SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: FEBRUARY 18, 1998
OUTSOURCE INTERNATIONAL, INC.
(Exact name of registrant as specified in charter)
FLORIDA 000-23147 65-0675628
(State or other jurisdiction (Commission (IRS employer
of incorporation) file number) identification no.)
1144 EAST NEWPORT CENTER DRIVE,
DEERFIELD BEACH, FLORIDA 33442
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (954) 418-6200
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 18, 1998, OutSource International of America, Inc., a
wholly owned subsidiary of the Registrant ("OSIA"), purchased substantially all
of the tangible and intangible assets, excluding accounts receivable, of L.M.
Investors, Inc., an Illinois corporation ("LM"), pursuant to the terms of an
Asset Purchase Agreement dated February 18, 1998. The purchase price for the
assets was approximately $6.8 million, which amount was paid (i) $5.0 million in
cash at closing, (ii) $1.7 million in the form of a three-year, junior
subordinated promissory note, which note bears interest at an annual rate of
seven and one-quarter percent, and (iii) OSIA's assumption of LM's liabilities
under certain employment contracts, estimated to be $100,000. In connection with
the acquisition, OSIA entered into five-year non-competition agreements with LM
and with Matthew Schubert and Louis J. Morelli, the shareholders of LM.
The purchase price was arrived at through arm's-length negotiations
between the parties. The cash portion of the purchase price was funded from the
Registrant's revolving credit agreement with Bank Boston, N.A., as agent.
LM had flexible industrial staffing revenues of approximately $11.5
million in 1997. The assets purchased by the Company included four business
locations in the suburban Chicago, Illinois area and substantially all of the
tangible and intangible assets, excluding accounts receivable, at those
locations. Prior to this purchase, the four locations were being operated by LM
in accordance with a franchise agreement dated November 1, 1994 between LM and
OutSource Franchising, Inc., a wholly owned subsidiary of the Registrant and an
affiliate of OSIA. This franchise agreement was terminated in connection with
this purchase although the Asset Purchase Agreement grants one of the LM owners,
Louis J. Morelli, exclusive rights to purchase and rights of first refusal for
franchises in another five flexible industrial staffing territories not
currently franchised or otherwise operated in by the Registrant. These rights
expire at various times up to forty-two months from the date of this
transaction.
Matthew Schubert and Louis J. Morelli are shareholders in the
Registrant but do not individually or in the aggregate hold a controlling
interest in the Registrant. A law firm owned by Louis J. Morelli has received
and continues to receive compensation for legal services rendered to the
Registrant.
The Registrant currently intends to continue to operate the business
formerly conducted by LM at all of the purchased locations with the purchased
assets for the foreseeable future. The foregoing statement of the Registrant's
intention is a forward looking statement within the meaning of Section 21E of
the Securities Exchange Act of 1934, and is based on certain assumptions,
including among others, general economic conditions, management's expectations
regarding the operating results of the Registrant and the purchased locations,
the capital requirements of continuing LM's current business, and others. Should
these assumptions change, or prove to be inaccurate, the Registrant's actual
future conduct of LM's business could differ materially from the intention
stated.
The above descriptions of the asset purchase agreement, the
non-competition agreements, the mutual termination agreement, and the promissory
note do not purport to be complete and are qualified in their entirety by the
full text of such documents which are attached as Exhibits hereto.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
It is not practicable to provide the financial statements required to
be filed as a result of the acquisition of assets described in Item 2 hereof
(the "Financial Statements") on the date that this report is being filed with
the Securities and Exchange Commission. The Financial Statements will be filed
by amendment to this Form 8-K as soon as practicable, but in any event not later
than 60 days after this report is filed. The Company expects to file the
Financial Statements no later than May 4, 1998.
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(b) PRO FORMA FINANCIAL INFORMATION.
It is not practicable to provide the pro forma financial information
required to be filed as a result of the acquisition of assets described in Item
2 hereof (the "Pro Forma Information"), on the date that this report is being
filed with the Securities and Exchange Commission. The Pro Forma Information
will be filed by amendment to this Form 8-K as soon as practicable, but in any
event not later than 60 days after this report is filed. The Company expects to
file the Pro Forma Information no later than May 4, 1998.
(c) EXHIBITS.
2.1 Asset Purchase Agreement, dated February 18, 1998, by
and among OutSource International of America, Inc.,
L.M. Investors, Inc., Louis J. Morelli and Matthew
Schubert.
10.1 Non-Competition Agreement, dated February 18,
1998, between OutSource International of America,
Inc. and Matthew Schubert.
10.2 Non-Competition Agreement, dated February 18,
1998, between OutSource International of America,
Inc. and Louis J. Morelli.
10.3 Non-Competition Agreement, dated February 18,
1998, between OutSource International of America,
Inc. and L.M. Investors, Inc.
10.4 Mutual Termination Agreement dated February 18,
1998 between OutSource Franchising, Inc., L.M.
Investors, Inc., Louis J. Morelli and Matthew
Schubert.
10.5 Junior Subordinated Promissory Note, dated as of
February 16, 1998, issued by OutSource International
of America, Inc. to L.M. Investors, Inc.
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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 thereunto duly authorized.
OUTSOURCE INTERNATIONAL, INC.
By: /s/ PAUL M. BURRELL
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Paul M. Burrell
President
Dated: March 5, 1998
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EXHIBIT INDEX
EXHIBIT DESCRIPTION
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2.1 Asset Purchase Agreement, dated February 18, 1998, by
and among OutSource International of America, Inc.,
L.M. Investors, Inc., Louis J. Morelli and Matthew
Schubert.
10.1 Non-Competition Agreement, dated February 18,
1998, between OutSource International of America,
Inc. and Matthew Schubert.
10.2 Non-Competition Agreement, dated February 18,
1998, between OutSource International of America,
Inc. and Louis J. Morelli.
10.3 Non-Competition Agreement, dated February 18,
1998, between OutSource International of America,
Inc. and L.M. Investors, Inc.
10.4 Mutual Termination Agreement dated February 18,
1998 between OutSource Franchising, Inc., L.M.
Investors, Inc., Louis J. Morelli and Matthew
Schubert.
10.5 Junior Subordinated Promissory Note, dated as of
February 16, 1998, issued by OutSource International
of America, Inc. to L.M. Investors, Inc.