UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) August 12, 2013
MASTECH HOLDINGS, INC.
(Exact Name of Registrant as Specified in Its Charter)
Pennsylvania
(State or Other Jurisdiction of Incorporation)
| 001-34099 | 26-2753540 | |
| (Commission File Number) | (IRS Employer Identification No.) | |
| 1000 Commerce Drive, Suite 500, Pittsburgh, PA | 15275 | |
| (Address of Principal Executive Offices) | (Zip Code) | |
(412) 787-2100
(Registrant’s Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
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 (see General Instruction A.2. below):
| ¨ | 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 12, 2013, Mastech Holdings, Inc. (the “Company”) closed the sale of substantially all of the assets of the Company’s Healthcare Staffing segment to Accountable Healthcare Staffing, Inc. (the “Transaction”), pursuant to a previously announced Asset Purchase Agreement. The closing purchase price totaled $1.15 million.
The Company has previously disclosed additional information concerning the Transaction on Form 8-K filed with the Securities and Exchange Commission on August 1, 2013.
Pro forma financial information with respect to the Transaction described herein is provided in Item 9.01 of this Current Report on Form 8-K.
Item 7.01. Regulation FD Disclosure.
On August 13, 2013, the Company issued a press release (the “Press Release”) announcing the Transaction, a copy of which is furnished with this Current Report on Form 8-K as Exhibit 99.1 and is incorporated herein by reference. The information contained in this Item 7.01 (including Exhibit 99.1 attached hereto) shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
| (b) | Pro forma financial information |
The following unaudited pro forma condensed consolidated financial information is presented to illustrate the effect of the Company’s disposition of the Healthcare Staffing segment on its historical financial position and operating results. The unaudited condensed consolidated statement of operations for the six months ended June 30, 2013 and 2012, and the year ended December 31, 2012 are based on the historical financial statements of the Company after giving effect to the Transaction as if the disposition had occurred on January 1, 2012. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2013 is based on the historical financial statements of the Company as of June 30, 2013 after giving effect to the Transaction as if the disposition had occurred on June 30, 2013. These unaudited pro forma condensed consolidated financial statements of the Company and accompanying notes thereto, are included as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference.
These unaudited pro forma condensed consolidated financial statements are presented for informational purposes only and are not intended to represent and may not be indicative of operating results or financial position that would have occurred had the Transaction been completed as of the dates presented, nor are such financial statements intended to represent and they may not be indicative of future operating results or financial position of the Company. These unaudited pro forma condensed consolidated financial statements and the accompanying notes should be read together with the Company’s audited consolidated financial statements and accompanying notes as of and for the year ended December 31, 2012, and Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012, as well as in conjunction with the Company’s unaudited condensed consolidated financial statements and accompanying notes as of and for the quarterly period ended June 30, 2013, and the MD&A included in the Company’s
Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013.
| (d) | Exhibits |
| Exhibit Number |
Description | |
| 99.1 | Press Release issued August 13, 2013, announcing the closing of the Transaction. | |
| 99.2 | Unaudited pro forma financial information. | |
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.
| MASTECH HOLDINGS, INC. | ||
| By: | /s/ John J. Cronin | |
| Name: | John J. Cronin | |
| Title: | Chief Financial Officer | |
August 16, 2013
EXHIBIT INDEX
| Exhibit Number |
Description | |
| 99.1 | Press Release issued August 13, 2013, announcing the closing of the Transaction. | |
| 99.2 | Unaudited pro forma financial information. | |
Exhibit 99.1
Mastech Holdings, Inc. Closes Sale of its Healthcare Unit
PITTSBURGH, Aug. 13, 2013 /PRNewswire/ — Mastech Holdings, Inc. (NYSE MKT: MHH), a national provider of Information Technology and Specialized Healthcare staffing services, announced today that it closed on the sale of its healthcare unit with Accountable Healthcare Staffing, Inc. The closing purchase price totaled $1.15 million and was in accordance with a definitive asset purchase agreement announced on July 31, 2013.
Commenting on the sale, D. Kevin Horner, Mastech’s Chief Executive Officer stated, “This divestiture is about ‘focus’ and not about a lack of confidence in our team of dedicated healthcare professionals. Today, we are a pure-play IT staffing Company, which is where our core competencies and unique value proposition lie. I want to thank our entire healthcare team for their hard work, their accomplishments and their loyalty and wish them continued success in their next chapter with Accountable Healthcare Staffing.”
Jack Cronin, Mastech’s Chief Financial Officer stated “The Company expects to generate approximately $2.5 million of free cash from the transaction and the monetization of accounts receivables and other current assets retained by the Company, net of current liabilities. These proceeds will be used to reduce outstanding borrowings in the short-term and will be available for strategic opportunities in the future.”
About Mastech Holdings, Inc.:
Leveraging the power of 26 years of IT experience, Mastech (NYSE MKT: MHH) provides Information Technology Staffing services in the disciplines which drive today’s business operations. More information about Mastech can be found at Mastech’s website: www.mastech.com.
Forward-Looking Statements:
Certain statements contained in this release are forward-looking statements based on management’s expectations, estimates, projections and assumptions. Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of revenues, earnings, and cash flow. These statements are based on information currently available to the Company and it assumes no obligation to update the forward-looking statements as circumstances change. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors, including, without limitation, the level of market demand for its services, the highly competitive market for the types of services offered by the company, the impact of competitive factors on profit margins, market conditions that could cause the Company’s customers to reduce their spending for its services, and the company’s ability to create, acquire and build new lines of business, to attract and retain qualified personnel, reduce costs and conserve cash, and other risks that are described in more detail in the company’s filings with the Securities and Exchange Commission including its Form 10-K for the year ended December 31, 2012.
CONTACT: Donna Mascia, Manager, Investor Relations, Mastech Holdings, Inc., 888.330.5497
Exhibit 99.2
MASTECH HOLDINGS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2013
(Amounts in thousands, except per share data)
(Unaudited)
| Pro Forma | ||||||||||||
| As Reported | Adjustments | Pro Forma | ||||||||||
| Revenues |
$ | 55,940 | $ | 5,805 | $ | 50,135 | ||||||
| Costs of revenues |
45,601 | 4,810 | 40,791 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gross Profit |
10,339 | 995 | 9,344 | |||||||||
| Selling, general and administrative expenses |
8,136 | 893 | 7,243 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income from operations |
2,203 | 102 | 2,101 | |||||||||
| Interest Income (expense), net |
(54 | ) | — | (54 | ) | |||||||
| Other income (expense), net |
45 | (1 | ) | 46 | ||||||||
|
|
|
|
|
|
|
|||||||
| Income before income taxes |
2,194 | 101 | 2,093 | |||||||||
| Income tax expense |
830 | 46 | 784 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net Income |
$ | 1,364 | $ | 55 | $ | 1,309 | ||||||
|
|
|
|
|
|
|
|||||||
| Earnings per share: |
||||||||||||
| Basic |
$ | 0.41 | $ | 0.02 | $ | 0.39 | ||||||
|
|
|
|
|
|
|
|||||||
| Diluted |
$ | 0.40 | $ | 0.02 | $ | 0.38 | ||||||
|
|
|
|
|
|
|
|||||||
| Weighted average common shares outstanding: |
||||||||||||
| Basic |
3,343 | 3,343 | 3,343 | |||||||||
| Diluted |
3,427 | 3,427 | 3,427 | |||||||||
MASTECH HOLDINGS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2012
(Amounts in thousands, except per share data)
(Unaudited)
| Pro Forma | ||||||||||||
| As Reported | Adjustments | Pro Forma | ||||||||||
| Revenues |
$ | 49,766 | $ | 5,245 | $ | 44,521 | ||||||
| Costs of revenues |
40,477 | 4,259 | 36,218 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gross Profit |
9,289 | 986 | 8,303 | |||||||||
| Selling, general and administrative expenses |
7,922 | 886 | 7,036 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income from operations |
1,367 | 100 | 1,267 | |||||||||
| Interest Income (expense), net |
(33 | ) | — | (33 | ) | |||||||
| Other income (expense), net |
(23 | ) | — | (23 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Income before income taxes |
1,311 | 100 | 1,211 | |||||||||
| Income tax expense |
501 | 43 | 458 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net Income |
$ | 810 | $ | 57 | $ | 753 | ||||||
|
|
|
|
|
|
|
|||||||
| Earnings per share: |
||||||||||||
| Basic |
$ | 0.24 | $ | 0.02 | $ | 0.23 | ||||||
|
|
|
|
|
|
|
|||||||
| Diluted |
$ | 0.24 | $ | 0.02 | $ | 0.22 | ||||||
|
|
|
|
|
|
|
|||||||
| Weighted average common shares outstanding: |
||||||||||||
| Basic |
3,320 | 3,320 | 3,320 | |||||||||
| Diluted |
3,427 | 3,427 | 3,427 | |||||||||
MASTECH HOLDINGS, INC.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 2012
(Amounts in thousands, except per share data)
(Unaudited)
| Pro Forma | ||||||||||||
| As Reported | Adjustments | Pro Forma | ||||||||||
| Revenues |
$ | 101,838 | $ | 11,068 | $ | 90,770 | ||||||
| Costs of revenues |
82,629 | 9,024 | 73,605 | |||||||||
|
|
|
|
|
|
|
|||||||
| Gross Profit |
19,209 | 2,044 | 17,165 | |||||||||
| Selling, general and administrative expenses |
15,693 | 1,899 | 13,794 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income from operations |
3,516 | 145 | 3,371 | |||||||||
| Interest Income (expense), net |
(68 | ) | — | (68 | ) | |||||||
| Other income (expense), net |
36 | — | 36 | |||||||||
|
|
|
|
|
|
|
|||||||
| Income before income taxes |
3,484 | 145 | 3,339 | |||||||||
| Income tax expense |
1,345 | 64 | 1,281 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net Income |
$ | 2,139 | $ | 81 | $ | 2,058 | ||||||
|
|
|
|
|
|
|
|||||||
| Earnings per share: |
||||||||||||
| Basic |
$ | 0.66 | $ | 0.02 | $ | 0.63 | ||||||
|
|
|
|
|
|
|
|||||||
| Diluted |
$ | 0.64 | $ | 0.02 | $ | 0.61 | ||||||
|
|
|
|
|
|
|
|||||||
| Weighted average common shares outstanding: |
||||||||||||
| Basic |
3,260 | 3,260 | 3,260 | |||||||||
| Diluted |
3,361 | 3,361 | 3,361 | |||||||||
MASTECH HOLDINGS, INC.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2013
(Amounts in thousands, except share and per share data)
(Unaudited)
| Pro Forma | ||||||||||||
| As Reported | Adjustments | Pro Forma | ||||||||||
| ASSETS | ||||||||||||
| Current assets: |
||||||||||||
| Cash and cash equivalents |
$ | 616 | $ | 1,006 | $ | 1,622 | ||||||
| Accounts receivable, net |
13,380 | — | 13,380 | |||||||||
| Unbilled receivables |
3,368 | — | 3,368 | |||||||||
| Prepaid and other current assets |
883 | (43 | ) | 840 | ||||||||
| Deferred income taxes |
141 | — | 141 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current assets |
18,388 | 963 | 19,351 | |||||||||
| Equipment, enterprise software and leasehold improvements, net |
233 | (14 | ) | 219 | ||||||||
| Intangible assets, net |
18 | (18 | ) | — | ||||||||
| Deferred financing costs, net |
33 | — | 33 | |||||||||
| Non-current deposits |
210 | — | 210 | |||||||||
| Goodwill |
405 | (405 | ) | — | ||||||||
| Deferred income taxes |
152 | — | 152 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total assets |
$ | 19,439 | $ | 526 | $ | 19,965 | ||||||
|
|
|
|
|
|
|
|||||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||||||
| Current liabilities: |
||||||||||||
| Short-term borrowings |
$ | 3,479 | $ | — | $ | 3,479 | ||||||
| Accounts payable |
2,571 | 228 | 2,799 | |||||||||
| Accrued payroll and related costs |
4,557 | (144 | ) | 4,413 | ||||||||
| Other accrued liabilities |
363 | — | 363 | |||||||||
| Deferred revenues |
91 | — | 91 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total current liabilities |
11,061 | 84 | 11,145 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities |
11,061 | 84 | 11,145 | |||||||||
| Commitments and contingent liabilities |
— | — | — | |||||||||
| Shareholders’ equity: |
||||||||||||
| Preferred Stock, no par value; 20,000,000 shares authorized; none outstanding |
— | — | — | |||||||||
| Common Stock, par value $.01; 100,000,000 shares authorized; and 3,931,912 shares issued as of June 30, 2013 |
39 | — | 39 | |||||||||
| Additional paid-in capital |
11,237 | — | 11,237 | |||||||||
| Retained earnings |
283 | 442 | 725 | |||||||||
| Accumulated other comprehensive (loss), net of tax |
(50 | ) | — | (50 | ) | |||||||
| Treasury Stock, at cost; 586,367 shares as of June 30, 2013 |
(3,131 | ) | — | (3,131 | ) | |||||||
|
|
|
|
|
|
|
|||||||
| Total shareholders’ equity |
8,378 | 442 | 8,820 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total liabilities and shareholders’ equity |
$ | 19,439 | $ | 526 | $ | 19,965 | ||||||
|
|
|
|
|
|
|
|||||||
MASTECH HOLDINGS, INC.
EXPLANATORY NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Pro forma Adjustments:
The unaudited pro forma condensed consolidated statements of operations for the six months ended June 30, 2013 and 2012 and the year ended December 31, 2012 includes the following adjustments:
| • | To reflect the removal of the operating results of the Company’s Healthcare Staffing segment as if the Transaction occurred on January 1, 2012. |
The unaudited pro forma condensed consolidated balance sheet as of June 30, 2013 includes the following adjustments:
| • | To reflect cash received and the removal of accrued liabilities assumed by the buyer related to the sale of the Company’s Healthcare Staffing segment. |
| • | To reflect the disposition of assets sold as of June 30, 2013. |
| • | To reflect accounts payable related to transaction closing costs and certain closure expenses of the business sold. |
| • | To reflect the gain on the sale, net of income tax expense of $43,000. |