1
|
|
| FOR IMMEDIATE RELEASE | CONTACT: | Lori Novickis | ||
| Director, Corporate Relations | ||||
| CBIZ, Inc. | ||||
| Cleveland, Ohio | ||||
| (216) 447-9000 |
CBIZ COMPLETES THE SALE OF ITS
MEDICAL MANAGEMENT PROFESSIONALS BUSINESS
Completes purchase of 3.85 million shares of the Company’s common stock from Westbury
Cleveland, Ohio (September 3, 2013)—CBIZ, Inc. (NYSE: CBZ) (“Company”) today announced that it has completed the previously announced sale of its Medical Management Professionals (“MMP”) business to Zotec Partners, LLC (“Zotec”) for $200 million. The Company also completed the purchase of 3.85 million shares of the Company’s common stock from Westbury (Bermuda) Ltd. at a price of $6.65 per share. Following both transactions, proceeds of the sale will immediately be used to reduce current borrowing levels and over time will be reinvested to enhance the growth of the core Financial and Employee Services businesses.
CBIZ, Inc. provides professional business services that help clients better manage their finances and employees. CBIZ provides its clients with financial services including accounting, tax, financial advisory, government health care consulting, risk advisory, merger and acquisition advisory, real estate consulting, and valuation services. Employee services include employee benefits consulting, property and casualty insurance, retirement plan consulting, payroll, life insurance, HR consulting, and executive recruitment. As one of the nation’s largest brokers of employee benefits and property and casualty insurance, and one of the largest accounting and valuation companies in the United States, the Company’s services are provided through nearly 100 Company offices in 32 states.
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 based on current expectations, forecasts and assumptions that are subject to risks and uncertainties, which could cause actual outcomes and results to differ materially from these statements. Such risks and uncertainties include, but are not limited to, the impact of the MMP disposition and Westbury stock repurchase on the Company’s stock price; the anticipated benefits of the disposition and stock purchase on the Company’s financial results, business performance, and/or product offerings; 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; competitive pricing pressures; general business and economic conditions; and changes in governmental regulation and tax laws affecting the Company’s 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. The information set forth herein speaks only as of the date hereof, and CBIZ disclaims any intention or obligation to update any forward-looking statements as a result of developments occurring after the date hereof.
For further information regarding CBIZ, call our Investor Relations Office at (216) 447-9000 or visit our web site at www.cbiz.com.
6050 Oak Tree Boulevard, South — Suite 500 — Cleveland, OH 44131 — Phone (216) 447-9000 — Fax (216) 447-9007
EXHIBIT 99.2
Unaudited Pro Forma Consolidated Financial Information
On July 26, 2013, CBIZ, Inc., a Delaware corporation (the “Company”), through its subsidiary CBIZ Operations, Inc., an Ohio corporation, entered into an agreement (the “Zotec Agreement”) with Zotec Partners, LLC, an Indiana limited liability company (“Zotec”), to sell all of the issued and outstanding capital stock of each of CBIZ Medical Management Professionals, Inc., an Ohio corporation, and CBIZ Medical Management, Inc., a North Carolina corporation, and substantially all of the stock of their subsidiary companies, collectively consisting of all of CBIZ’s Medical Management Professionals ongoing operations and business (“MMP”).
On August 30, 2013, pursuant to the terms of the Zotec Agreement, the Company completed the divestiture of its MMP business to Zotec for consideration of $201.6 million, subject to adjustments for working capital as defined in the Zotec Agreement.
Concurrent with the completion of the Zotec Agreement, the Company completed the purchase of 3,858,334 shares of the Company’s common shares from Westbury (Bermuda) Ltd. (“Westbury”), pursuant to a Stock Purchase Agreement that was entered into on July 26, 2013 between the Company and its largest shareholder, Westbury. The Company paid Westbury a total of $25,657,921, which represents a price per share of $6.65.
The unaudited pro forma consolidated balance sheet of the Company as of June 30, 2013 is presented as if the disposition occurred on June 30, 2013. The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2013 and for the years ended December 31, 2012, 2011 and 2010 are presented as if the disposition occurred on January 1, 2010 and exclude the results of discontinued operations.
The results of operations of the MMP business were classified as discontinued operations in the unaudited consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q as of and for the six months ended June 30, 2013. As such, in the condensed consolidated statement of operations for the six months ended June 30, 2013, there are no pro forma adjustments to continuing operations necessary to reflect the disposition.
The following unaudited pro forma consolidated financial statements are presented for illustrative purposes only and have been prepared to give effect to the sale of MMP and reflect what the financial statements would have reported if the sale of MMP occurred at the beginning of the earliest date presented. The resulting pro forma financial information of the continuing operations of the Company are not necessarily indicative of future results of operations or financial condition.
CBIZ, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET AND NOTES - UNAUDITED
JUNE 30, 2013
(In thousands)
| Pro Forma Adjustments | ||||||||||||||||
| Previously | MMP | Proceeds | ||||||||||||||
| Reported | Items | and Other | Pro Forma | |||||||||||||
| ASSETS | ||||||||||||||||
| Current assets: |
||||||||||||||||
| Cash and cash equivalents |
$ | 1,187 | $ | — | $ | 7,142 | (b) | $ | 8,329 | |||||||
| Restricted cash |
28,219 | — | — | 28,219 | ||||||||||||
| Accounts receivable, net |
161,402 | — | — | 161,402 | ||||||||||||
| Deferred income taxes—current |
12,138 | — | — | 12,138 | ||||||||||||
| Other current assets |
12,978 | — | 1,600 | (c) | 14,578 | |||||||||||
| Assets of discontinued operations |
102,087 | (102,087 | )(a) | — | — | |||||||||||
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|
|||||||||
| Current assets before funds held for clients |
318,011 | (102,087 | ) | 8,742 | 224,666 | |||||||||||
| Funds held for clients |
116,370 | — | — | 116,370 | ||||||||||||
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|||||||||
| Total current assets |
434,381 | (102,087 | ) | 8,742 | 341,036 | |||||||||||
| Property and equipment, net |
18,210 | — | — | 18,210 | ||||||||||||
| Goodwill and other intangible assets, net |
474,981 | — | — | 474,981 | ||||||||||||
| Assets of deferred compensation plan |
44,964 | — | — | 44,964 | ||||||||||||
| Other assets |
7,693 | — | — | 7,693 | ||||||||||||
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|||||||||
| Total assets |
$ | 980,229 | $ | (102,087 | ) | $ | 8,742 | $ | 886,884 | |||||||
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| LIABILITIES | ||||||||||||||||
| Current liabilities: |
||||||||||||||||
| Accounts payable |
$ | 40,766 | $ | — | $ | — | $ | 40,766 | ||||||||
| Income taxes payable—current |
8,612 | — | 48,700 | (d) | 57,312 | |||||||||||
| Accrued personnel costs |
30,168 | — | — | 30,168 | ||||||||||||
| Notes payable—current |
4,875 | — | — | 4,875 | ||||||||||||
| Contingent liabilities—current |
14,456 | — | — | 14,456 | ||||||||||||
| Other current liabilities |
19,785 | — | — | 19,785 | ||||||||||||
| Liabilities of discontinued operations |
11,553 | (11,553 | )(a) | — | — | |||||||||||
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|||||||||
| Current liabilities before client fund obligations |
130,215 | (11,553 | ) | 48,700 | 167,362 | |||||||||||
| Client fund obligations |
116,338 | — | — | 116,338 | ||||||||||||
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|||||||||
| Total current liabilities |
246,553 | (11,553 | ) | 48,700 | 283,700 | |||||||||||
| Convertible notes, net |
123,810 | — | — | 123,810 | ||||||||||||
| Bank debt |
204,000 | — | (164,000 | )(b) | 40,000 | |||||||||||
| Income taxes payable—non-current |
4,280 | — | — | 4,280 | ||||||||||||
| Deferred income taxes—non-current |
875 | — | — | 875 | ||||||||||||
| Deferred compensation plan obligations |
44,964 | — | — | 44,964 | ||||||||||||
| Contingent liabilities—non-current |
19,798 | — | — | 19,798 | ||||||||||||
| Accrued expenses—non current |
11,297 | — | — | 11,297 | ||||||||||||
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|||||||||
| Total liabilities |
655,577 | (11,553 | ) | (115,300 | ) | 528,724 | ||||||||||
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| STOCKHOLDERS’ EQUITY | ||||||||||||||||
| Common stock |
1,131 | — | — | 1,131 | ||||||||||||
| Additional paid-in capital |
563,646 | — | — | 563,646 | ||||||||||||
| Retained earnings |
132,580 | (90,534 | )(e) | 149,700 | (e) | 191,746 | ||||||||||
| Treasury stock |
(371,890 | ) | — | (25,658 | )(f) | (397,548 | ) | |||||||||
| Accumulated other comprehensive loss |
(815 | ) | — | — | (815 | ) | ||||||||||
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|||||||||
| Total stockholders’ equity |
324,652 | (90,534 | ) | 124,042 | 358,160 | |||||||||||
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|||||||||
| Total liabilities and stockholders’ equity |
$ | 980,229 | $ | (102,087 | ) | $ | 8,742 | $ | 886,884 | |||||||
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| (a) | Represents the assets and liabilities of MMP that were previously determined to be held for sale. |
| (b) | Proceeds from sale of MMP, net of closing costs and adjustments of $4.8 million, less $25.7 million used to repurchase 3.86 million shares of the Company’s common shares from Westbury (Bermuda) Ltd., and $164.0 million to immediately pay down debt. |
| (c) | Proceeds from the sale of MMP in the form of a note receivable. |
| (d) | Estimated tax liability resulting from the gain on sale of MMP using a tax rate of 40%. |
| (e) | Collectively, the estimated after tax gain on the sale of MMP. |
| (f) | The repurchase of the Company’s common shares as described in note (b). |
CBIZ, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND NOTES - UNAUDITED
FOR THE YEARS ENDED DECEMBER 31, 2012, 2011, AND 2010
(In thousands, except per share data)
| 2012 | ||||||||||||
| Previously | Adjustments for | CBIZ | ||||||||||
| Reported | Sale of MMP (a) | Pro Forma (b) | ||||||||||
| Revenue |
$ | 766,094 | $ | 138,016 | $ | 628,078 | ||||||
| Operating expenses |
680,195 | 122,958 | 557,237 | |||||||||
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| Gross margin |
85,899 | 15,058 | 70,841 | |||||||||
| Corporate general and administrative expenses |
30,422 | 213 | 30,209 | |||||||||
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| Operating income |
55,477 | 14,845 | 40,632 | |||||||||
| Total other expense, net |
5,074 | 1,054 | 4,020 | |||||||||
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| Income from continuing operations before income tax expense |
50,403 | 13,791 | 36,612 | |||||||||
| Income tax expense |
19,328 | 5,349 | 13,979 | |||||||||
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| Income from continuing operations |
$ | 31,075 | $ | 8,442 | $ | 22,633 | ||||||
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| Basic weighted average common shares outstanding |
49,002 | 49,002 | ||||||||||
| Diluted weighted average common shares outstanding |
49,252 | 49,252 | ||||||||||
| Basic earnings per share from continuing operations |
$ | 0.63 | $ | 0.17 | $ | 0.46 | ||||||
| Diluted earnings per share from continuing operations |
$ | 0.63 | $ | 0.17 | $ | 0.46 | ||||||
| 2011 | ||||||||||||
| Previously | Adjustments for | CBIZ | ||||||||||
| Reported | Sale of MMP (a) | Pro Forma (b) | ||||||||||
| Revenue |
$ | 733,805 | $ | 141,046 | $ | 592,759 | ||||||
| Operating expenses |
644,269 | 124,668 | 519,601 | |||||||||
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| Gross margin |
89,536 | 16,378 | 73,158 | |||||||||
| Corporate general and administrative expenses |
31,583 | 50 | 31,533 | |||||||||
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| Operating income |
57,953 | 16,328 | 41,625 | |||||||||
| Total other expense, net |
10,986 | 1,060 | 9,926 | |||||||||
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| Income from continuing operations before income tax expense |
46,967 | 15,268 | 31,699 | |||||||||
| Income tax expense |
18,383 | 6,092 | 12,291 | |||||||||
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| Income from continuing operations |
$ | 28,584 | $ | 9,176 | $ | 19,408 | ||||||
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|||||||
| Basic weighted average common shares outstanding |
49,328 | 49,328 | ||||||||||
| Diluted weighted average common shares outstanding |
49,599 | 49,599 | ||||||||||
| Basic earnings per share from continuing operations |
$ | 0.58 | $ | 0.19 | $ | 0.39 | ||||||
| Diluted earnings per share from continuing operations |
$ | 0.58 | $ | 0.19 | $ | 0.39 | ||||||
| 2010 | ||||||||||||
| Previously | Adjustments for | CBIZ | ||||||||||
| Reported | Sale of MMP (a) | Pro Forma (b) | ||||||||||
| Revenue |
$ | 730,401 | $ | 148,425 | $ | 581,976 | ||||||
| Operating expenses |
644,335 | 131,754 | 512,581 | |||||||||
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| Gross margin |
86,066 | 16,671 | 69,395 | |||||||||
| Corporate general and administrative expenses |
29,584 | 4 | 29,580 | |||||||||
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| Operating income |
56,482 | 16,667 | 39,815 | |||||||||
| Total other expense, net |
11,310 | 1,140 | 10,170 | |||||||||
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| Income from continuing operations before income tax expense |
45,172 | 15,527 | 29,645 | |||||||||
| Income tax expense |
17,017 | 6,189 | 10,828 | |||||||||
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| Income from continuing operations |
$ | 28,155 | $ | 9,338 | $ | 18,817 | ||||||
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|||||||
| Basic weighted average common shares outstanding |
57,692 | 57,692 | ||||||||||
| Diluted weighted average common shares outstanding |
58,193 | 58,193 | ||||||||||
| Basic earnings per share from continuing operations |
$ | 0.49 | $ | 0.16 | $ | 0.33 | ||||||
| Diluted earnings per share from continuing operations |
$ | 0.48 | $ | 0.16 | $ | 0.32 | ||||||
| (a) | Adjustments for MMP include the previously reported operating results for MMP as well as adjustments for allocation of interest expense and income tax expense. Income tax expense was calculated using the estimated effective tax rate for MMP. |
| (b) | The CBIZ Pro Forma reflects the adjusted results of operations after the divestiture of MMP. |
CBIZ, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS AND NOTES - UNAUDITED
SIX MONTHS ENDED JUNE 30, 2013
(In thousands, except per share data)
| Previously | Adjustments for | CBIZ | ||||||||||
| Reported | Sale of MMP (a) | Pro Forma | ||||||||||
| Revenue |
$ | 373,945 | $ | — | $ | 373,945 | ||||||
| Operating expenses |
311,625 | — | 311,625 | |||||||||
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|||||||
| Gross margin |
62,320 | — | 62,320 | |||||||||
| Corporate general and administrative expenses |
17,633 | — | 17,633 | |||||||||
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|||||||
| Operating income |
44,687 | — | 44,687 | |||||||||
| Total other expense, net |
5,892 | — | 5,892 | |||||||||
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|||||||
| Income from continuing operations before income tax expense |
38,795 | — | 38,795 | |||||||||
| Income tax expense |
16,441 | — | 16,441 | |||||||||
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| Income from continuing operations |
$ | 22,354 | $ | — | $ | 22,354 | ||||||
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| Basic weighted average common shares outstanding |
49,535 | 49,535 | ||||||||||
| Diluted weighted average common shares outstanding |
49,891 | 49,891 | ||||||||||
| Basic earnings per share from continuing operations |
$ | 0.45 | $ | — | $ | 0.45 | ||||||
| Diluted earnings per share from continuing operations |
$ | 0.45 | $ | — | $ | 0.45 | ||||||
| (a) | The results of operations of MMP were classified as discontinued operations in the unaudited consolidated financial statements and notes thereto included in CBIZ’s Quarterly Report on Form 10-Q as of and for the six months ended June 30, 2013. As such, no pro forma adjustments to continuing operations are necessary to reflect the divestiture. |