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:
November 9, 1995
VSE CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
0-3676 54-0649263
(Commission File Number) (I.R.S. Identification Number)
2550 Huntington Avenue
Alexandria, Virginia 22303-1499
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code
(703) 960-4600
This Amendment No. 1 to the Current Report is filed on Form 8-K/A by VSE
Corporation (the "Company") and amends the Current Report on Form 8-K filed by
the Company on September 13, 1995.
Only those items which are amended are set forth herein.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
A. FINANCIAL STATEMENTS OF Energetics Incorporated
Unaudited Financial Statements as of June 30, 1995 and for the seven
months ended June 30, 1994 and June 30, 1995
Audited Financial Statements for the year ended November 27, 1994,
together with auditors' report
B. PRO FORMA FINANCIAL STATEMENTS OF VSE CORPORATION
Unaudited Pro Forma Combined Condensed Financial Statements
Notes to Unaudited Pro Forma Combined Condensed Financial Statements
C. EXHIBITS
Exhibit No. Exhibit
23 Consent of Arthur Andersen LLP, Independent Public
Accountants
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 thereunto duly authorized.
VSE CORPORATION
(Registrant)
Date: November 9, 1995 C. S. Weber
C. S. Weber, Senior Vice President,
Secretary and Treasurer
(Principal Financial Officer)
ITEM 7.A FINANCIAL STATEMENTS OF Energetics Incorporated
Attached are the financial statements of Energetics Incorporated, which include
the unaudited financial statements as of June 30, 1995 and for the seven months
ended June 30, 1995 and June 30, 1994 and the audited financial statements for
the year ended December 27, 1994 with the Report of Arthur Andersen LLP,
Independent Public Accountants.
Energetics Incorporated
Financial Statements (Unaudited)
Balance Sheet As of June 30, 1995
(in thousands, except share amounts)
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . $ 227
Accounts receivable, principally
U. S. Government . . . . . . . . . . . . . . . . . . 2,696
Other current assets . . . . . . . . . . . . . . . . . 64
______
Total current assets . . . . . . . . . . . . . . . . 2,987
Property and equipment, net . . . . . . . . . . . . . . 308
______
Total assets . . . . . . . . . . . . . . . . . . . . $ 3,295
======
Liabilities and Stockholders' Investment
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . $ 67
Accounts payable and other current liabilities . . . . 274
Accrued expenses . . . . . . . . . . . . . . . . . . . 733
Dividends payable . . . . . . . . . . . . . . . . . . 51
______
Total current liabilities . . . . . . . . . . . . . 1,125
______
Total liabilities . . . . . . . . . . . . . . . . . 1,125
======
Commitments and contingencies
Stockholders' investment:
Common stock, no par value, authorized
10,000 shares; issued 850 shares . . . . . . . . . . -
Paid-in surplus . . . . . . . . . . . . . . . . . . . 92
Retained earnings . . . . . . . . . . . . . . . . . . 2,078
______
Total stockholders' investment . . . . . . . . . . . 2,170
______
Total liabilities and stockholders' investment . . . $ 3,295
======
See accompanying notes
Energetics Incorporated
Financial Statements (Unaudited)
Statement of Income For the seven months ended June 30,
(in thousands, except share amounts)
1995 1994
Revenues, principally from contracts . . . . . . . . . $ 6,450 $ 6,075
Costs and expenses of contracts . . . . . . . . . . . . 5,985 5,701
______ ______
Gross profit . . . . . . . . . . . . . . . . . . . . . 465 374
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . . . 34 14
Interest expense . . . . . . . . . . . . . . . . . . . 5 48
______ ______
Net income . . . . . . . . . . . . . . . . . . . . . . $ 426 $ 312
====== ======
Earnings per common share,
based on weighted shares
outstanding $501.67 $368.10
====== ======
Weighted-average shares outstanding 850 850
====== ======
See accompanying notes
Energetics Incorporated
Financial Statements (Unaudited)
Statement of Cash Flows For the seven months ended June 30,
(in thousands)
1995 1994
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . $ 426 $ 312
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization . . . . . . . . . . . 130 127
Change in assets and liabilities
(Increase) decrease in:
Accounts receivable . . . . . . . . . . . . . . (409) (93)
Other current assets. . . . . . . . . . . . . . (2) (20)
Increase (decrease) in:
Accounts payable and other current
liabilities. . . . . . . . . . . . . . . . . . (226) (42)
Accrued expenses. . . . . . . . . . . . . . . . 45 63
______ _____
Net cash (used in) provided by operations . . . (36) 347
______ _____
Cash flows from investing activities:
Purchase of property and equipment . . . . . . . . . . (99) (74)
______ _____
Net cash used in investing activities . . . . . . . (99) (74)
______ _____
Cash flows from financing activities:
Payments of bank note payable . . . . . . . . . . . . (33) (47)
Cash dividends paid . . . . . . . . . . . . . . . . . (124) (127)
______ _____
Net cash used in financing activities. . . . . . . . (157) (174)
______ _____
Net decrease in cash and cash equivalents . . . . . . . (292) 99
Cash and cash equivalents at beginning of the year. . 519 1,057
------ -----
Cash and cash equivalents at end of period. . . . . . $ 227 $1,156
====== =====
Interest paid $ 5 $ 7
====== =====
See accompanying notes
Energetics Incorporated
Notes to Financial Statements (Unaudited)
(1) Basis of Presentation
The unaudited financial statements included herein have been prepared pursuant
to the rules and regulations of the Securities and Exchange Commission.
Although certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and regula-
tions, the Company believes that the disclosures included herein are adequate
to make the information presented not misleading. Operating results for the
seven month period ended June 30, 1995, are not necessarily indicative of the
results that may be expected for the remainder of the current year. These un-
audited financial statements should be read in conjunction with the financial
statements and the notes thereto included in the Company's audited financial
statements for the year ended December 27, 1994 included in this Current Report
on Form 8-K/A.
In the opinion of the Company, the unaudited financial statements contain all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the results for the seven month periods ended June 30, 1995 and
June 30, 1994.
(2) Contingencies
During the seven month period ending June 30, 1995, there has been no change in
the Company's position relating to contingencies discussed in Note 6 of the
1994 audited financial statements. No other matters of a contingent nature
have arisen.
(3) Subsequent Events
Effective August 29, 1995, VSE Corporation, a publicly traded professional
services company, purchased all of the outstanding common stock of Energetics
Incorporated. As of August 28, 1995 the Company incurred various non-recurring
and administrative charges in connection with the sale of the stock. These
costs are not included in these accompanying financial statements.
Report of Independent Public Accountants
To the Board of Directors of Energetics Incorporated:
We have audited the accompanying balance sheet of Energetics Incorporated (a
Maryland corporation) as of November 27, 1994, and the related statements of
income, stockholders' investment 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 generally accepted auditing
standards. 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 Energetics Incorporated as of
November 27, 1994, and the results of its operations and its cash flows for the
year then ended in conformity with generally accepted accounting principles.
Arthur Andersen LLP
Washington, D.C.,
November 6, 1995
Energetics Incorporated
Financial Statements
Balance Sheet As of November 27, 1994
(in thousands, except share amounts)
Assets
Current assets:
Cash and cash equivalents . . . . . . . . . . . . . . $ 519
Accounts receivable, principally
U. S. Government . . . . . . . . . . . . . . . . . . 2,288
Other current assets . . . . . . . . . . . . . . . . . 62
______
Total current assets . . . . . . . . . . . . . . . . 2,869
Property and equipment, net . . . . . . . . . . . . . . 339
______
Total assets . . . . . . . . . . . . . . . . . . . . $ 3,208
======
Liabilities and Stockholders' Investment
Current liabilities:
Current portion of long-term debt. . . . . . . . . . . $ 80
Accounts payable and other current liabilities . . . . 480
Accrued expenses . . . . . . . . . . . . . . . . . . . 689
Dividends payable . . . . . . . . . . . . . . . . . . 58
______
Total current liabilities . . . . . . . . . . . . . 1,307
Long-term debt . . . . . . . . . . . . . . . . . . . . . 33
______
Total liabilities . . . . . . . . . . . . . . . . . 1,340
______
Commitments and contingencies (Note 6)
Stockholders' investment:
Common stock, no par value, authorized
10,000 shares; issued 850 shares . . . . . . . . . . -
Paid-in surplus . . . . . . . . . . . . . . . . . . . 92
Retained earnings . . . . . . . . . . . . . . . . . . 1,776
______
Total stockholders' investment . . . . . . . . . . . 1,868
______
Total liabilities and stockholders' investment . . . $ 3,208
======
See accompanying notes
Energetics Incorporated
Financial Statements
Statement of Income For the year ended November 27, 1994
(in thousands, except share amounts)
Revenues, principally from contracts . . . . . . . . . . . . . $10,484
Costs and expenses of contracts . . . . . . . . . . . . . . . . 9,836
______
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . 648
Selling, general and administrative
expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
Interest expense . . . . . . . . . . . . . . . . . . . . . . . 70
______
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . $ 499
======
Earnings per common share,
based on weighted shares
outstanding $587.49
======
Weighted-average shares outstanding 850
======
See accompanying notes
Energetics Incorporated
Financial Statements
Statement of Stockholders' Investment
(in thousands, except share amounts)
Common Stock Paid-In Retained
Shares Amount Surplus Earnings
Balance at November 28, 1993 . . . . 850 -- $ 92 $ 1,504
Net income . . . . . . . . . . . . . -- -- -- 499
Dividends declared ($267 per share). -- -- -- (227)
___ ___ _____ ______
Balance at November 27, 1994 . . . . 850 -- $ 92 $ 1,776
=== === ===== ======
See accompanying notes
Energetics Incorporated
Financial Statements
Statement of Cash Flows For the year ended November 27, 1994
(in thousands)
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 499
Adjustments to reconcile net income to net cash
provided by operations:
Depreciation and amortization . . . . . . . . . . . . . . 193
Change in assets and liabilities
(Increase) decrease in:
Accounts receivable . . . . . . . . . . . . . . . . . 2
Other current assets. . . . . . . . . . . . . . . . . (38)
Decrease in:
Accounts payable and other current
liabilities. . . . . . . . . . . . . . . . . . . . . (1)
Accrued expenses. . . . . . . . . . . . . . . . . . . (40)
______
Net cash provided by operations . . . . . . . . . . . 615
______
Cash flows from investing activities:
Purchase of property and equipment . . . . . . . . . . . . . (149)
______
Net cash used in investing activities . . . . . . . . . . (149)
______
Cash flows from financing activities:
Payments of bank note payable . . . . . . . . . . . . . . . (128)
Payments of stockholders' loans . . . . . . . . . . . . . . (650)
Cash dividends paid . . . . . . . . . . . . . . . . . . . . (227)
______
Net cash used in financing activities . . . . . . . . . . (1,005)
______
Net decrease in cash and cash equivalents . . . . . . . . . . (539)
Cash and cash equivalents at beginning of year. . . . . . . 1,058
______
Cash and cash equivalents at end of year. . . . . . . . . . $ 519
======
See accompanying notes
Energetics Incorporated
Notes to Financial Statements
(1) Summary of Significant Accounting Policies
Energetics Incorporated (the "Company") assists government and industry in
conducting effective technology programs, primarily in the fields of energy use
and the environment. Principal clients include the U. S. Department of Energy,
other U. S. Government prime contractors, public utilities, universities, and
non-profit corporations and associations.
Fiscal Year
The Company's annual accounting period ends on the Sunday closest to
November 30. The fiscal year-end date for 1994 is November 27, 1994. Fiscal
year 1994 contains 52 weeks.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original maturity
of three months or less to be cash equivalents.
Concentration of Credit Risk
Financial instruments that potentially subject the company to concentration of
credit risk consist primarily of cash, cash equivalents, and accounts
receivable. The company believes that credit risk with respect to trade
accounts receivable are limited due to the large number of U. S. Government
receivables.
Statement of Cash Flows
Supplemental disclosures of cash flow information for the year ended
November 27 1994 is presented below:
Interest paid . . . . . . . . . . $70,000
Contract Revenues
Substantially all of the Company's revenues result from contract services
performed for the U. S. Government or for contractors engaged in work for the
U. S. Government under a variety of contracts. Revenues on cost-type contracts
are recorded on the basis of recoverable costs incurred and fees earned.
Revenues and fees on fixed price contracts are recorded as services are
performed, using the percentage-of-completion method of accounting, primarily
based on contract costs incurred to date compared with total estimated costs at
completion. Revenues on time and material contracts are recorded on the basis
of hours delivered plus other allowable direct costs as incurred. Losses on
contracts are recognized when they become known.
Notes to Financial Statements
A substantial portion of the contract and administrative costs is subject to
audit by the Defense Contract Audit Agency. The company's indirect cost rates
have been audited and approved for 1991 and prior years. In the opinion of
management the audits of 1994, 1993 and 1992 will not result in adjustments, if
any, having a material adverse effect on the Company's results of operations or
financial position.
Income Taxes
Effective with the year beginning December 1, 1992, the Stockholders of the
Company have consented to the Company's election to come within the provisions
of Section 1372(A) of the Internal Revenue Code, which provides that income of
the Corporation will be taxed directly to its stockholders; therefore, no
provision for Federal or state income taxes has been recorded in the
accompanying financial statements.
Property and Equipment
Property and equipment (valued at cost) as of November 27, 1994 consists of the
following (in thousands):
Computer systems equipment. . . . . . . . . $ 731
Furniture, fixtures, equipment, and other . 496
______
1,227
Less accumulated depreciation . . . . . . . (888)
______
$ 339
======
Depreciation and amortization expense for property and equipment is
approximately $193,000 for 1994. The Company uses accelerated methods of
depreciation over estimated useful lives ranging from five to seven years.
(2) Accounts Receivable
The components of accounts receivable as of November 27, 1994, are as follows
(in thousands):
Billed . . . . . . . . . . . . . . . . $ 2,120
Unbilled:
Retainages (generally not billable
within one year). . . . . . . . . . . 114
Other . . . . . . . . . . . . . . . . 94
Less-Allowance for contract
disallowances . . . . . . . . . . . . (40)
______
Total accounts receivable $ 2,288
======
Notes to Financial Statements
(3) Debt
Long-Term Debt
(in thousands):
Long-term debt as of November 27, 1994 is comprised of the following:
Bank note payable . . . . . . . . . . . . . . . . $113
Less current portion. . . . . . . . . . . . . . . (80)
___
Long-term debt $ 33
===
The Company has an unsecured note with a bank which is used to fund working
capital requirements. The loan is payable in monthly installments of $6,667.
The note bears interest at prime and one half percent. The note was paid in
full in October 1995, as a result of the transaction discussed in Note (7).
(4) Retirement Plan
The Company maintains a profit sharing plan for employees. All employees who
have completed two years of service are members of the profit sharing plan.
The Company makes an annual discretionary contribution to the profit sharing
plan. The Company's profit sharing plan expense for 1994 was approximately
$402,000.
(5) Accrued Expenses
The components of accrued expenses as of November 27, 1994 were as follows (in
thousands):
Accrued salaries and bonuses. . . . . . . . . $ 647
Accrued vacation. . . . . . . . . . . . . . . 24
Other accrued expenses. . . . . . . . . . . . 18
_______
Total accrued expenses $ 689
=======
(6) Commitments and Contingencies
Leases
The principal facilities, equipment, and automobiles of the Company are rented
under generally noncancelable operating leases for periods of one to five
years. Rent expense for 1994 was $621,000. The future minimum rental payments
required under leases having remaining noncancelable lease terms in excess of
one year approximate $627,000 in 1995, $520,600 in 1996, $494,000 in 1997,
$456,000 in 1998, and $36,000 in 1999.
Notes to Financial Statements
Litigation
The Company has in the normal course of business, certain claims against it and
against other parties. In the opinion of management, the resolution of these
claims will not have a material adverse effect on the Company's results of
operations or financial position.
(7) Subsequent Event
Effective August 29, 1995, VSE Corporation, a publicly traded professional
services company, purchased all of the outstanding common stock of Energetics
Incorporated.
ITEM 7.B Pro Forma Financial Statements of VSE Corporation
The following unaudited pro forma combined financial information sets forth the
combined financial position and the combined results of operations of VSE
Corporation and Energetics Incorporated based upon accounting for the
acquisition as a purchase method transaction and that the acquisition was
consummated (a) on June 30, 1995 for the Balance Sheet and; (b) as of the
beginning of each period presented in the Statements of Income.
The unaudited pro forma combined financial information combines the historical
Balance Sheets of VSE Corporation and Energetics Incorporated as of June 30,
1995 and the historical Statements of Income of VSE Corporation and Energetics
Incorporated for the six months ended June 30, 1995 and the year ended
December 31, 1994 and November 27, 1994, for VSE Corporation and Energetics
Incorporated respectively.
Non-recurring administrative costs incurred by VSE Corporation such as legal
and accounting costs have not been reflected in the pro forma combined
financial statements. The following pro forma data is not necessarily
indicative of the financial position or results of operations which would have
actually been reported had the acquisition been in effect during those periods
or which may be reported in the future. The pro forma adjustments described in
the accompanying notes are based upon preliminary estimates and certain
assumptions that the registrant believes are reasonable in the circumstances.
The pro forma financial statements should be read in conjunction with the
historical statements on file for VSE Corporation and those of Energetics
Incorporated included in this filing.
VSE Corporation and Energetics Incorporated
Pro Forma Condensed Combined Balance Sheets (Unaudited)
As of June 30, 1995
(in thousands)
VSE Energetics (A)
Corporation Incorporated Adjustments Combined
Assets
Current assets:
Cash and cash equivalents. $ 1,286 $ 227 $(1,286) $ 227
Accounts receivable. . . . 11,973 2,696 14,669
Other current assets . . . 1,106 64 1,170
Deferred charges . . . . . 1,259 0 1,259
_______ ______ ______ ______
Total current assets . . 15,624 2,987 (1,286) 17,325
Property and equipment, less
accumulated depreciation . 2,912 308 3,220
Intangible Assets. . . . . 2,437 0 1,490 3,927
Other assets . . . . . . . 1,787 0 1,787
______ ______ ______ ______
Total assets . . . . . . $ 22,760 $ 3,295 $ 204 $26,259
====== ====== ====== ======
Liabilities and Stockholders' Investment
Current liabilities:
Current portion of
long-term debt. . . . . . $ $ 67 $ $ 67
Accounts payable and
other current liabilities 1,761 274 2,035
Accrued expenses . . . . . 6,351 733 7,084
Accrued and deferred
income taxes. . . . . . . 212 0 212
Dividends payable . . . . 69 51 120
______ ______ _____ ______
Total current liabilities 8,393 1,125 0 9,518
Long-term debt, less
current portion . . . . . 74 0 2,374 2,448
Deferred compensation plans 1,136 0 1,136
Deferred income taxes. . . 392 0 392
______ ______ _____ ______
Total liabilities. . . . 9,995 1,125 2,374 13,494
______ ______ _____ ______
Total stockholders'
investment . . . . . . 12,765 2,170 (2,170) 12,765
______ ______ _____ ______
Total liabilities and
stockholders'
investment . . . . . . $22,760 $3,295 $ 204 $26,259
====== ===== ===== ======
<FN>
<FN1>
(A) To record the purchase of Energetics Incorporated by VSE Corportion for
$3,660,000 and the associated elimination of Energetics Incorporated
stockholders' investment accounts as if the transactions was effected on
June 30, 1995.
</FN>
VSE Corporation and Energetics Incorporated
Pro Forma Condensed Combined Income Statement (Unaudited)
For the six months ended June 30, 1995
(in thousands, except per share amounts)
VSE Energetics (A)
Corporation Incorporated Adjustments Combined
Revenues, principally
from contracts. . . . . . . $33,265 $5,608 $ $38,873
Contract costs . . . . . . . 31,964 5,181 37,145
______ _____ ______ ______
Gross profit . . . . . . . . 1,301 427 0 1,728
Selling, general and
administrative expenses . . 151 31 124 306
Interest expense . . . . . . 12 4 25 41
______ _____ ______ ______
Income before income taxes . 1,138 392 (149) 1,381
Provision for income taxes . 427 0 122 549
______ _____ ______ ______
Net income . . . . . . . . . $ 711 $ 392 $ (271) $ 832
====== ===== ====== ======
Earnings per common share,
based on weighted shares
outstanding: $ .82 $ .96
====== ======
Weighted-average shares
outstanding 864,024 864,024
======= =======
<FN>
<FN1>
(A) To record amortization of intangible assets and the related tax benefit
associated with the purchase of Energetics Incorporated by VSE Corportion,
to record Energetics Incorporated Federal and state income tax provision at
effective tax rates and to record additional interest costs related to the
purchase.
</FN>
VSE Corporation and Energetics Incorporated
Pro Forma Condensed Combined Income Statement (Unaudited)
For the year ended December 31, 1994 and November 27, 1994, respectively
(in thousands, except per share amounts)
VSE Energetics (A)
Corporation Incorporated Adjustments Combined
Revenues, principally
from contracts. . . . . . . $65,581 $10,484 $ $76,065
Contract costs . . . . . . . 61,468 9,836 71,304
______ ______ _____ ______
Gross profit . . . . . . . . 4,113 648 0 4,761
Selling, general and
administrative expenses . . 1,577 79 247 1,903
Interest expense . . . . . . 23 70 50 143
______ ______ _____ ______
Income before income taxes . 2,513 499 (297) 2,715
Provision for income taxes . 960 0 133 1,093
______ ______ _____ ______
Net income . . . . . . . . . $ 1,553 $ 499 $ (430) $ 1,622
====== ====== ===== ======
Earnings per common share,
based on weighted shares
outstanding: $ 1.80 $ 1.88
====== ======
Weighted-average shares
outstanding 863,167 863,167
======= =======
<FN>
<FN1>
(A) To record amortization of intangible assets and the related tax benefit
associated with the purchase of Energetics Incorporated by VSE Corportion,
to record Energetics Incorporated Federal and state income tax provision at
effective tax rates and to record additional interest costs related to the
purchase.
</FN>