-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Upk1SdIWQ8MWCMMjlILOIl+Vm4jKKgt4/MUMFIsBgQeZyTXpUPSGKMVZCwz+ODBg pYYZgkoWfRQswsN3lUvabA== 0001002536-97-000012.txt : 19970811 0001002536-97-000012.hdr.sgml : 19970811 ACCESSION NUMBER: 0001002536-97-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970808 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INDIVIDUAL INC CENTRAL INDEX KEY: 0001002536 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 043036959 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27734 FILM NUMBER: 97654307 BUSINESS ADDRESS: STREET 1: 8 NEW ENGLAND EXECUTIVE PARK WEST CITY: BURLINGTON STATE: MA ZIP: 01803 BUSINESS PHONE: 6172736000 MAIL ADDRESS: STREET 1: 8 NEW ENGLAND EXECUTIVE PK CITY: BURLINGTON STATE: MA ZIP: 01803 10-Q 1 3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10Q (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1997 ------------------------------------------ -- or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ________________________ Commission File Number: 0-27734 --------------------------------------------------- Individual,Inc - -------------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware - -------------------------------------------------------------------- (State or other jurisdiction of incorporation or organization) 04-303-6959 - ----------- (I.R.S. Employer Identification No.) 8 New England Executive Park West, Burlington, MA 01803 - --------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) (617) 273-6000 - --------------- (Registrant's telephone number, including area code) - ----------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. __X__Yes ___No APPLICABLE ONLY TO CORPORATE ISSUERS: As of June 30, 1997, 16,092,129 shares of Common Stock, $.01 par value per share, were outstanding. ------ Individual, Inc. Form 10-Q For the Quarter Ended June, 1997 Index
Page # --------- Facing Sheet . . . . . . . . . . . . . . . . . . . . . . . . . 1 Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 PART I - UNAUDITED FINANCIAL INFORMATION - -------------------------------------------------------------- Item 1.. Consolidated Financial Statements Consolidated Balance Sheets June 30, 1997 (unaudited) and December 31, 1996 3 Consolidated Statements of Operations (unaudited). . 4 Consolidated Statements of Cash Flows (unaudited) . . 5 Notes to Unaudited Consolidated Financial Statements. 6 Item 2.. Management's Discussion and Analysis of Financial Condition and Results of Operations. . . . . . . . . 9 PART II - OTHER INFORMATION - -------------------------------------------------------------- Item 2.. Change in Securities 16 Item 4.. Submission of Matters to a Vote of Security Holders 17 Item 6.. Exhibits and Reports on Form 8-K 17 Signatures . . . . . . . . . . . . . . . . . . . . . . . . . 18 Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . 19 Exhibit 11 . Computation of Loss Per Share 20 Financial Data Schedule. . . . . . . . . . . . . . . . . . .. 21
INDIVIDUAL, INC. CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, December 31, 1997 1996 ------------- -------------- ASSETS Current assets: Cash and cash equivalents . . . . . . . . . . . . . . . . $ 16,014,232 $ 22,117,834 Investments in marketable securities. . . . . . . . . . . 9,125,577 8,448,306 Accounts receivable, net. . . . . . . . . . . . . . . . . 7,274,660 11,950,638 Deferred income taxes . . . . . . . . . . . . . . . . . . - 35,000 Prepaid expenses. . . . . . . . . . . . . . . . . . . . . 715,809 562,063 ------------- -------------- Total current assets. . . . . . . . . . . . . . . . . . 33,130,278 43,113,841 Property and equipment, net. . . . . . . . . . . . . . . . . 4,328,851 4,333,580 Other assets, net. . . . . . . . . . . . . . . . . . . . . . 475,831 952,388 ------------- -------------- Total assets. . . . . . . . . . . . . . . . . . . . . . $ 37,934,960 $ 48,399,809 ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable. . . . . . . . . . . . . . . . . . . . . $ 3,943,973 $ 4,894,036 Accrued royalties . . . . . . . . . . . . . . . . . . . . 1,836,835 1,610,829 Accrued expenses. . . . . . . . . . . . . . . . . . . . . 6,968,979 3,955,481 Deferred revenue. . . . . . . . . . . . . . . . . . . . . 11,387,085 14,694,856 Equipment financing loans and notes payable . . . . . . . 1,457,351 1,074,055 ------------- -------------- Total current liabilities . . . . . . . . . . . . . . . 25,594,223 26,229,257 Other long term liabilities. . . . . . . . . . . . . . . . . 1,694,624 1,540,375 Commitments and contingencies (note 6) Stockholders' equity: Common stock, $0.01 par value; 25,000,000 shares authorized, 16,092,129 and 15,722,498 shares issued and outstanding in 1997 and 1996, respectively. 147,836 144,140 Additional paid in capital. . . . . . . . . . . . . . . . 90,887,572 89,915,343 Cumulative translation adjustment . . . . . . . . . . . . 63,732 70,149 Unrealized gains on marketable securities . . . . . . . . 116,172 125,475 Accumulated deficit . . . . . . . . . . . . . . . . . . . (80,569,199) (69,594,253) Less 32,865 shares held in treasury (at cost) at December 31, 1996 . . . . . . . . . . . . - (30,677) ------------- -------------- Total stockholders' equity. . . . . . . . . . . . . . 10,646,113 20,630,177 ------------- -------------- Total liabilities and stockholders' equity. . . . . . . $ 37,934,960 $ 48,399,809 ============= ============== The accompanying notes are an integral part of the financial statements.
INDIVIDUAL, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
For the three months ended For the six months ended June 30, June 30, 1997 1996 1997 1996 ------------- -------------- -------------- -------------- Revenue . . . . . . . . . . . . . $ 8,806,575 $ 6,638,334 $ 17,575,721 $ 12,550,024 Cost of revenue . . . . . . . . . 4,238,804 2,961,153 8,832,832 5,548,085 ------------- -------------- -------------- -------------- Gross margin. . . . . . . . . . . 4,567,771 3,677,181 8,742,889 7,001,939 Operating expenses: Sales and marketing. . . . . . 1,916,035 1,502,058 4,128,287 2,709,507 New subscriber acquisition . . 3,414,866 1,948,926 6,197,924 4,179,629 Product development. . . . . . 1,803,840 1,128,833 3,243,455 2,046,442 General and administrative . . 839,825 1,203,541 2,043,365 2,029,782 Acquisitions and other charges 3,068,433 36,220,417 4,700,722 36,220,417 ------------- -------------- -------------- -------------- Total operating expenses. . 11,042,999 42,003,775 20,313,753 47,185,777 ------------- -------------- -------------- -------------- Loss from operations. . . . . . . (6,475,228) (38,326,594) (11,570,864) (40,183,838) Interest income and other, net. . 485,741 231,245 854,160 472,839 Interest expense. . . . . . . . . (161,443) (63,880) (258,242) (828,386) Net loss. . . . . . . . . . . . . ($6,150,930) ($38,159,229) ($10,974,946) ($40,539,385) ============= ============== ============== ============== Net loss per common share . . . . ($0.39) ($2.78) ($0.69) ($3.29) ============= ============== ============== ============== Weighted average common shares outstanding . . . . . . 15,976,190 13,730,789 15,917,649 12,338,771 ============= ============== ============== ============== The accompanying notes are an integral part of the financial statements.
INDIVIDUAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
For the six months ended June 30, 1997 1996 -------------- -------------- Cash flows from operating activities: Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ($10,974,871) ($40,492,293) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization. . . . . . . . . . . . . . . . . . . 1,468,977 678,010 Loss on disposal of property and equipment . . . . . . . . . . . . 421,117 18,728 Provision for doubtful accounts. . . . . . . . . . . . . . . . . . - 217,675 Compensation recognized under employee stock plans . . . . . . . . - 27,981 Purchased incomplete technology. . . . . . . . . . . . . . . . . . - 35,563,750 Loss on joint venture. . . . . . . . . . . . . . . . . . . . . . . - 1,303,821 Changes in operating assets and liabilities: Decrease in accounts receivable . . . . . . . . . . . . . . . 4,675,978 891,873 Increase in prepaid expenses. . . . . . . . . . . . . . . . . (118,824) (383,310) Decrease/ (Increase) in other assets. . . . . . . . . . . . . 444,939 10,276 (Decrease)/ Increase in accounts payable and accrued expenses 1,970,780 1,668,893 Increase in other long term liabilities . . . . . . . . . . . (500,004) 166,667 (Decrease)/ Increase in deferred revenue. . . . . . . . . . . (3,307,771) 572,635 -------------- -------------- Net cash used in operating activities: . . . . . . . . . . . . . . (5,919,679) 244,706 -------------- -------------- Cash flows from investing activities: Additions to property and equipment. . . . . . . . . . . . . . . . (1,241,655) (937,930) Investment in joint venture. . . . . . . . . . . . . . . . . . . . - (1,883,417) Cash acquired from/(paid for) acquistion . . . . . . . . . . . . . (280,000) 1,010,354 Investments in marketable securities . . . . . . . . . . . . . . . (700,000) (5,992,450) -------------- -------------- Net cash used in investing activities: . . . . . . . . . . . . . . (2,221,655) (7,803,443) -------------- -------------- Cash flows from financing activities: Principal repayments on loans . . . . . . . . . . . . . . . . . . (55,149) (69,391) Increase in equipment loan, net. . . . . . . . . . . . . . . . . . 1,092,697 180,963 Proceeds from issuance of common stock, net of related expenses. . 1,006,601 34,086,706 Payment on senior subordinated notes . . . . . . . . . . . . . . . - (10,000,000) -------------- -------------- Net cash provided by financing activities. . . . . . . . . . . . . 2,044,149 24,198,278 -------------- -------------- Effect of exchange rate on cash. . . . . . . . . . . . . . . . . . (6,417) (2,342) -------------- -------------- Net increase in cash and cash equivalents. . . . . . . . . . . . . (6,103,602) 16,637,199 Cash and cash equivalents at the beginning of period . . . . . . . 22,117,834 17,920,924 -------------- -------------- Cash and cash equivalents at the end of period . . . . . . . . . . $ 16,014,232 $ 34,558,123 ============== ============== Supplemental cash flow information: Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . $ 65,806 $ 746,688 ============== ============== Non cash transactions: Issuance of common stock in connection with acquisition. . . . $ 512,500 - ============== ============== Equipment acquired under capital lease obligation . . . . . . . - $ 22,859 ============== ============== Net liabilities assumed in exchange for stock . . . . . . . . . - $ 1,643,019 ============== ============== Conversion of redeemable preferred stock into common stock. . . - $ 2,999,013 ============== ============== The accompanying notes are an integral part of the financial statements.
INDIVIDUAL, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The unaudited consolidated financial statements of Individual, Inc. (the "Company") presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and note disclosures required by generally accepted accounting principles. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management's discussion and analysis of financial condition and results of operations, contained in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1996. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the consolidated financial position, results of operations and cash flows of the Company and its subsidiaries. Quarterly operating results are not necessarily indicative of the results which would be expected for the full year. In June 1997, the Company acquired all of the outstanding capital stock of ClariNet Communications Corp. in a transaction accounted for as a pooling of interests. Accordingly, all prior period financial statements presented herein have been restated to include the financial position, results of operations, and cash flows of ClariNet Communications Corp. See Note 5. 2. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 3. Reclassification of Amounts Certain amounts in the financial statements for the three months and the six months ended June 30, 1996 have been reclassified to conform to the presentation for the three months and the six months ended June 30, 1997. 4. Per Share Computations Net loss per common share for 1996 gives effect to the conversion of all shares of Series B, C, D, E and G Redeemable Preferred Stock and Series A and F Preferred Stock and does not include the dividends on Redeemable Preferred Stock as an increase in net loss. Pursuant to the requirements of the Securities and Exchange Commission, common shares and common equivalent shares issued at prices below the IPO price of $14.00 per share during the twelve months immediately preceding the date of the initial filing of the Registration Statement have been included in the calculation of common shares and common share equivalents, using the treasury stock method, as if they were outstanding for all periods prior to the IPO. 5. Acquisitions and Other Charges In June 1997, the Company completed the acquisition of ClariNet Communications Corp. ("ClariNet" through a subsidiary merger (the "merger")whereby a wholly-owned subsidiary of the Company was merged with and into ClariNet, with ClariNet continuing as the surviving corporation and a wholly-owned subsidiary of the Company. ClariNet publishes a global electronic newspaper on the Internet called ClariNews, which is distributed through internet service providers and to corporations, educational institutions and individual subscribers. Approximately 1,475,000 shares of Individual Common Stock were issued in exchange for all of the outstanding Common Stock of ClariNet (including approximately 138,512 shares of Individual Common Stock reserved for issuance upon exercise of outstanding ClariNet stock options assumed by Individual in the Merger). The transaction was accounted for as pooling of interests and therefore, all prior period financial statements presented herein have been restated as if the merger took place at the beginning of such periods. Separate results of operations for the periods prior to the merger with ClariNet are as follows:
Unaudited Unadited Unaudited Unaudited Three Months Three Months Six Months Six Months Ended Ended Ended Ended 6/30/97 6/30/96 6/30/97 6/30/96 ------------- --------- ----------- ---------- Net Sales Individual. . . . 7,874,827 5,647,727 15,669,714 10,677,018 ClariNet. . . . . 931,748 990,607 1,906,007 1,873,006 ---------- --------- ----------- ---------- Combined . . . . . . 8,806,575 6,638,334 17,575,721 12,550,024 Net Income Individual. . . . (5,896,129) (38,338,143) 10,554,743) (40,848,364) ClariNet. . . . . (254,801) 178,914 (420,203) 308,979 ----------- ------------- ----------- ---------- Combined . . . . . . (6,150,930) (38,159,229)(10,974,946) (40,539,385) Other changes in shareholders' equity Individual. . . . 639,939 38,819,702 990,882 10,902,367 ClariNet. . . . . - - - 7,425 ---------- ------------ ----------- ---------- Combined . . . . . . 639,939 38,819,702 990,882 10,909,792
In connection with the Merger, $873,000 of merger costs and expenses were incurred and have been charged to expense in the second quarter of 1997 and are included in acquisitions and other charges. The Merger costs and expenses related primarily to legal, accounting, and investment adviser's fees. In June 1997, the Company acquired certain assets and liabilities of the CompanyLink service from Knowledge Factory Partners, L.L.C., a subsidiary of Delphi Internet Services Corporation. The CompanyLink service detects corporate-specific references and detailed market statistics on more than 65,000 companies and dynamically links those references to related news and information on the Web. The purchase price for the acquisition included $280,000 in cash, a Common Stock Purchase Warrant exercisable for the purchase of 50,000 shares of Individual Common Stock at an exercise price of $5.25 per share and certain monthly contingent payments payable for a period of twelve months after the closing of the acquisition. The Company also recognized $50,000 of legal and accounting expenses in connection with the acquisition. The acquisition has been recorded using the purchase method of accounting. The total estimated purchase price of $447,000 has been recorded as an intangible asset and is being amortized over 18 months. Amortization expense for June is included in acquisitions and other charges. Amortization of goodwill of approximately $174,000 was charged primarily in connection with the Company's acquisition in October 1996 of certain assets and liabilities of the Hoover Business Intelligence Services unit ("Hoover") from Information Access Company, a unit of the Thomson Corporation (Toronto). The amortization expense is included in acquisitions and other charges. The Company ceased operations of its FreeLoader service as of May 31, 1997, and all costs related to the shutdown are included in acquisitions and other charges as well as operating expenses of FreeLoader of approximately $1.4 million, which are predominantly product development expenses. 6. Commitments and Contingencies Under the merger agreement with FreeLoader, the Company is required to pay a balloon payment of $2,000,000 to the two founders of FreeLoader, payable upon the successful completion of three years of employment with the Company. The Company has accrued this charge in acquisitions and other charges. The Company has also guaranteed the value of certain shares issued to the two founders in the transaction, which will be measured during the period August 31, 1997 through February 28, 1998. If the fair value of the stock is less than the guaranteed value, then the Company will pay out the difference in cash. At June 30, 1997, the fair value of the stock is approximately $3,791,000 below the guaranteed value. The Company has letters of credit outstanding of approximately $4,100,000 in connection with the repayment of this amount by the Company. 7. Recently Issued Accounting Standards The Financial Accounting Standards Board issued Statement No. 128 ("SFAS 128"), "Earnings per Share", which modifies the way in which earnings per share (EPS) is calculated and disclosed. Upon adoption of this standard for the fiscal period ending December 31, 1997, the Company will disclose basic and diluted EPS and will restate all prior period EPS data presented. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS, similar to fully diluted EPS, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Management believes the adoption of SFAS 128 will not have a material impact on reported earnings per share. The Financial Accounting Standard Board recently issued Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income." This Statement requires that changes in comprehensive income be shown in a financial statement that is displayed with the same prominence as other financial statements. The Statement will become effective for fiscal years beginning after December 15, 1997. The Company will adopt the new standard beginning in the first quarter of the fiscal year ending December 31, 1998. In June 1997, the Financial Accounting Standard Board issued Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 specifies new guidelines for determining a company's operating segments and related requirements for disclosure. The Company is in the process of evaluating the impact of the new standard on the presentation of the financial statements and the disclosures therein. The Statement will become effective for fiscal years beginning after December 15, 1997. The Company will adopt the new standard for the fiscal year ending December 31, 1998. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Overview Individual offers a suite of customized information services that provide knowledge workers with relevant current awareness reports each day while offering information providers and advertisers new ways to reach targeted audiences. The Company commenced delivery of its initial service in early 1990, and has subsequently introduced additional services targeted at multiple market segments. The Company's revenue is derived from three classes of services: enterprise services, single-user services and ClariNews, a news service of ClariNet, acquired in June 1997 and described below. Revenue for the Company's principal enterprise service, First! (introduced in the first quarter of 1990) consists of subscription fees from organizations. In October 1996, the Company acquired the Hoover business intelligence unit ("Hoover"), from the Information Access Company ("IAC"), a unit of the Thomson Corporation. Revenue from the enterprise Hoover service consists of both subscription fees for content, and software license and maintenance fees. The Company's principal single-user service is the World Wide Web-based service NewsPage, introduced in the second quarter of 1995. NewsPage base service is generally available for no charge to users. Revenue consists of advertising fees from companies placing advertisements through this service and from subscription fees for premium levels of service and fees for the fulfillment of certain user requests for additional information. Another single-user service of the Company is HeadsUp, which was introduced in the second quarter of 1993. HeadsUp consists of subscription fees and fees for the fulfillment of certain user requests for additional information. HeadsUp is a fax and email-based service and is not being promoted actively in 1997, primarily due to the Company's belief that users are moving to Web-based information services, such as NewsPage. On June 28, 1996, the Company acquired FreeLoader, a developer of agent-based software for the off-line delivery of World Wide Web multi-media content. The Company ceased operations of FreeLoader as of May 31, 1997, and all costs related to the shutdown are included in acquisitions and other charges as well as operating expenses of FreeLoader of approximately $1.4 million, which are predominantly product development expenses. No material impact on operations was incurred in the shutdown, as the majority of the purchase price was allocated to purchased incomplete technology and accordingly, was expensed at the time of the purchase. In June 1997, the Company acquired CompanyLink, a service of Delphi Internet Services. CompanyLink's advanced technology detects corporate-specific references and detailed market statistics on more than 65,000 companies and dynamically links those references to related news and information on the Web. The service also features a personalized news product that enables automatic access to updated information for competitive research, industry reports, potential business/customer investigation, and more. Company Link did not materially contribute to revenues for the quarter ended June 30, 1997. The purchase price for the acquisition included $280,000 in cash, a Common Stock Purchase Warrant exercisable for the purchase of 50,000 shares of Individual Common Stock at an exercise price of $5.25 per share and certain monthly contingent payments payable for a period of twelve months after the closing of the acquisition. The Company also incurred $50,000 of legal and accounting expenses in connection with the acquisition. The acquisition has been recorded using the purchase method of accounting. The total purchase price of $447,000 has been recorded as an intangible asset and is being amortized over 18 months. Amortization expense for June is included in acquisitions and other charges. In June 1997, the Company completed the acquisition of ClariNet Communications Corp. ("ClariNet") through a subsidiary merger (the "merger") whereby approximately 1,475,000 shares of Individual Common Stock were issued in exchange for all of the outstanding Common Stock of ClariNet (including approximately 138,512 shares of Individual Common Stock reserved for issuance upon exercise of outstanding ClariNet stock options assumed by Individual in the Merger). The transaction was accounted for as pooling of interests and therefore, all prior period financial statements presented herein have been restated as if the merger took place at the beginning of such periods. ClariNet Communications is the publisher of ClariNews, the premier globally branded electronic newspaper. ClariNet revenue consists primarily of subscription fees generated by the licensing of its content through more than 350 Internet Service Providers, corporations, and educational institutions worldwide. Although advertising currently accounts for less than five percent of ClariNet revenue, ClariNet intends to explore ways of incorporating advertising into its services. The Company recognizes subscription revenue ratably over the subscription period. The Company's subscription contracts are typically billed in advance, and amounts attributable to services not yet delivered are recorded in deferred revenue. Customers of the Company's services may, under certain circumstances, terminate their subscriptions at any time and receive a credit in the form of a cash refund for the unused portion. Historically, the level of subscription cancellations prior to the termination of the subscription period has not been material and has had no impact on revenue previously recognized. Fulfillment fees are recognized as revenue at the time stories are provided. Advertising revenue is recognized ratably over the advertisement period. The majority of the Company's operating expenses consists of salaries and related costs. The Company had 241 full-time employees on June 30,1997, up from 214 on December 31, 1996, and up from 157 and 96 on December 31, 1995 and 1994, respectively. The number on June 30, 1997 includes 40 employees working at ClariNet. The Company incurs significant expenses to acquire new customers, reported as new subscriber acquisition expenses. The Company may also incur expenses in the process of soliciting a subscription renewal, which are included in sales and marketing expenses. The cost of soliciting subscription renewals is substantially less than the cost of acquiring new subscriptions. General Risk Factors That May Affect Future Quarterly Results - --------------------------------------------------------------------- This Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to risks and uncertainties. The Company's actual future results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in "Factors That May Affect Future Performance" under Item 7 of the Company's Annual Report on Form 10K for the fiscal year ended December 31, 1996 as well as other factors described from time to time in the Company's filings with the Securities and Exchange Commission. The market for current awareness products is experiencing rapid changes as organizations introduce company-wide information and knowledge solutions built on enterprise computing platforms such as internal intranets and groupware products, such as Lotus Notes. As a result of these changes, Individual has migrated its First! product from fax and e-mail distribution, sold primarily to small groups of users at an average annual contract value of less than $10,000, to distribution via intranet and Lotus Notes systems capable of servicing large organizations. This evolving market focus has required the Company not only to invest in the product development and engineering required to introduce new and enhanced enterprise-based products such as First! Intranet and First! Notes, but also to adapt its selling efforts in order to address the requirements of large organizations that desire to implement current business awareness solutions on an enterprise-wide basis over their existing information infrastructures. Such solutions typically involve large contracts with annual contract values in excess of $50,000 and generally require a longer sales cycle than departmental or business-group sales. As a result, the Company has been investing in additional sales and sales management personnel with experience in selling large contracts, as well as in additional customer service personnel capable of addressing increasingly complex customer needs. Approximately 75% of the Company's enterprise customer base presently distributes the Company's products from intranets and Lotus Notes, almost double from a year ago. Notwithstanding such growth, however, the ability of the Company to achieve future growth is heavily dependent on the Company's ability to successfully sell large contracts to enterprise customers and to support implementations with those customers. There can be no assurance that the Company will be successful in recruiting and training additional sales and customer service personnel with the skills required to sell and support large contracts which may affect its rate of growth. In addition, the Company is experiencing longer sales cycles and if this trend continues its rate of growth and future operating results may be adversely affected. Management may in future periods consider acquisitions that it believes may enable Individual to acquire complementary skills and capabilities, offer new products and services, expand its customer base, or obtain other competitive advantages. Such acquisitions involve potential risks, including difficulties in assimilating the acquired Company's operations, technology, products and personnel, completing and integrating acquired in-process technology, diverting management's resources, uncertainties associated with operating in new markets and working with new employees and customers, and the potential loss of the acquired Company's key employees. The Company depends, in significant part, upon the continued services of its key technical, editorial, sales and product development, most of whom are not bound by employment agreements, and only certain of whom are bound by noncompetition agreements. The Company's plan requires the hiring of additional engineering and sales personnel in order to add additional products and features and grow its customer base. In the Boston, MA and Silicon Valley, CA markets, these skills are in high demand and there is no assurance that the Company will be successful in hiring these personnel. In view of the Company's revenue growth in recent years and its limited operating history, period-to-period comparisons of its financial results are not necessarily meaningful and should not be relied upon as any indication of future performance. The Company's quarterly results of operations have fluctuated significantly in the past and will likely fluctuate in the future due to, among other factors, demand for its services and changes in service mix, the size and timing of new and renewal subscriptions from corporate customers, advertising revenue levels, the effect of new service announcements by the Company and its competitors, the ability of the Company to develop, market and introduce new and enhanced versions of its services on a timely basis and the level of product and price competition. A substantial portion of the Company's cost of revenue, which consists principally of fees payable to information providers, telecommunication costs and personnel expenses, is relatively fixed in nature. The Company's operating expense levels are based, in significant part, on the Company's expectations of future revenue. If quarterly revenues are below management's expectations, both gross margins and results of operations would be adversely affected because a relatively small amount of the Company's costs and expenses varies with its revenue in the short-term. Results of Operations - ----------------------- The following table sets forth, for the periods indicated, certain financial data as a percentage of total revenue (All data has been restated to reflect the acquisition of ClariNet, which was acquired in June 1997 and accounted for as a pooling of interests):
Three months ended June 30, Six months ended June 30, 1997 1996 1997 1996 Revenue. . . . . . . . . . . . . . . 100% 100% 100% 100% Cost of Revenue. . . . . . . . . . . . . . 48% 45% 50% 44% ------- -------- ------ ------- Gross Margin . . . . . . . . . . . . . . . 52% 55% 50% 56% Operating expenses: Sales and marketing. . . . . . . . . . . . 22% 23% 23% 22% New subscriber acquisition . . . . . . . . 39% 29% 35% 33% Product development. . . . . . . . . . . . 20% 17% 19% 16% General and administrative . . . . . . . . 10% 18% 12% 16% Mergers, acquisitions and related charges. 35% 546% 27% 289% ------- ------- ------- -------- Total operating expense. . . . . . . . . 126% 633% 116% 376% Loss from operations . . . . . . . . . . . (74)% (578)% (66%) (320)% Interest and other income (expense), net . 4% 3% 4% (3)% -------- ------- -------- ------ Net loss . . . . . . . . . . . . . . . . . (70)% (575)% (62%) (323)% ========= ======== ========= ======
Three months and six months ended June 30, 1997 and 1996 - ------------------------------------------------------------------ Revenue. Revenues increased 33% from $6,638,000 for the three months ended June 30, 1996 to $8,807,000 for the three months ended June 30, 1997. Revenues increased 40% from $12,550,000 to $17,576,000 in the six months ended June 30, 1996 and 1997, respectively. Additionally, the number of registered and authorized users of the Company's information services, including ClariNet, increased to more than 2,130,000 at June 30, 1997, an increase of 22% over the number of users at June 30, 1996 (Including in each case the 1.5 million subscribers acquired with the acquisition of ClariNet). In the second quarter of fiscal 1997, revenue from the Company's enterprise (First! and Hoover) products was $5,341,000, up from $3,712,000 for the second quarter of fiscal 1996. This increase of 44% in revenue resulted primarily from Hoover, acquired in October 1996 and new sales of First! Intranet, which are offsetting declining revenues from First! distributed by fax and e-mail. For the six months ended June 30, 1997, revenue from First! and Hoover grew to $10,715,000, an increase of 49% over the $7,177,000 of revenue for the same period in 1996. During the first half of 1997, the Company has revamped its sales approach to target larger, strategic account relationships for First! Intranet and First! Notes. This decision has resulted in a 24 percent increase in the average size of a First! account during the first six months of 1997 to almost $25,000, as compared to a contract base a year ago which was weighted more heavily by multiple fax and e-mail contracts with an average contract value of $6,000 to $8,000. However, due to the longer selling cycle for larger accounts, the new sales strategy has reduced some short term enterprise revenue while creating a sales pipeline to generate long term growth. In the second quarter of fiscal 1997, revenue from single user services (NewsPage and Heads Up) grew by 31% to $2,534,000, up from $1,935,000 for the second quarter of fiscal 1996. The growth was attributable primarily to the Company's NewsPage service on the World Wide Web. The increase in revenue from NewsPage was partially offset by the declining revenues of the non-Web single user service HeadsUp, which has not been actively promoted as the Company believes that many of these users are migrating to Web-based services, including the Company's NewsPage service. The Company expects this trend to continue in the future. For the six months ended June 30, 1997, single user revenue grew to $4,954,000, an increase of 42% over the $3,500,000 of revenue for the same period in 1996. In the second quarter of fiscal 1997, revenue from ClariNet totaled $932,000, representing a 4% drop from the $972,000 of revenue in the second quarter of fiscal 1996. For the six months ended June 30, 1997 ClariNet revenue totaled $1,906,000, an increase of 2% from the $1,873,000 of revenue for the six months ended June 30, 1996. Much of the reduction in revenue for the second quarter of 1997 is attributable to a number of ISP's (Internet Service Providers) switching their subscriptions to a lower level of service to minimize their costs while still providing their subscribers with the opportunity to upgrade to a ClariNet premium service. In future quarters, the Company expects to incorporate ClariNet's revenue into the enterprise and single user products. Cost of revenue. Cost of revenue was $4,239,000 for the three months ended June 30, 1997, as compared to $2,961,000 for the same period in 1996, or an increase of 43%. Cost of revenue was $8,833,000 for the six months ended June 30, 1997, as compared to $5,548,000 for the same period in 1996, or an increase of 59%. Gross margin decreased from 55% to 52% for the three months ended June 30, 1997, and decreased from 56% to 50% for the six months ended June 30, 1997. The decline in gross margin is the result of higher information provider costs, including minimum royalties paid to certain information providers and the higher royalty percentage paid on Hoover revenue as compared to revenue from First!. Additional costs were also incurred by increasing the capacity for NewsPage email deliveries and supporting larger scale enterprise accounts. The Company expects many of these costs to remain fairly constant throughout the rest of fiscal 1997 and the first half of fiscal 1998, which should improve the gross margin percent if revenues continue to grow. Sales and marketing. Sales and marketing expenses increased 28% to $1,916,000 for the three months ended June 30, 1997, up from $1,502,000 for the same period of 1996. Sales and marketing expenses increased by 52% to 4,128,000 for the six months ended June 30, 1997, up from $2,710,000 for the same period of 1996. This increase is primarily due to additional personnel for product management and advertising sales related to NewsPage, additional sales personnel for ClariNet, subscription and advertising royalties paid to NewsPage distribution partners such as Netcom, and increased expenses related to renewing First! contracts. New subscriber acquisition. New subscriber acquisition expenses increased 75% to $3,415,000 for the three months ended June 30, 1997 from $1,949,000 for the same period in 1996. New subscriber acquisition expenses increased 48% from $4,180,000 to $6,198,000 for the six months ended June 30, 1996 and June 30, 1997 respectively. The increase is primarily due to costs incurred to acquire NewsPage users, including Web site advertising, radio advertising, and direct mailings. The Company does not expect the current level of spending for this type of advertising to continue in the near future as it intends to focus on more efficient subscriber acquisition programs, including leveraging strategic distribution partnerships to grow the NewsPage subscriber base. Product development. Product development increased 60% to $1,804,000 for the three months ended June 30, 1997, up from $1,129,000 for the same period in 1996. Product development expenses increased 59% to $3,243,000 for the six months ended June 30, 1997, up from $2,046,000 for the same period in 1996. This increase is primarily the result of additional personnel related to the continued enhancements of both First! and NewsPage products. General and administrative. General and administrative expenses decreased 30% to $840,000 for the three months ended June 30, 1997, down from $1,204,000 for the same period of 1996. General and administrative expenses increased 1% to $2,043,000 for the six months ended June 30, 1997, up from $2,030,000 for the same period of 1996. The decrease in the second quarter of 1997 is due in part to a reduction in severance payments and recruiting expenses for additional management and administrative personnel incurred in the second quarter of 1996. Additionally, one time charges were incurred in the second quarter of 1996 in preparation for the shutdown of the BookWire business which occurred in September 1996. Acquisitions and other charges. Acquisitions and other charges were $3,068,000 for the three months ended June 30, 1997, and were $4,701,000 for the six months ended June 30, 1997. These charges primarily include operating costs, primarily development expenses, related to Freeloader, a wholly-owned subsidiary acquired in June 1996, and charges related to the shutdown of FreeLoader in May 1997. Other items included in these charges were amortization on goodwill acquired in the Hoover acquisition in October 1996, and transaction costs related to the CompanyLink and ClariNet acquisitions in June 1997. Acquisition and other charges for the six months ended June 30, 1996 were $36 million, primarily related to the acquisition of FreeLoader which was expensed as in process development at the time of the acquisition. Interest income and other, net. Interest income and other, net increased 110% to $486,000 for the three months ended June 30, 1997, up from $231,000 for the same period of 1996. Interest income and other, net increased 81% to $854,160 for the six months ended June 30, 1997, up from $473,000 for the same period of 1996. These increases were due to the recognition in 1996 of the Company's share of operating losses of its joint venture in Japan with Toshiba Corp. and Mitsui & Co. Ltd. The Company's investment in the joint venture was reduced to zero during the third quarter of 1996. Interest income increased primarily from interest earned on the investment of net proceeds of the Company's IPO in March 1996. Interest expense. Interest expense increased 151% to $161,000 for the three months ended June 30, 1997, up from $64,000 for the same period of 1996. Interest expense decreased 68% to $258,000 for the six months ended June 30, 1997, down from $828,000 for the same period of 1996. The increase for the three months ended June 30, 1997 is due to interest costs incurred on guaranteed payments with two FreeLoader employees related to the acquisition of FreeLoader in June 1996. The decrease over the six month period is due to interest costs incurred in 1996 on senior subordinated notes that were paid in full in March 1996 from a portion of the proceeds of the Company's IPO. Liquidity and Capital Resources - ---------------------------------- The Company's cash, cash equivalents and marketable securities balance at June 30, 1997 was $25,140,000, as compared to $30,566,000 at December 31, 1996. Net cash used in operations was $5,920,000 for the six months ended June 30, 1997, as compared with $245,000 for the same period in 1996. The decrease in cash is due to increased operating losses incurred in the first half of 1997, and a decrease in deferred revenue of $3,308,000 in the first half of 1997. Net cash used in investing activities was $2,222,000 in the six months ended June 30, 1997 as compared with $7,803,000 for the same period of 1996. In the first quarter of 1997, $700,000 was used to purchase marketable securities, primarily from U.S. government agencies, down from $5,992,000 used during the same period a year ago. Net cash provided by financing activities was $2,044,000 for the six months ended June 30, 1997, as compared to $24,198,000 in the same period of 1996. This decrease resulted primarily from the completion of the Company's IPO in March of 1996. The Company has also used equipment leases and debt instruments to finance the majority of its purchases of capital equipment. At June 30, 1997 the Company had approximately $1,971,000 outstanding in connection with these obligations and had an additional $1,010,000 available under established credit arrangements. In addition, the Company has a revolving line of credit with a commercial bank providing for a maximum credit of $3,500,000 subject to certain covenants. At June 30, 1997, no amounts were outstanding under this line. Management believes that cash and marketable securities will be sufficient to fund its operations for the next twelve months and to provide for the payments of up to $6 million to the two FreeLoader founders, under the terms of the agreements with the founders. This may depend on numerous factors, including the rate of expansion for current products and services, the development of new products and services, and potential acquisitions or strategic investments. Recently Issued Accounting Standards - --------------------------------------- The Financial Accounting Standards Board issued Statement No. 128 ("SFAS 128"), "Earnings per Share", which modifies the way in which earnings per share (EPS) is calculated and disclosed. Upon adoption of this standard for the fiscal period ending December 31, 1997, the Company will disclose basic and diluted EPS and will restate all prior period EPS data presented. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS, similar to fully diluted EPS, reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Management believes the adoption of SFAS 128 will not have a material impact on reported earnings per share. The Financial Accounting Standard Board recently issued Statement of Financial Accounting Standard No. 130, "Reporting Comprehensive Income." This Statement requires that changes in comprehensive income be shown in a financial statement that is displayed with the same prominence as other financial statements. The Statement will become effective for fiscal years beginning after December 15, 1997. The Company will adopt the new standard beginning in the first quarter of the fiscal year ending December 31, 1997. In June 1997, the Financial Accounting Standard Board issued Statement of Financial Accounting Standard No. 131, "Disclosures about Segments of an Enterprise and Related Information" (SFAS No. 131). SFAS No. 131 specifies new guidelines for determining a company's operating segments and related requirements for disclosure. The Company is in the process of evaluating the impact of the new standard on the presentation of the financial statements and the disclosures therein. The Statement will become effective for fiscal years beginning after December 15, 1997. The Company will adopt the new standard for the fiscal year ending December 31, 1998. PART II - OTHER INFORMATION Item 2. Changes in Securities - -------- ----------------------- On June 6, 1997, the Company acquired certain of the assets and liabilities of the CompanyLink service from Knowledge Factory Partners, L.L.C., a subsidiary of Delphi Internet Services Corporation. The purchase price for the acquisition of the CompanyLink assets included $280,000 in cash, certain monthly contingent payments payable for a period of twelve months after the closing of the acquisition, and the issuance by the Company to Knowledge Factory Partners, L.L.C. on June 6, 1997 of an unregistered Common Stock Purchase Warrant (the "Warrant") exercisable for the purchase of 50,000 shares of Common Stock of the Company at an exercise price of $5.25 per share (the last sale price of the Company's Common Stock on the Nasdaq National Market on the last trading day immediately preceding the closing date of the CompanyLink acquisition). The Warrant was issued to Knowledge Factory Partners, L.L.C. in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, because such issuance did not involve a public offering. On June 18, 1997, the Company completed the acquisition (the "Merger") of ClariNet Communications Corp. ("ClariNet") through a subsidiary merger whereby a wholly-owned subisidiary of the Company was merged with and into ClariNet, with ClariNet continuing as the surviving corporation and a wholly-owned subsidiary of the Company. As consideration for the acquisition, the Company issued approximately 1,475,000 shares of Common Stock to the ClariNet shareholders on June 18, 1997 in exchange for all of the outstanding shares of ClariNet Common Stock (including approximately 138,512 shares of Company Common Stock reserved for issuance upon exercise of outstanding ClariNet stock options assumed by the Company in the Merger). The shares of Company Common Stock were issued to the shareholders of ClariNet in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, because such issuance did not involve a public offering. In connection with the Merger, the Company also entered into a fee payment agreement (the "Fee Payment Agreement") dated as of June 13, 1997 with Broadview Associates ("Broadview") and ClariNet, pursuant to which the Company agreed to assume ClariNet's obligation to pay Broadview $500,000 (the "Broadview Fee") as full payment for all services provided by Broadview in connection with the Merger. The Broadview Fee is payable in cash or Individual Common Stock in Individual's discretion, subject to the terms and conditions of the Fee Payment Agreement. Pursuant to the terms of the Fee Payment Agreement, the Company issued to Broadview 100,000 shares of Company Common Stock upon the consummation of the Merger on June 18, 1997 as a downpayment on the Broadview Fee. The number of such shares of Company Common Stock, if any, to be retained by Broadview as payment for the Broadview Fee is subject to adjustment in accordance with the terms of the Fee Payment Agreement. The shares of Company Common Stock were issued to Broadview Associates in reliance upon the exemption from registration provided by Section 4(2) of the Securities Act of 1933, as amended, because such issuance did not involve a public offering. - ------ Item 4. Submission of Matters to a Vote of Security Holders - ------- --------------------------------------------------- (a) The Annual Meeting of Stockholders of the Company was held on May 22, 1997 pursuant to the Notice of Annual Meeting of Stockholders dated April 17, 1997. (b) Jeffery S. Galt and Marino R. Polestra were elected as Class I Directors of the Company for a three-year term. The terms of office of the following directors continued after the meeting: Michael E. Kolowich, Joseph A. Amram, James D. Daniell, William A. Devereaux, Elon Kohlberg and Daniel Rosen. (c) (i) The first matter voted upon was the proposal to elect Jeffery S. Galt and Marino R. Polestra to serve as Class I Directors of the Company, each to serve a three (3) year term and until his successor is duly elected and qualified or until his earlier resignation or removal: Nominee Votes For Votes Withheld Abstained ------- --------- -------------- --------- Jeffery S. Galt 12,796,435 27,501 0 Marino R. Polestra 12,772,743 51,193 0 (ii) The second matter voted upon was the proposal to ratify an amendment of the Company's Amended and Restated 1989 Stock Option Plan, increasing the number of shares of Common Stock of the Company authorized for issuance thereunder from 3,500,000 to 5,000,000. This matter was approved by a vote of 8,293,995 FOR, 1,813,630 AGAINST, 360,176 ABSTAINING and 2,356,135 BROKER NON-VOTES. (iii) The third and final matter voted upon was the proposal to ratify the selection of Coopers & Lybrand L.L.P. as independent auditors for the fiscal year ending December 31, 1997. This matter was approved by a vote of 12,387,271 FOR, 16,003 AGAINST, 420,662 ABSTAINING, and 0 BROKER NON-VOTES. Item 6. Exhibits and Reports on Form 8-K - -------- ------------------------------------- (a) Exhibits 11 Computation of Weighted Average Shares Used in Computing Loss Per Share Amounts Financial Data Schedule (b) Reports on Form 8-K On July 3, 1997, the Company filed a Current Report on Form 8-K with the Securities and Exchange Commission, disclosing under Item 2 the acquisition of ClariNet Communications Corp. by means of a subsidiary merger. No financial statements were required to be filed as part of this Report. 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. Individual, Inc. Date: August 8, 1997 By: /s/Michael E. Kolowich ------------------------ Michael E. Kolowich Chariman of the Board, President and Chief Executive Officer and Director (Principal Executive Officer) By: /s/Robert L. Lentz -------------------- Robert L. Lentz Senior Vice President, Finance and Administration, Chief Financial Officer, Treasurer and Secretary (Principal Financial and Accounting Officer) EXHIBIT INDEX INDIVIDUAL, INC.
Exhibit Number Description Page - -------------- ------------------------------------------ ---- 11 Computation of Weighted Average Shares Used in Computing Loss Per Share Amounts 20 Financial Data Schedule. . . . . . . . . 21
EX-11 2 COMPUTATION OF EPS 20 INDIVIDUAL, INC. Exhibit 11 COMPUTATION OF WEIGHTED AVERAGE SHARES USED IN COMPUTING LOSS PER SHARE AMOUNTS
Primary Fully Diluted Supplemental Type of Security Shares Shares Shares (1) - ------------------------------------------------------------------ -------------- -------------- ------------- FOR THE THREE MONTHS ENDED JUNE 30, 1996: Common stock less shares held in treasury, beginning of period. 13,264,725 13,264,725 13,264,725 Weighted average common stock issued during the period. . . . . 466,468 466,468 466,468 Weighted average treasury stock repurchased during the period . (404) (404) (404) -------------- -------------- ------------- Weighted average shares of common stock outstanding. . . . 13,730,789 13,730,789 13,730,789 ============== ============== ============= Net loss per common share. . . . . . . . . . . . . . . . . ($2.78) ($2.78) ($2.78) ============== ============== ============= FOR THE THREE MONTHS ENDED JUNE 30, 1997: Common stock less shares held in treasury, beginning of period. 15,946,582 15,946,582 15,946,582 Weighted average common stock issued during the period. . . . . 29,608 29,608 29,608 Weighted average shares of common stock outstanding . . . . . 15,976,190 15,976,190 15,976,190 ============== ============== ============= Net loss per common share . . . . . . . . . . . . . . . . . . ($0.37) ($0.37) ($0.37) ============== ============== ============= Primary Fully Diluted Supplemental Type of Security . . . . . . . . . . . . . . . . . . . . . . . . . Shares Shares Shares (1) - ------------------------------------------------------------------ -------------- -------------- ------------- FOR THE SIX MONTHS ENDED JUNE 30, 1996: Common stock less shares held in treasury, beginning of period. 2,813,035 2,813,035 2,813,035 Weighted average common stock issued during the period. . . . . 1,901,327 1,901,327 1,901,327 Weighted average treasury stock repurchased during the period . (801) (801) (801) Conversion of preferred stock and redeemable preferred stock into common stock (1). . . . . . . . . . . . . . . . . . . . 4,273,470 4,273,470 7,625,210 -------------- -------------- ------------- Weighted average shares of common stock outstanding. . . . 8,987,030 8,987,030 12,338,771 ============== ============== ============= Net loss per common share. . . . . . . . . . . . . . . . . ($4.51) ($4.51) ($3.29) ============== ============== ============= FOR THE SIX MONTHS ENDED JUNE 30, 1997: Common stock less shares held in treasury, beginning of period. 15,689,633 15,689,633 15,689,633 Weighted average common stock issued during the period. . . . . 228,016 228,016 228,016 Weighted average shares of common stock outstanding . . . . . 15,917,649 15,917,649 15,917,649 ============== ============== ============= Net loss per common share . . . . . . . . . . . . . . . . . . ($0.67) ($0.67) ($0.67) ============== ============== ============= (1) Upon completion of the public offering on March 20, 1996, the redeemable preferred stock and preferred stock converted to 7,625,210 shares of common stock. Accordingly, the supplemental earnings per share calculation has assumed the conversion of all shares of redeemable preferred stock and preferred stock, effected for the 3-for-2 split, at the beginning of each period presented.
EX-27 3
5 3-MOS 6-MOS DEC-31-1997 DEC-31-1997 APR-01-1997 JAN-01-1997 JUN-30-1997 JUN-30-1997 0 16,014,232 0 9,125,577 0 7,274,660 0 0 0 0 0 33,130,278 0 4,328,851 0 0 0 37,934,960 0 25,594,223 0 0 0 0 0 0 0 147,836 0 10,498,277 0 37,934,960 0 0 8,806,575 17,575,721 4,238,804 8,832,832 11,042,099 20,313,753 0 0 0 0 161,443 854,160 0 0 0 0 0 0 0 0 0 0 0 0 (6,150,930) (10,974,946) $(.39) $(.69) 0 0
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