-----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, WZQ6CF+2V+suf1ZjfA60amZrwptUlVVy2IOp6xLDQa+tIcrNP13rBpWk9JM/OUbr 6fTM0co/gmD6ZIGBVkmgWg== 0001002536-97-000066.txt : 19971113 0001002536-97-000066.hdr.sgml : 19971113 ACCESSION NUMBER: 0001002536-97-000066 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 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: SEC FILE NUMBER: 000-27734 FILM NUMBER: 97716578 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 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 September 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------------------------------------------------------- 04-303-6959 - ----------- (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 8 New England Executive Park West, Burlington, 01803 - ----- (Address of principal executive offices) (Zip Code) (781) 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 September 30, 1997, 16,333,424 shares of Common Stock, $.01 par value per share, were outstanding. ------ Individual, Inc. Form 10-Q For the Quarter Ended September 30, 1997 Index
Page # ------------------------------------------------- Facing Sheet. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 PART I - UNAUDITED FINANCIAL INFORMATION - ------------------------------------------------------------------- Item 1. Consolidated Financial Statements Consolidated Balance Sheets September 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 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)
SEPTEMBER 30, DECEMBER 31, 1997 1996 --------------- -------------- ASSETS CURRENT ASSETS: CASH AND CASH EQUIVALENTS . . . . . . . . . . . . . . . . $ 9,920,140 $ 22,117,834 INVESTMENTS IN MARKETABLE SECURITIES. . . . . . . . . . . 8,678,763 8,448,306 ACCOUNTS RECEIVABLE, NET. . . . . . . . . . . . . . . . . 6,063,360 11,950,638 DEFERRED INCOME TAXES . . . . . . . . . . . . . . . . . . - 35,000 PREPAID EXPENSES. . . . . . . . . . . . . . . . . . . . . 1,925,412 562,063 --------------- -------------- TOTAL CURRENT ASSETS. . . . . . . . . . . . . . . . . . 26,587,675 43,113,841 PROPERTY AND EQUIPMENT, NET. . . . . . . . . . . . . . . . . 4,027,349 4,333,580 OTHER ASSETS, NET. . . . . . . . . . . . . . . . . . . . . . 2,182,425 952,388 --------------- -------------- TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . $ 32,797,449 $ 48,399,809 =============== ============== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: ACCOUNTS PAYABLE. . . . . . . . . . . . . . . . . . . . . $ 2,668,248 $ 4,894,036 ACCRUED ROYALTIES . . . . . . . . . . . . . . . . . . . . 1,815,918 1,610,829 ACCRUED EXPENSES. . . . . . . . . . . . . . . . . . . . . 7,112,415 3,955,481 DEFERRED REVENUE. . . . . . . . . . . . . . . . . . . . . 10,509,802 14,694,856 EQUIPMENT FINANCING LOANS AND NOTES PAYABLE . . . . . . . 1,225,708 1,074,055 --------------- -------------- TOTAL CURRENT LIABILITIES . . . . . . . . . . . . . . . 23,332,091 26,229,257 OTHER LONG TERM LIABILITIES. . . . . . . . . . . . . . . . . 1,234,601 1,540,375 COMMITMENTS AND CONTINGENCIES (NOTE 6) STOCKHOLDERS' EQUITY: COMMON STOCK, $0.01 PAR VALUE; 25,000,000 SHARES AUTHORIZED, 16,333,424 AND 15,722,498 SHARES ISSUED AND OUTSTANDING IN 1997 AND 1996, RESPECTIVELY. 163,334 157,225 ADDITIONAL PAID IN CAPITAL. . . . . . . . . . . . . . . . 91,515,235 89,902,258 CUMULATIVE TRANSLATION ADJUSTMENT . . . . . . . . . . . . 11,585 70,149 UNREALIZED GAINS ON MARKETABLE SECURITIES . . . . . . . . 221,455 125,475 ACCUMULATED DEFICIT . . . . . . . . . . . . . . . . . . . (83,680,852) (69,594,253) LESS 32,865 SHARES HELD IN TREASURY (AT COST) AT DECEMBER 31, 1996 . . . . . . . . . . . . - (30,677) --------------- -------------- TOTAL STOCKHOLDERS' EQUITY. . . . . . . . . . . . . . 8,230,757 20,630,177 --------------- -------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY. . . . . . . $ 32,797,449 $ 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 NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 1997 1996 1997 1996 ------------- ------------- -------------- -------------- REVENUE . . . . . . . . . . . . . $ 8,853,897 $ 7,221,310 $ 26,429,619 $ 19,771,334 COST OF REVENUE . . . . . . . . . 4,266,171 3,158,912 13,099,003 8,706,997 ------------- ------------- -------------- -------------- GROSS MARGIN. . . . . . . . . . . 4,587,726 4,062,398 13,330,616 11,064,337 OPERATING EXPENSES: SALES AND MARKETING. . . . . . 1,600,732 1,620,001 5,729,019 4,329,508 NEW SUBSCRIBER ACQUISITION . . 2,689,703 2,173,862 8,887,627 6,353,491 PRODUCT DEVELOPMENT. . . . . . 2,205,924 1,476,922 5,449,379 3,523,364 GENERAL AND ADMINISTRATIVE . . 743,408 1,435,163 2,786,773 3,464,945 ACQUISITIONS AND OTHER CHARGES 314,741 1,261,369 5,015,463 37,481,786 ------------- ------------- -------------- -------------- TOTAL OPERATING EXPENSES. . 7,554,508 7,967,317 27,868,261 55,153,094 ------------- ------------- -------------- -------------- LOSS FROM OPERATIONS. . . . . . . (2,966,782) (3,904,919) (14,537,645) (44,088,757) INTEREST INCOME AND OTHER, NET. . 332,611 (200,579) 1,186,770 272,260 INTEREST EXPENSE. . . . . . . . . (174,157) (68,462) (432,399) (896,848) NET LOSS. . . . . . . . . . . . . ($2,808,328) ($4,173,960) ($13,783,274) ($44,713,345) ============= ============= ============== ============== NET LOSS PER COMMON SHARE . . . . ($0.17) ($0.27) ($0.86) ($3.34) ============= ============= ============== ============== WEIGHTED AVERAGE COMMON SHARES OUTSTANDING . . . . . . 16,197,277 15,395,949 16,010,858 13,374,646 ============= ============= ============== ============== THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
INDIVIDUAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SEPTEMBER 30, 1997 1996 -------------- -------------- CASH FLOWS FROM OPERATING ACTIVITIES: NET LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . ($13,783,274) ($44,713,345) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES: DEPRECIATION AND AMORTIZATION. . . . . . . . . . . . . . . . . . 1,956,204 951,962 LOSS ON DISPOSAL OF PROPERTY AND EQUIPMENT . . . . . . . . . . . 437,824 45,926 PROVISION FOR DOUBTFUL ACCOUNTS. . . . . . . . . . . . . . . . . - 73,649 COMPENSATION RECOGNIZED UNDER EMPLOYEE STOCK PLANS . . . . . . . - 27,981 PURCHASED INCOMPLETE TECHNOLOGY. . . . . . . . . . . . . . . . . - 35,563,750 DECREASE IN RETAINED EARNINGS FROM CHANGING FISCAL YEAR OF COMBINING ENTERPRISE . . . . . . . . . . . . . . . . . . (225,361) LOSS ON JOINT VENTURE. . . . . . . . . . . . . . . . . . . . . . - 1,945,966 CHANGES IN OPERATING ASSETS AND LIABILITIES: DECREASE IN ACCOUNTS RECEIVABLE . . . . . . . . . . . . . . 5,887,278 1,157,188 INCREASE IN PREPAID EXPENSES. . . . . . . . . . . . . . . . (1,328,427) (339,317) INCREASE IN OTHER ASSETS. . . . . . . . . . . . . . . . . . (1,223,613) (82,464) INCREASE IN ACCOUNTS PAYABLE AND ACCRUED EXPENSES . . . . . 1,136,309 332,947 (DECREASE)/INCREASE IN OTHER LONG TERM LIABILITIES. . . . . (500,004) 324,226 DECREASE IN DEFERRED REVENUE. . . . . . . . . . . . . . . . (4,185,054) (713,296) -------------- -------------- NET CASH USED IN OPERATING ACTIVITIES: . . . . . . . . . . . . . (11,828,118) (5,424,827) -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES: ADDITIONS TO PROPERTY AND EQUIPMENT. . . . . . . . . . . . . . . (1,793,694) (1,739,377) INVESTMENT IN JOINT VENTURE. . . . . . . . . . . . . . . . . . . - (1,883,417) CASH (PAID FOR)/ACQUIRED FROM ACQUISTION . . . . . . . . . . . . (280,000) 1,010,354 INVESTMENTS IN MARKETABLE SECURITIES . . . . . . . . . . . . . . (155,000) (6,992,450) -------------- -------------- NET CASH USED IN INVESTING ACTIVITIES: . . . . . . . . . . . . . (2,228,694) (9,604,890) -------------- -------------- CASH FLOWS FROM FINANCING ACTIVITIES: PRINCIPAL REPAYMENTS ON LOANS . . . . . . . . . . . . . . . . . (67,047) (91,649) INCREASE (DECREASE) IN EQUIPMENT LOAN, NET. . . . . . . . . . . 412,929 (20,220) PROCEEDS FROM ISSUANCE OF COMMON STOCK, NET OF RELATED EXPENSES. 1,652,800 34,899,385 PAYMENT ON SENIOR SUBORDINATED NOTES . . . . . . . . . . . . . . - (10,000,000) PAYMENT TO DISSENTER SHAREHOLDER . . . . . . . . . . . . . . . . (81,000) - -------------- -------------- NET CASH PROVIDED BY FINANCING ACTIVITIES. . . . . . . . . . . . 1,917,682 24,787,516 -------------- -------------- EFFECT OF EXCHANGE RATE ON CASH. . . . . . . . . . . . . . . . . (58,564) 14,441 -------------- -------------- NET INCREASE IN CASH AND CASH EQUIVALENTS. . . . . . . . . . . . (12,197,694) 9,772,240 CASH AND CASH EQUIVALENTS AT THE BEGINNING OF PERIOD . . . . . . 22,117,834 17,920,924 -------------- -------------- CASH AND CASH EQUIVALENTS AT THE END OF PERIOD . . . . . . . . . $ 9,920,140 $ 27,693,164 ============== ============== SUPPLEMENTAL CASH FLOW INFORMATION: INTEREST PAID . . . . . . . . . . . . . . . . . . . . . . . . $ 159,206 $ 782,601 ============== ============== NON CASH TRANSACTIONS: ISSUANCE OF COMMON STOCK IN CONNECTION WITH ACQUISITION. . . $ 500,000 - ============== ============== ISSUANCE OF COMMON STOCK IN EXCHANGE FOR CONSULTING SERVICES $ 400,000 ============== 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. Estimates and assumptions in these financial statements relate to, among other items, valuation of deferred tax assets, the allowance for doubtful accounts and accrued liabilities. 3. Reclassification of Amounts Certain amounts in the financial statements for the three months and the nine months ended September 30, 1996 have been reclassified to conform to the presentation for the three months and the nine months ended September 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. 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 is included in acquisitions and other charges. 6. Commitments and Contingencies Under the merger agreement with FreeLoader, and in settlement of all claims related to this agreement, the Company is required to pay a one-time payment of $1,345,000 in October 1997 to the two founders of Freeloader. 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 February 1998 through April 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 September 30, 1997, the fair value of the stock is approximately $3,269,025 below the guaranteed value. The Company has letters of credit outstanding of approximately $4,740,405 in connection with the payment of this amount by the Company. The Company has been named as a defendant in a putative federal securities class action lawsuit filed on November 13, 1996 in the United States District Court for the District of Massachusetts. The lawsuit was filed on behalf of an alleged class of purchasers of the Company's common stock during the period from March 15, 1996 through July 24, 1996. The complaint filed in the lawsuit also names as defendants, among others, certain of the Company's current and former directors and officers, including Joseph A. Amram, the Company's former Chief Executive Officer, as well as the three co-managing underwriters of the Company's IPO. The complaint alleges, among other things, that the defendants made misstatements, or failed to make statements, to the investing public in the IPO Prospectus, Registration Statement, as well as in the subsequent public disclosures, relating to the alleged existence of disputes between Joseph A. Amram and the Company. The plaintiffs seek damages, including costs and expenses, in an unspecified amount, among other relief. The Company believes that the allegations contained in the complaint are without merit and intends to defend vigorously against all such claims. The ultimate claims payable under these actions, if any, are neither probable nor estimable. 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. 8. Netscape Agreement In September 1997 the Company was named by Netscape Communications Corp. as the exclusive provider of business information services to the Netscape Netcenter On-line Business Service. The agreement provides the Company the opportunity to gain traffic for its NewsPage service from the Netscape home page, one of the highest traffic page on the world wide web, and to lower the Company's historical cost of acquiring new subscribers. As part of the agreement the Company paid Netscape an upfront license fee covering the 27 month period of the contract. These fees are included in prepaid expenses and other assets. There are no guarantees or traffic commitments from Netscape and there are no assurances that the fees paid to Netscape will be realized from future revenue generated from Netcenter traffic. 9. Subsequent Event On November 3, 1997, Desktop Data, Inc. and Individual, Inc. announced a definitive agreement to merge and form a new company, NewsEDGE Corporation. The merger calls for shares of Desktop Data common stock to be exchanged for all outstanding shares, options and warrants of Individual on the basis of one share of Desktop Data common stock for each two shares of Individual common stock. The transaction will be accounted for as a pooling of interests. Completion of the transaction is subject to customary conditions, including approval by the stockholders of both Desktop Data and Individual. The board members and key management of each company have agreed to vote their shares in favor of the merger. Furthermore, each company has granted the other an option to purchase newly issued shares equal to approximately 20 percent of the current outstanding stock, exercisable upon certain events. The merger is expected to close in the first quarter of 1998, and at that time, Desktop Data will be renamed NewsEDGE Corporation. 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. On November 3, 1997 the Company announced that it signed a definitive agreement to merge with Desktop Data Corporation to form a new company, NewsEDGE Corporation. The merger is expected to be accounted for as a pooling of interests and each shareholder of Individual will receive one share of Desktop Data common stock for every two shares of Individual common stock. The merger is subject to shareholder approval and is expected to be consummated in the first quarter of 1998. The Company's revenue is derived from two classes of services: enterprise services and single-user services. 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 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. Revenue from Clari-News, a news service of Clarinet, acquired in June 1997 (described below), is included in both enterprise services and single-user services. 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 the Company's results of operations was incurred in the shutdown, as the majority of the purchase price was previously 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. This amortization expense 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, a 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 ("ISP's"), 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. Revenue from subscription fees earned from ISP's and educational institutions are included in single user revenue and subscription fees from corporations are included in enterprise revenue. 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 239 full-time employees on September 30, 1997, up from 214 on December 31, 1996, and up from 157 and 96 on December 31, 1995 and 1994, respectively. 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. In September 1997 the Company was named by Netscape Communications Corp. as the exclusive provider of business information services to the Netscape Netcenter On-line Business Service. The agreement provides the Company the opportunity to gain traffic for its NewsPage service from the Netscape home page, one of the highest traffic page on the world wide web, and to lower the Company's historical cost of acquiring new subscribers. As part of the agreement the Company paid Netscape an upfront license fee covering the 27 month period of the contract. These fees are included in prepaid expenses and other assets. There is no guarantees or traffic commitments from Netscape and there are no assurances that the fees paid to Netscape will be realized from future revenue generated from Netcenter traffic. On November 3, 1997, the Company announced that it has entered into a definitive merger agreement with Desktop Data, Inc., subject to approval of shareholders of both companies. Mergers involve potential risks, including difficulties in assimilating the 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, the potential loss of key employees, and the potential for creating confusion and uncertainties with customers and prospects, thereby impacting customers' purchase decisions. 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. 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 personnel, 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 and retention of 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 and training 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 September 30, Nine months ended September 30, 1997 1996 1997 1996 Revenue. . . . . . . . . . . . . . . . . . 100% 100% 100% 100% Cost of Revenue. . . . . . . . . . . . . . 48% 44% 50% 44% ------- -------- ------ ---- Gross Margin . . . . . . . . . . . . . . . 52% 56% 50% 56% Operating expenses: Sales and marketing. . . . . . . . . . . . 18% 22% 22% 22% New subscriber acquisition . . . . . . . . 30% 30% 33% 32% Product development. . . . . . . . . . . . 25% 20% 21% 18% General and administrative . . . . . . . . 09% 20% 10% 17% Mergers, acquisitions and related charges. 04% 18% 19% 190% ------- ------- -------- ------- Total operating expense. . . . . . . . . 86% 110% 105% 279% Loss from operations . . . . . . . . . . . (34)% ( 54)% (55%) (223)% Interest and other income (expense), net . 2% (4)% 3% (3)% ------- -------- ------- ------- Net loss . . . . . . . . . . . . . . . . . (32)% (58)% (52%) (226)% ========= ========= ========== ======
Three months and nine months ended September 30, 1997 and 1996 - ------------------------------------------------------------------------ Revenue. Revenues increased 23% from $7,221,000 for the three months ended September 30, 1996 to $8,854,000 for the three months ended September 30, 1997. Revenues increased 34% from $19,771,000 to $26,430,000 in the nine months ended September 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 2,170,000 at September 30, 1997, an increase of 18% over the number of users at September 30, 1996. In the third quarter of fiscal 1997, revenue from the Company's enterprise (First!, Hoover and ClariNews sold to corporations) products was $5,886,000 up from $4,498,000 for the third quarter of fiscal 1996. This increase of 31% 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 nine months ended September 30, 1997, enterprise revenue grew to $17,164,000,an increase of 41% over the $12,206,000 of revenue for the same period in 1996. During the nine months ended September 30, 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 31 percent increase in the average size of a First! account during the first nine 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 $19,000. 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 third quarter of fiscal 1997, revenue from single user services (NewsPage, Heads Up and ClariNews) grew by 9% to $2,968,000, up from $2,724,000 for the third 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, and reduction in subscription fees received from ISP's for ClariNews. The reduction in revenue from ClariNews is the combination in both the number of ISP customers subscribing to the service and a reduction to lower premium service from certain ISP's. To offset this decline, Clarinet in future quarters will be incorporating advertising into the ClariNews service to compliment its subsctiption revenue and, with the objective of thereby reducing the ISP's cost which is important to the ISP's business model. The Company also expects the trend of declining revenue from HeadsUp to continue in the future. For the nine months ended September 30, 1997, single user revenue grew to $9,266,000, an increase of 22% over the $7,566,000 of revenue for the same period in 1996. Cost of revenue. Cost of revenue was $4,266,000 for the three months ended September 30, 1997, as compared to $3,159,000 for the same period in 1996, or an increase of 35%. Cost of revenue was $13,099,000 for the nine months ended September 30, 1997, as compared to $8,707,000 for the same period in 1996, or an increase of 50%. Gross margin decreased from 56% to 52% for the three months ended September 30, 1997, and decreased from 56% to 50% for the nine months ended September 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 the dollar amount of many of these costs to remain fairly constant throughout the rest of fiscal 1997 and the first half of fiscal 1998, which would improve the gross margin percent if revenues continue to grow. Sales and marketing. Sales and marketing expenses decreased 1% to $1,601,000 for the three months ended September 30, 1997, down from $1,620,000 for the same period of 1996. Sales and marketing expenses increased by 32% to 5,729,000 for the nine months ended September 30, 1997, up from $4,330,000 for the same period of 1996. The nine month increase is primarily due to additional personnel for product management and advertising sales related to selling advertising on NewsPage, additional sales personnel for ClariNet, subscription and advertising royalties paid to NewsPage distribution partners, and increased expenses related to renewing First! Contracts. New subscriber acquisition. New subscriber acquisition expenses increased 24% to $2,690,000 for the three months ended September 30, 1997 from $2,174,000 for the same period in 1996. New subscriber acquisition expenses increased 40% from $6,353,000 to $8,888,000 for the nine months ended September 30, 1996 and September 30, 1997 respectively. The increase is primarily due to costs incurred to acquire NewsPage users, including Web site advertising, radio advertising, and direct mailings. In the third quarter of 1997, The Company reduced its spending on this type of advertising in favor of a large alliance-based approach that leverages strategic distribution partners, such as Netscape Netcenter agreement, to grow the NewsPage subscriber base. The Netscape service is expected to commence in the fourth quarter of 1997 and none of the license fees paid to Netscape as part of this agreement has been included in expenses in the period ended September 30. Also, contributing to the year to year increase are the expenses related to additional direct sales personnel and sales management and minimum fees paid to Dow Jones related to sales commitments for the inclusion of certain Dow Jones content, sold as an add-on service to the First! service. Product development. Product development increased 49% to $2,206,000 for the three months ended September 30, 1997, up from $1,477,000 for the same period in 1996. Product development expenses increased 55% to $5,449,000 for the nine months ended September 30, 1997, up from $3,523,000 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 48% to $743,000 for the three months ended September 30, 1997, down from $1,435,000 for the same period of 1996. General and administrative expenses decreased 20% to $2,787,000 for the nine months ended September 30, 1997, down from $3,465,000 for the same period of 1996. The decrease in the third quarter of 1997 is due in part to the inclusion in 1996 of severance payments and recruiting expenses for additional management personnel as well as legal fees and deferred compensation charges incurred as a result of acquisitions. Acquisitions and other charges. Acquisitions and other charges were $315,000 for the three months ended September 30, 1997, and $5,015,000 for the nine months ended September 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 nine months ended September 30, 1996 were $37,482,000 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 266% to $333,000 for the three months ended September 30, 1997, up from ($201,000) for the same period of 1996. Interest income and other, net increased 336% to $1,187,000 for the nine months ended September 30, 1997, up from $272,000 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 156% to $174,000 for the three months ended September 30, 1997, up from $68,000 for the same period of 1996. Interest expense decreased 52% to $432,000 for the nine months ended September 30, 1997, down from $897,000 for the same period of 1996. The increase for the three months ended September 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 nine 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 September 30, 1997 was $18,599,000, as compared to $30,566,000 at December 31, 1996. Net cash used in operations was $11,828,000 for the nine months ended September 30, 1997, as compared with $5,425,000 for the same period in 1996. The decrease in cash is due to increased operating losses incurred in the first three quarters of 1997, a decrease in deferred revenue of $4,185,000 in the first three quarters of 1997, and the payment in September 1997 to Netscape of the prepaid license fee. Net cash used in investing activities was $2,229,000 in the nine months ended September 30, 1997 as compared with $9,605,000 for the same period of 1996. In the first three quarters of 1997, only $155,000 was used to purchase marketable securities, primarily from U.S. government agencies, down from $6,992,000 used during the same period a year ago. Net cash provided by financing activities was $1,918,000 for the nine months ended September 30, 1997, as compared to $24,788,000 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 September 30, 1997 the Company had approximately $1,977,000 outstanding in connection with these obligations and had an additional $699,000 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 September 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. 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. The payment to the FreeLoader founders are due under the terms of the FreeLoader purchase agreement, as amended, with approximately $1.3 million due in October 1997 and the balance in the period from February 1998 through April 1998. The payment in 1998 could be lower depending on the value of the Company's common stock at that time 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. Item 2. Changes in Securities - -------- ----------------------- In connection with the performance by The Parthenon Group of certain consulting services for the Company, the Company issued 75,294 shares of Common Stock to Parthenon. The shares of Company Common Stock were issued to Parthenon 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 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 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: November 13, 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. Lent -------------------- 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 19 Financial Data Schedule. . . . . . . . . 20
EX-11 2 COMPUTATION OF EPS 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 SEPTEMBER 30, 1996: Common stock less shares held in treasury, beginning of period. 15,333,896 15,333,896 15,333,896 Weighted average common stock issued during the period. . . . . 62,053 62,053 62,053 Weighted average treasury stock repurchased during the period . 0 0 0 -------------- -------------- ------------- Weighted average shares of common stock outstanding. . . . 15,395,949 15,395,949 15,395,949 ============== ============== ============= Net loss per common share. . . . . . . . . . . . . . . . . ($0.27) ($0.27) ($0.27) ============== ============== ============= FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1997: Common stock less shares held in treasury, beginning of period. 16,092,129 16,092,129 16,092,129 Weighted average common stock issued during the period. . . . . 105,148 105,148 105,148 Weighted average shares of common stock outstanding . . . . . 16,197,277 16,197,277 16,197,277 ============== ============== ============= Net loss per common share . . . . . . . . . . . . . . . . . . ($0.17) ($0.17) ($0.17) ============== ============== ============= PRIMARY. . . . . . . . . . . . . . . . . . . . . . . . . . . . FULLY DILUTED SUPPLEMENTAL Type of Security . . . . . . . . . . . . . . . . . . . . . . . . . SHARES SHARES SHARES (1) - ------------------------------------------------------------------ -------------- -------------- ------------- FOR THE NINE MONTHS ENDED SEPTEMBER 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. . . . . 2,937,490 2,937,490 2,937,490 Weighted average treasury stock repurchased during the period . (1,089) (1,089) (1,089) Conversion of preferred stock and redeemable preferred stock into common stock (1). . . . . . . . . . . . . . . . . . . . 5,390,716 5,390,716 7,625,210 -------------- -------------- ------------- Weighted average shares of common stock outstanding. . . . 11,140,152 11,140,152 13,374,646 ============== ============== ============= Net loss per common share. . . . . . . . . . . . . . . . . ($4.01) ($4.01) ($3.34) ============== ============== ============= FOR THE NINE MONTHS ENDED SEPTEMBER 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. . . . . 321,225 321,225 321,225 Weighted average shares of common stock outstanding . . . . . 16,010,858 16,010,858 16,010,858 ============== ============== ============= Net loss per common share . . . . . . . . . . . . . . . . . . ($0.86) ($0.86) ($0.86) ============== ============== ============= (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 9-MOS DEC-31-1997 DEC-31-1997 JUL-01-1997 JAN-01-1997 SEP-30-1997 SEP-30-1997 0 9,920,140 0 8,678,763 0 6,063,360 0 0 0 0 0 26,587,675 0 4,027,349 0 0 0 32,797,449 0 23,332,091 0 0 0 0 0 0 0 163,334 0 8,067,423 0 32,797,449 0 0 8,853,897 26,429,619 4,266,171 13,099,003 7,554,508 27,868,261 0 0 0 0 174,157 432,399 0 0 0 0 0 0 0 0 0 0 0 0 (2,808,328) (13,783,274) (0.17) (0.86) 0 0
-----END PRIVACY-ENHANCED MESSAGE-----