SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report September 25, 1997
(Date of earliest event reported)
RCM TECHNOLOGIES, INC.
(exact name of registrant as specified in its charter)
NEVADA
(State or other jurisdiction of incorporation)
1-10245 95-1480559
(Commission File Number) (IRS Employer
` Identification Number)
2500 McClellan Avenue, Pennsauken, NJ 08109-4613
(Address of principal executive offices) (Zip Code)
(609) 486 - 1777
(Registrant's telephone number, including area code)
ITEM 2. Acquisition or Disposition of Assets.
On September 25, 1997, RCM Technologies, Inc. ("Registrant") acquired Camelot
Contractors Limited ("CAMELOT"), a Manchester, New Hampshire-based specialty
provider of information technology personnel. The acquisition was completed
effective as of August 1, 1997, through a stock purchase transaction (the
"Purchase") pursuant to which CAMELOT, through an exchange of all of its
outstanding shares of stock with the Registrant became a wholly-owned subsidiary
of the Registrant.
The Purchase consideration paid to the former shareholders of CAMELOT consisted
of $9,000,000 cash, 22,409 shares of common stock of the Registrant valued at
$318,433 and a $3,500,000 three year promissory note payable contingent upon
CAMELOT achieving certain base levels of operating income for each of the three
twelve month periods following the Purchase. An additional earn-out payment may
be made to the former shareholders at the end of each of the three twelve month
periods following the Purchase, to the extent that operating income exceeds
these base levels. The Purchase has been accounted for under the purchase method
of accounting. The transaction was financed with a portion of the proceeds of
the Registrant's secondary public offering. The cost in excess of net assets
acquired will be approximately $7,400,000. It is anticipated the cost in excess
of net assets acquired will be amortized over a 40 year period.
As part of the Purchase, all of the 22,409 shares of common stock issued to the
former shareholders of CAMELOT were delivered into escrow as collateral to
secure the performance of certain financial conditions. The shares held in
escrow are subject to certain restrictions on resale, however, the Registrant
has agreed to file a shelf registration statement by January 31, 1998 permitting
the resale of such shares.
The Purchase consideration paid by the Registrant was determined by negotiations
between and among the representatives of the Registrant and CAMELOT.
Following the Purchase, the directors and executive officers of CAMELOT consist
of Leon Kopyt, Stanton Remer, and Michael O'Keefe (former Chief Executive
Officer of CAMELOT prior to the Purchase).
CAMELOT's assets consist of cash, accounts receivable, contracts and office
equipment. These assets are used in providing information technology personnel
to businesses and institutions. The Registrant plans for CAMELOT to continue
such course of business under its control.
Prior to the Purchase, no material relationship existed between CAMELOT and the
Registrant or any of its affiliates, any director or officer of the Registrant,
or any associate of any such director or officer.
ITEM 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired
Audited Balance Sheets, June 30, 1997 and 1996
Audited Statements of Income
Years ended June 30, 1997 and 1996
Audited Statements of Changes in Stockholders' Equity,
Years ended June 30, 1997 and 1996
Audited Statement of Cash Flows,
Years ended June 30, 1997 and 1996
Notes to Financial Statements, June 30, 1997 and 1996
Unaudited Balance Sheets, July 31, 1997 and 1996
Unaudited Statements of Income and Retained Earnings, Nine Months
and three months ended July 31, 1997 and 1996
Unaudited Statements of Cash Flows,
Nine Months ended July 31, 1997 and 1996
Item 7. Financial Statements and Exhibits (Continued)
(b) Pro forma financial information
Unaudited Pro Forma Condensed Combined Balance Sheet, July 31, 1997.
Unaudited Pro Forma Condensed Combined Statements of Income for the
year ended October 31, 1996 and the nine months ended July 31, 1997.
ITEM 7.
(c) Exhibits
(1) Stock Purchase Agreement, dated September 25, 1997
(2) Escrow Agreement, dated September 25, 1997
(3) Employment Agreements, dated September 25, 1997
(4) Registration Rights Agreement, dated September 25, 1997
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.
RCM Technologies, Inc.
By: /S/ Stanton Remer
Stanton Remer
Chief Financial Officer,
Treasurer and Director
Date: October 7, 1997
CAMELOT CONTRACTORS LIMITED
FINANCIAL STATEMENTS
June 30, 1997 and 1996
Frank B. Morris, PA
20 Montgomery Ave. Unit F
Bala Cynwyd, PA 19004
Tel: 610-667-6337
Fax: 610-667-3465
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Camelot Contractors Limited
I have audited the accompanying balance sheets of Camelot Contractors Limited as
of June 30, 1997 and 1996, and the related statements of income, changes in
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. My responsibility
is to express an opinion on these financial statements based on our audit.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I 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.
I believe that my audit provides a reasonable basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Camelot Contractors Limited as of
June 30, 1997 and 1996, and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.
/s/Frank B. Morris, PA
October 6, 1997
Bala Cynwyd, PA
CAMELOT CONTRACTORS LIMITED
BALANCE SHEETS
June 30, 1997 and 1996
ASSETS
1997 1996
------------ --------
Current assets
Cash and cash equivalents $ 1,530,556 $ 510,351
Trade receivables 1,615,608 1,185,312
--------- ---------
Total current assets 3,146,164 1,695,663
--------- ---------
Equipment
Equipment 60,796 39,908
Furniture and fixtures 1,811 1,811
----- -----
62,607 41,719
Less accumulated depreciation 42,990 35,351
------ ------
Net equipment 19,617 6,368
------ -----
$ 3,165,781 $ 1,702,031
= ========= = =========
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996
-------------- ---------
Current liabilities
Accounts payable $ 318,157 $ 208,703
Accrued expenses 163,663 94,508
Income taxes payable 542,500 169,200
Deferred income taxes 256,523 340,668
------- -------
Total current liabilities 1,280,843 813,079
--------- -------
Shareholders' equity
Common stock of no par value; authorized 300 shares,
issued and outstanding 200 shares 100 100
Retained earnings 1,884,838 888,852
--------- -------
Total stockholders' equity 1,884,938 888,952
--------- -------
$ 3,165,781 $ 1,702,031
= ========= = =========
The accompanying notes are an integral part of these
financial statements.
- 3 -
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF INCOME
Years Ended June 30, 1997 and 1996
1997 1996
--------- -----------
Net sales $ 16,172,884 $ 11,056,924
- ---------- - ----------
Direct costs
Subcontractors 6,134,349 3,884,118
Labor 6,681,983 4,780,504
Payroll taxes 509,604 365,709
------- -------
13,325,936 9,030,331
---------- ---------
Gross profit 2,846,948 2,026,593
General and administrative expenses 1,212,850 1,171,776
--------- ---------
Income from operations 1,634,098 854,817
--------- -------
Other income (expense)
Interest income 15,976 8,848
Interest expense ( 231 ) ( 13,474 )
--- ------
Other expense, net 15,745 ( 4,626 )
------ -----
Income before provision for income taxes 1,649,843 850,191
--------- -------
Provision for income taxes
Current 738,002 218,600
Deferred ( 84,145 ) 111,357
------ -------
653,857 329,957
------- -------
Net Income $ 995,986 $ 520,234
= ======= = =======
The accompanying notes are an integral part of these
financial statements.
- 4 -
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Nine Months Ended July 31, 1997 and 1996
Common Stock
Retained
Shares Amount Earnings
Balance, July 1, 1995 200 $ 100 $ 368,618
Net income,
year ended June 30, 1996 520,234
----------------------------------- -------
Balance, June 30, 1996 200 100 888,852
Net income,
year ended June 30, 1997 995,986
----------------------------------- -------
Balance, June 30, 1997 200 $ 100 $ 1,884,838
==================================== =========
The accompanying notes are an integral part of these
financial statements.
- 5 -
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF CASH FLOWS
Years Ended June 30, 1997 and 1996
1997 1996
-----------------------
Cash flows from operating activities:
Net income $ 995,986 $ 520,234
- ------- - -------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 7,640 15,723
(Decrease) in deferred income taxes ( 84,145) 111,356
Increase in trade receivables ( 430,296) ( 296,476 )
Increase (decrease) in
Accounts payable and accrued expenses 178,609 ( 6,624 )
Income taxes payable 373,300 165,150
------- -------
Net cash provided by operating activities 1,041,094 509,363
--------- -------
Cash flows from investing activities
Purchase of property and equipment ( 20,889) ( 9,058 )
------ -----
Cash flows from financing activities
Principal payments on notes payable - ( 265,000 )
Borrowings on notes payable - -
------------- -
Net cash used by financing activities - ( 265,000 )
------- - -------
Net increase in cash 1,020,205 235,305
Cash, beginning of year 510,351 275,046
----------- -------
Cash, end of year $ 1,530,556 $ 510,351
= ========= = =======
The accompanying notes are an integral part of these
financial statements.
- 6 -
CAMELOT CONTRACTORS LIMITED
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
Nature of Business
The Company's operations are principally in the recruitment and employment
of personnel for temporary positions in New Hampshire and Massachusetts for
a fee. Credit is extended at regular terms without collateral after the
Company performs appropriate credit investigations.
1. Summary of Significant Accounting Policies
Use of Estimates in the Preparation of Financial Statements
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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Concentration of Credit Risks
The Company maintains its cash in bank deposit accounts which, at times, may
exceed federally insured limits. The Company has not experienced any losses in
such accounts. The Company believes it is not exposed to any significant risk on
cash.
Depreciation
The Company charges to operating expenses annual amounts of depreciation
which allocates the cost of equipment over its estimated useful lives. The
Company uses the modified accelerated cost recovery system method for
determining the annual charge for depreciation. The depreciation expense
for 1997 and 1996 was $7,640 and $15,723, respectively.
Income Taxes
Deferred taxes are provided on a liability method whereby deferred tax
assets are recognized for deductible temporary differences and operating
loss and tax credit carryforwards and deferred tax liabilities are
recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and
their tax bases. Deferred tax assets are reduced by a valuation allowance
when, in the opinion of management, it is more likely than not that some
portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax
laws and rates on the date of enactment.
- 7 -
CAMELOT CONTRACTORS LIMITED
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
2. Income Taxes
The sources of the deferred tax liability and the tax effect of each is as
follows:
1997 1996
-------------- ---------
Accounts receivable ($ 344,348) ($ 457,768 )
Accounts payable 60,452 80,600
Accrued payroll 27,373 36,500
------ ------
($ 256,523) ($ 340,668 )
== ======= == =======
The provision for income taxes charged to operations consisted of the
following as of June 30:
1997 1996
-------------- ---------
Current
Federal $ 581,803 $ 173,761
State 156,199 44,839
------- ------
738,002 218,600
------- -------
Deferred
Federal ( 68,894) 95,929
State ( 15,251) 15,428
- ------ ------
( 84,145) 111,357
- ------ -------
$ 653,857 $ 329,957
= ======= = =======
- 8 -
CAMELOT CONTRACTORS LIMITED
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
3. Major Customers
Net sales for the year ended June 30, 1997 included sales from the
following major customers which each accounted for amounts in excess of 10%
of the total sales of the Company. The revenue earned and the related
amounts receivable are as follows:
Revenues for Trade Receivable
the Year Ended Balance as of
June 30, 1997 June 30, 1996
--------------- ---------------
Customer A 2,931,607 255,293
Customer B 1,361,761 123,361
4. Total Rental Expense
The Company rents office space from a related party as a tenant-at-will for
$1,574 per month plus utilities. The total rental expense included in the
income statement for the years ended June 30, 1997 and 1996 is $21,686 and
$25,417, respectively.
5. Cash Flow Information
Cash paid for interest and income taxes was as follows:
1997 1996
-------------- ---------
Interest $ 231 $ 13,474
= === = ======
Income taxes $ 364,702 $ 53,450
= ======= = ======
6. Disclosure About Fair Value of Financial Instruments
The Company's financial instruments consist of cash, short-term trade
receivables and payables. The carrying value of all instruments approximate
their fair value.
7. Subsequent Events
On August 14, 1997, the shareholders of the Company signed a letter of
intent to sell all of the outstanding shares of the Company.
- 9 -
CAMELOT CONTRACTORS LIMITED
UNAUDITED FINANCIAL STATEMENTS
July 31, 1997 and 1996
CAMELOT CONTRACTORS LIMITED
BALANCE SHEETS
July 31, 1997 and 1996
(Unaudited)
ASSETS
1997 1996
------------ --------
Current assets
Cash and cash equivalents $ 1,964,081 $ 994,495
Trade receivables 1,411,188 888,837
--------- -------
Total current assets 3,375,269 1,833,332
--------- ---------
Equipment
Equipment 42,103 39,908
Furniture and fixtures 1,811 1,811
----- -----
43,914 41,719
Less accumulated depreciation 35,351 19,628
------ ------
Net equipment 8,563 22,091
----- ------
$ 3,383,832 $ 1,855,423
= ========= = =========
LIABILITIES AND SHAREHOLDERS' EQUITY
1997 1996
-------------- ---------
Current liabilities
Accounts payable $ 313,073 $ 183,630
Accrued payroll and payroll taxes 236,945 126,207
Income taxes payable 519,797 233,362
Deferred income taxes 340,668 -
------- -
Total current liabilities 1,410,482 543,199
--------- -------
Shareholders' equity
Common stock of no par value; authorized 300 shares,
issued and outstanding 200 shares 100 100
Retained earnings 1,973,250 1,312,124
--------- ---------
Total stockholders' equity 1,973,350 1,312,224
--------- ---------
$ 3,383,832 $ 1,855,423
= ========= = =========
The accompanying notes are an integral part of these
financial statements.
- 1 -
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF INCOME AND RETAINED EARNINGS
Nine Months Ended July 31, 1997 and 1996
(Unaudited)
1997 1996
----------------- ----------
Net sales $ 12,401,618 $ 8,990,464
- ---------- - ---------
Direct costs
Subcontractors 4,846,117 2,827,196
Labor 4,974,073 4,146,877
Payroll taxes 433,779 276,962
------- -------
10,253,969 7,251,035
---------- ---------
Gross profit 2,147,649 1,739,429
General and administrative expenses 880,041 970,595
------- -------
Income from operations 1,267,608 768,834
--------- -------
Other income (expense)
Interest income 20,039 8,848
Interest expense ( 231 ) ( 4,376 )
--- -----
Other expense, net 19,808 4,472
------ -----
Income before provision for income taxes 1,287,416 773,306
--------- -------
Provision for income taxes 514,966 309,322
------- -------
Net Income 772,450 463,984
Retained earnings at beginning of period 1,200,800 848,140
--------- -------
Retained earnings at end of period $ 1,973,250 $ 1,312,124
= ========= ==============
The accompanying notes are an integral part of these
financial statements.
- 2 -
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF INCOME
Three Months Ended July 31, 1997 and 1996
(Unaudited)
1997 1996
----------------- ----------
Net sales $ 4,331,612 $ 3,659,793
- --------- - ---------
Direct costs
Subcontractors 1,732,925 473,599
Labor 1,794,943 2,312,380
Payroll taxes 143,036 56,491
------- ------
3,670,904 2,842,470
--------- ---------
Gross profit 660,708 817,323
General and administrative expenses 294,129 514,779
------- -------
Income from operations 366,579 302,544
------- -------
Other income (expense)
Interest income 10,941 5,372
Interest expense
Other expense, net 10,941 5,372
------ -----
Income before provision for income taxes 377,520 307,916
------- -------
Provision for income taxes 151,008 123,166
------- -------
Net Income $ 226,512 $ 184,750
= ======= = =======
The accompanying notes are an integral part of these
financial statements.
- 3 -
CAMELOT CONTRACTORS LIMITED
STATEMENTS OF CASH FLOWS
Nine Months Ended July 31, 1997 and 1996
(Unaudited)
1997 1996
-----------------------
Cash flows from operating activities:
Net income $ 772,450 $ 463,984
- ------- - -------
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 15,224
Increase in trade receivables ( 23,292) ( 238,415 )
Increase (decrease) in
Accounts payable and accrued expenses 129,681 ( 53,543 )
Increase in income taxes payable 379,972 150,338
------- -------
Net cash provided by (used in) operating activities 226,999 ( 19,310 )
------- ------
Cash flows from investing activities
Purchase of property and equipment ( 9,058 )
-----
Cash flows from financing activities
Principal payments on notes payable ( 140,000 )
-------
Net increase in cash 999,449 295,616
Cash, beginning of period 964,632 648,879
------- -------
Cash, end of period $ 1,964,081 $ 944,495
= ========= = =======
The accompanying notes are an integral part of these
financial statements.
- 4 -
CAMELOT CONTRACTORS LIMITED
NOTES TO FINANCIAL STATEMENTS
June 30, 1997 and 1996
(Unaudited)
1. General
The accompanying financial statements have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). These unaudited financial statements should be read in
conjunction with the Company's audited financial statements for the year
ended June 30, 1997 and 1996. Certain information and footnote disclosures
which are normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or
omitted. The information reflects all normal and recurring adjustments
which, in the opinion of Management, are necessary for a fair presentation
of the financial position of the Company and its results of operations for
the interim periods set forth herein.
- 5 -
Financial Statements and Exhibits
Item 7 (b) Pro Forma financial Information
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial statements
give effect to the acquisition of Camelot Contractors Limited. ("CAMELOT") by
RCM Technologies, Inc. ("RCM") pursuant to a purchase transaction that was
completed on September 25, 1997. This pro forma information has been prepared
utilizing the historical financial statements of RCM and CAMELOT. This
information should be read in conjunction with the historical financial
statements and notes thereto of RCM which are incorporated by reference to RCM's
Form 10-K and the historical financial statements of CAMELOT which is
incorporated within this Form 8-K. The pro forma financial data are provided for
comparative purposes only and does not purport to be indicative of the results
which actually would have been obtained if the acquisition had been effected on
the dates indicated or of the results which may be obtained in the future.
The pro forma financial information is based on the purchase method of
accounting for the acquisition. The pro forma adjustments are described in the
accompanying Notes to Unaudited Pro Forma Condensed Combined Balance Sheet and
Notes to Unaudited Pro Forma Condensed Combined Statement of Income. The
Unaudited Pro Forma condensed combined statement of income for the year ended
October 31, 1996 assumes that the acquisition of CAMELOT had occurred on
November 1, 1995 (combining the results for the year ended October 31, 1996, for
RCM and the twelve months ended October 31,1996 for CAMELOT). The Unaudited Pro
Forma condensed combined statement of income for the nine months ended July 31,
1997 assumes that the acquisition of CAMELOT had occurred on November 4, 1996
(combining the results for the nine months ended July 31, 1997 for RCM and
CAMELOT). The unaudited pro forma condensed combined balance sheet at July 31,
1997 assumes that the acquisition of CAMELOT had occurred on July 31, 1997.
Acquisition
The Purchase consideration payable to the former shareholders of CAMELOT
consisted of $9,000,000 cash, 22,409 shares of common stock of the Registrant
valued at $318,433 (based upon the average closing price of the Registrant's
common stock for twenty trading days immediately preceding the closing date) and
a $3,500,000 note payable contingent upon CAMELOT obtaining certain base line of
operating income. An additional earn-out payment may be made to the former
shareholders at the end of each of the first three anniversary years of the
Purchase to the extent that operating income exceeds these base levels.
Assumptions
Purchase Price Allocation
Although neither RCM nor CAMELOT has complete information at this time
as to the fair value of CAMELOT's individual assets and liabilities, an estimate
of the eventual allocation of the purchase price was made on the basis of
available information. The eventual allocation of the purchase price will be
made on the basis of appraisals and valuations which give effect to various
factors including the nature and intended future use of assets acquired in
determining their value. It is not anticipated that any change in the allocation
price will be material from the pro forma adjustments.
For purpose of pro forma presentations, the excess purchase price over
the net assets acquired is being amortized over an estimated life of forty (40)
years.
RCM Technologies, Inc.
Unaudited Proforma Balance Sheet
July 31, 1997
RCM Camelot Adjustments & Proforma
Technologies, Inc. Contractors, Limited Eliminations Combined
Assets:
Cash and cash equivalents ............... $ 14,833,368 1,964,082 A (9,000,000) 7,722,450
C (75,000)
Accounts and notes receivable ........... 19,252,653 1,411,188 20,663,841
Prepaid expenses & other current assets . 725,139 0 725,139
Total current assets .................... 34,811,160 3,375,270 29,111,430
Property and equipment-net .............. 1,007,603 8,562 1,016,165
Intangible assets ....................... 14,221,176 0 A 9,000,000 21,641,259
B 318,433
C 75,000
D(1,973,350)
Other Assets ............................ 111,431 0 111,431
Total ................................... $ 50,151,370 $ 3,383,832 ($ 1,654,917) $ 51,880,285
Liabilities and Shareholders' Equity:
Current Liabilities
Bank- line of credit ............ $ 2,000,000 2,000,000
Other current liabilities ....... 5,422,714 1,410,482 6,833,196
Total current liabilities ............... 7,422,714 1,410,482 8,833,196
Long Term Liabilities
Income taxes payable ............ 314,475 314,475
Shareholders' equity .................... 42,414,181 1,973,350 B 318,433 42,732,614
D (1,973,350)
Total ................................... $ 50,151,370 $ 3,383,832 ($ 1,654,917) $ 51,880,285
<FN>
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
(A) to record initial cash consideration for purchase Camlot Contractors, Limited. ("CCL")
in exchange for all the shares of CCL $9,000,000
(B) to reflect issuance of $318,433 of RCMT common stock (22409 Shs) $318,433
(C) to reflect estimated acquisition costs incurred $75,000
(D) to adjust Goodwill for amount in excess net worth acquired $1,973,350
</FN>
RCM TECHNOLOGIES, INC. AND CAMELOT CONTRACTORS LIMITED
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED OCTOBER 31, 1996
Historical Historical Pro Forma
----------------------------------------------------------------------
RCM Progamming Camelot
Technologies, Inc Alternatives of MN Contractors LTD
(NOTE D ) Combined Adjustments Combined
--------- -------- ----------- --------
Revenues $61,039,173 $9,649,287 $70,688,460 12,738,134 83,426,594
----------- ---------- ----------- ----------
Cost and expenses
Cost of services 48,779,886 6,430,505 55,210,391 10,584,824 65,795,215
Selling, general and administrative 8,914,102 1,955,996 10,870,098 1,317,144 (100,000) A 12,087,242
Interest expense (income) 163,811 368,627 532,438 (4,472) 527,966
Other, net 30,216 13,889 44,105 44,105
Depreciation and amortization 329,680 139,561 469,241 185,500 B 654,741
------- ------- ------- ------- -------
Total 58,217,695 8,908,578 67,126,273 11,897,496 85,500 79,109,269
---------- --------- ---------- ---------- ----------
Income before income taxes 2,821,478 740,709 3,562,187 840,638 4,317,325
Income taxes (benefit) 453,539 188,000 641,539 336,255 (35,910) C 941,884
------- ------- ------- ------- -------- -------
Net Income $2,367,939 $552,709 $2,920,648 $504,383 49,590 $3,375,441
========== ======== ========== ======== ====== ==========
Net income per common share $0.55 $552.71 $0.68 $2,521.92 $0.78
===== ======= ===== ========= =====
Average number of common
shares outstanding 4,320,571 1,000 4,320,571 200 4,342,980
========= ===== ========= === =========
<FN>
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
(A) to reflect reduction of expenses attributable to
consolidation of administrative overhead 100,000
=======
(B) to provide for amortization on excess purchase price over net assets
acquired based an estimated life of 40 years 185,500
=======
(C) to tax effect adjustments 35,910
======
(D) Represents acquisition of Programming Alternatives of Minnesota, Inc. on
January 7, 1997 previously reported on Form 8-K filed on January 21, 1997.
</FN>
RCM TECHNOLOGIES, INC. AND CAMELOT CONTRACTORS LIMITED
UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
Nine Months Ended July 31, 1997
Historical Pro Forma
RCM Camelot
Technologies, Inc. Contractors LTD
Adjustments Combined
Revenues .................................. $76,540,067 12,401,618 88,941,685
Cost and expenses
Cost of services ........................ 58,275,612 10,253,969 68,529,581
Selling, general and administrative ..... 12,616,194 880,041 75,000 A 13,421,235
Interest expense (income) ................. 282,444 66,900 B 329,536
Depreciation and amortization ............. 368,503 139,125 C 507,628
Total ..................................... 71,542,753 11,114,202 131,025 82,787,980
Income before income taxes ................ 4,997,314 1,287,416 6,153,705
Income taxes (benefit) .................... 2,093,066 514,966 ( 55,031)D 2,553,002
Net Income ................................ $ 2,904,248 $ 772,450 75,995 $ 3,600,704
Net income per common share ............... $ 0.53 $ 3,862.25 $ 0.65
Average number of common
shares outstanding ...................... 5,522,945 200 5,545,348
<FN>
NOTES TO UNAUDITED PROFORMA CONDENSED COMBINED STATEMENT OF INCOME
(A) to reflect reduction of expenses attributable to
consolidation of administrative overhead 75,000
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(C) to eliminate interest income earned on cash consideration 66,900
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(B) to provide for amortization on excess purchase price over net assets
acquired based an estimated life of 40 years 139,125
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(D) to tax effect adjustments 55,031
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</FN>