Delaware | 0-28082 | |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) |
50 Enterprise Center Middletown, RI | 02842 | |
(Address of Principal Executive Offices) | (Zip Code) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.14d-2(b)) |
(i) | Unaudited Pro Forma Combined Consolidated Statement of Operations for the six months ended June 30, 2014; |
(ii) | Unaudited Pro Forma Combined Consolidated Statement of Operations for the year ended December 31, 2013; |
(iii) | Unaudited Pro Forma Combined Consolidated Balance Sheet as of June 30, 2014; and |
(iv) | Notes to Unaudited Pro Forma Combined Consolidated Financial Information. |
23.1 | Consent of Grant Thornton UK LLP |
99.1 | Videotel's Audited Combined Financial Statements as of December 31, 2013 and 2012 and for the years then ended |
99.2 | Unaudited Pro Forma Combined Consolidated Financial Information |
KVH INDUSTRIES, INC. | ||
Date: September 17, 2014 | BY: | /s/ PETER A. RENDALL |
Peter A. Rendall | ||
Chief Financial Officer |
23.1 | Consent of Grant Thornton UK LLP |
99.1 | Videotel's Audited Combined Financial Statements as of December 31, 2013 and 2012 and for the years then ended |
99.2 | Unaudited Pro Forma Combined Consolidated Financial Information |
SUPER DRAGON LIMITED AND VIDEOTEL MARINE ASIA LIMITED GROUP | |||||||
COMBINED BALANCE SHEETS | |||||||
(in thousands, except share data) | |||||||
As of | |||||||
December 31, | |||||||
2013 | 2012 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash | £ | 9,353 | £ | 7,303 | |||
Accounts receivable, net of allowance for doubtful accounts of £300 and £566, respectively | 3,453 | 2,811 | |||||
Prepaid expenses and other current assets | 87 | 83 | |||||
Total current assets | 12,893 | 10,197 | |||||
Property and equipment, net | 2,647 | 2,039 | |||||
Film production costs, net | 790 | 692 | |||||
Capitalized software, net | 383 | 340 | |||||
Acquired intangible assets, net | 1,488 | 2,335 | |||||
Deferred tax asset | 866 | 768 | |||||
Total assets | £ | 19,067 | £ | 16,371 | |||
LIABILITIES AND STOCKHOLDER'S EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | £ | 1,274 | £ | 1,221 | |||
Accrued expenses | 1,021 | 880 | |||||
Accrued taxes | 1,204 | 1,137 | |||||
Deferred revenue | 1,805 | 1,073 | |||||
Stockholder loan | 2,400 | 2,400 | |||||
Dividend payable | 4,100 | — | |||||
Total current liabilities | 11,804 | 6,711 | |||||
Other non-current liabilities | 737 | 635 | |||||
Liability for uncertain tax positions | 2,202 | 2,296 | |||||
Total liabilities | 14,743 | 9,642 | |||||
Commitments and contingencies (note 5) | |||||||
Stockholder's equity: | |||||||
Super Dragon Limited common stock, £0.09 par value. Authorized 10,000 shares; 100 shares issued outstanding. | — | — | |||||
Videotel Marine Asia Limited common stock, £0.07 par value. Authorized 10,000 shares; 100 shares issued and outstanding. | — | — | |||||
Accumulated earnings | 4,324 | 6,729 | |||||
Total stockholder's equity | 4,324 | 6,729 | |||||
Total liabilities and stockholder's equity | £ | 19,067 | £ | 16,371 | |||
See accompanying Notes to Combined Financial Statements. |
SUPER DRAGON LIMITED AND VIDEOTEL MARINE ASIA LIMITED GROUP | |||||||
COMBINED STATEMENTS OF OPERATIONS | |||||||
(in thousands) | |||||||
Years ended | |||||||
December 31, | |||||||
2013 | 2012 | ||||||
Revenue | £ | 13,422 | £ | 13,090 | |||
Costs and expenses: | |||||||
Cost of sales | 4,032 | 3,725 | |||||
Sales and marketing | 3,738 | 3,756 | |||||
General and administrative | 1,522 | 1,926 | |||||
Total costs and expenses | 9,292 | 9,407 | |||||
Income from operations | 4,130 | 3,683 | |||||
Other income, net | 480 | 317 | |||||
Income before income tax expense | 4,610 | 4,000 | |||||
Income tax expense | 965 | 1,090 | |||||
Net income | £ | 3,645 | £ | 2,910 | |||
See accompanying Notes to Combined Financial Statements. |
SUPER DRAGON LIMITED AND VIDEOTEL MARINE ASIA LIMITED GROUP | |||||||||||||||||||||
COMBINED STATEMENTS OF CHANGES IN STOCKHOLDER'S EQUITY | |||||||||||||||||||||
(in thousands, except share data) | |||||||||||||||||||||
Common Stock of Super Dragon Limited | Common Stock of Videotel Marine Asia Limited | Accumulated Earnings | Total Stockholder's Equity | ||||||||||||||||||
Shares | Amount | Shares | Amount | ||||||||||||||||||
Balance at December 31, 2011 | 100 | £ | — | 100 | £ | — | £ | 3,819 | £ | 3,819 | |||||||||||
Net income | — | — | — | — | 2,910 | 2,910 | |||||||||||||||
Balance at December 31, 2012 | 100 | £ | — | 100 | £ | — | £ | 6,729 | £ | 6,729 | |||||||||||
Net income | — | — | — | — | 3,645 | 3,645 | |||||||||||||||
Cash dividends declared - Super | |||||||||||||||||||||
Dragon Limited | — | — | — | — | (700 | ) | (700 | ) | |||||||||||||
Cash dividends declared - | |||||||||||||||||||||
Videotel Marine Asia Limited | — | — | — | — | (5,350 | ) | (5,350 | ) | |||||||||||||
Balance at December 31, 2013 | 100 | £ | — | 100 | £ | — | £ | 4,324 | £ | 4,324 | |||||||||||
See accompanying Notes to Combined Financial Statements. |
SUPER DRAGON LIMITED AND VIDEOTEL MARINE ASIA LIMITED GROUP | |||||||
COMBINED STATEMENTS OF CASH FLOWS | |||||||
(in thousands) | |||||||
Years ended | |||||||
December 31, | |||||||
2013 | 2012 | ||||||
Cash flows from operating activities: | |||||||
Net income | £ | 3,645 | £ | 2,910 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Allowance for doubtful accounts | 131 | 271 | |||||
Depreciation and amortization | 2,236 | 2,154 | |||||
Loss on disposals | 185 | 130 | |||||
Deferred taxes | (98 | ) | (249 | ) | |||
Change in operating assets and liabilities: | |||||||
Accounts receivable | (773 | ) | (103 | ) | |||
Prepaid expenses and other current assets | (4 | ) | 14 | ||||
Film production costs | (356 | ) | (294 | ) | |||
Accounts payable | (432 | ) | (356 | ) | |||
Accrued expenses | 97 | 229 | |||||
Accrued taxes | 67 | 7 | |||||
Deferred revenue | 732 | 403 | |||||
Other non-current liabilities | 102 | 127 | |||||
Liability for uncertain tax positions | (94 | ) | 238 | ||||
Net cash provided by operating activities | 5,438 | 5,481 | |||||
Cash flows from investing activities: | |||||||
Purchase of property and equipment, including internally developed software | (1,438 | ) | (1,220 | ) | |||
Net cash used in investing activities | (1,438 | ) | (1,220 | ) | |||
Cash flows from financing activities: | |||||||
Repayment of related party loan | — | (2,759 | ) | ||||
Dividends paid | (1,950 | ) | — | ||||
Net cash used in financing activities | (1,950 | ) | (2,759 | ) | |||
Net increase in cash | 2,050 | 1,502 | |||||
Cash, beginning of period | 7,303 | 5,801 | |||||
Cash, end of period | £ | 9,353 | £ | 7,303 | |||
Supplemental disclosure of noncash investing and financing activities: | |||||||
Cash paid for income taxes | £ | 1,162 | £ | 801 | |||
Changes in accounts payable and accrued expenses related to fixed asset additions | £ | 529 | £ | 557 | |||
See accompanying Notes to Combined Financial Statements. |
(1) | Summary of Significant Accounting Policies |
Legal Entity | Country of incorporation | Description |
Super Dragon Limited | Hong Kong | Holding Group of Videotel Marine International Limited, Videotel Consultants & Rentals Limited, Videotel Training Services and Videotel Limited |
Videotel Marine Asia Limited | Hong Kong | Holding Group of Videotel PTE Limited, Distribution of marine training material |
Videotel Training Services Limited | England and Wales | Subsidiary of Super Dragon Limited, Supply of training services |
Videotel Consultants & Rentals Limited | England and Wales | Subsidiary of Super Dragon Limited, Production and distribution of marine training material |
Videotel Marine International Limited | England and Wales | Subsidiary of Super Dragon Limited, Distribution of marine training material |
Videotel Limited | England and Wales | Subsidiary of Super Dragon Limited, Dormant |
Videotel PTE Limited | Singapore | Subsidiary of Videotel Marine Asia Limited, Administrative and Support Services |
Useful Life | |
VOD units | 4 |
Furniture and fixtures | 7 |
Office and computer equipment | 3 |
Useful Life | |
Customer relationships | 8 |
Proprietary content | 5 |
Internally developed software | 4 |
(2) | Property and equipment, net |
Year-ended | |||||||
December 31, | |||||||
2013 | 2012 | ||||||
VOD units | £ | 4,529 | £ | 3,769 | |||
Furniture and fixtures | 19 | 19 | |||||
Office and computer equipment | 67 | 142 | |||||
4,615 | 3,930 | ||||||
Less accumulated depreciation | 1,968 | 1,891 | |||||
£ | 2,647 | £ | 2,039 |
(3) | Acquired intangible assets, net |
Gross Carrying Amount | Accumulated Amortization | Net Carrying Value | ||||||||||
December 31, 2013 | ||||||||||||
Customer relationships | £ | 1,120 | £ | 514 | £ | 606 | ||||||
Proprietary content | 3,225 | 2,367 | 858 | |||||||||
Internally developed software | 253 | 229 | 24 | |||||||||
£ | 4,598 | £ | 3,110 | £ | 1,488 | |||||||
December 31, 2012 | ||||||||||||
Customer relationships | £ | 1,120 | £ | 374 | £ | 746 | ||||||
Proprietary content | 3,225 | 1,722 | 1,503 | |||||||||
Internally developed software | 253 | 167 | 86 | |||||||||
£ | 4,598 | £ | 2,263 | £ | 2,335 |
Years ending December 31, | Amortization Expense | |||
2014 | £ | 806 | ||
2015 | 355 | |||
2016 | 140 | |||
2017 | 140 | |||
2018 | 47 | |||
Thereafter | — | |||
Total amortization expense | £ | 1,488 |
(4) | Accrued expenses |
Year-ended | |||||||
December 31, | |||||||
2013 | 2012 | ||||||
Accrued Commissions | £ | 770 | £ | 551 | |||
Accrued Expense, Other | 251 | 329 | |||||
Total | £ | 1,021 | £ | 880 |
(5) | Commitments and Contingencies |
Years ending December 31, | Operating Leases | |||
2014 | £ | 142 | ||
2015 | 139 | |||
2016 | 125 | |||
2017 | 125 | |||
2018 | 125 | |||
Thereafter | 85 | |||
Total minimum lease payments | £ | 741 |
(6) | Income Taxes |
Year-ended | |||||||
December 31, | |||||||
2013 | 2012 | ||||||
U.S. | £ | — | £ | — | |||
Foreign | 4,610 | 4,000 | |||||
£ | 4,610 | £ | 4,000 |
Year-ended | |||||||
December 31, | |||||||
2013 | 2012 | ||||||
Current | |||||||
Federal | £ | — | £ | — | |||
State | — | — | |||||
Foreign | 1,063 | 1,339 | |||||
1,063 | 1,339 | ||||||
Deferred | |||||||
Federal | — | — | |||||
State | — | — | |||||
Foreign | (98 | ) | (249 | ) | |||
(98 | ) | (249 | ) | ||||
Total | £ | 965 | £ | 1,090 |
December 31, | |||||||
2013 | 2012 | ||||||
Depreciation | £ | 849 | £ | 740 | |||
Deferred revenue | 108 | 88 | |||||
Net operating loss carryforwards | 84 | 103 | |||||
Valuation allowance | (84 | ) | (103 | ) | |||
Net deferred tax assets | 957 | 828 | |||||
Other | (91 | ) | (60 | ) | |||
Total deferred tax liability | (91 | ) | (60 | ) | |||
Net deferred tax assets | £ | 866 | £ | 768 |
(7) | Legal Matters |
(8) | Stockholder Loan |
(9) | Related Party Transactions |
(10) | Subsequent Events |
• | Accounting principles generally accepted in the United States of America (“US GAAP”) financial information for KVH has been extracted without adjustment from (i) KVH audited consolidated statement of operations for the year ended December 31, 2013 contained in KVH’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on March 17, 2014; and (ii) KVH unaudited consolidated balance sheet and consolidated statement of operations for the six months ended June 30, 2014 contained in KVH’s Quarterly Report on Form 10-Q filed with the SEC on August 7, 2014. |
• | The financial information for Videotel has been prepared in accordance with US GAAP and derived without material adjustment from: (i) Videotel’s audited combined profit and loss account as of and for the year ended December 31, 2013, contained in this Form 8-K/A; and (ii) Videotel’s unaudited combined balance sheet and profit and loss account as of and for the six months ended June 30, 2014, provided by Videotel management. These financial statements were originally prepared using pounds sterling as the reporting currency, and have been translated into U.S. dollars in the Pro Forma Financial Information using the methodology and the exchange rates noted below. |
• | The historical financial information and pro forma adjustments in the Pro Forma Financial Information have been translated from pounds sterling to U.S. dollars using historic exchange rates. The average exchange rates applicable to Videotel during the periods presented for the Pro Forma Statements of Operations and the period end exchange rate for the Pro Forma Balance Sheet, obtained from www.oanda.com, are as follows: |
GBP/USD | ||||
Year ended December 31, 2013 | Average spot rate | $ | 1.5630 | |
Six months ended June 30, 2014 | Average spot rate | $ | 1.6687 | |
June 30, 2014 | Period end spot rate | $ | 1.7028 |
• | the accompanying notes to the Pro Forma Financial Information; |
• | the unaudited consolidated financial statements of KVH for the six months ended June 30, 2014 and related notes thereto and the consolidated financial statements of KVH for the year ended December 31, 2013 and related notes thereto; and |
• | the combined financial statements of Videotel for the year ended December 31, 2013 and related notes thereto, incorporated by reference in this Form 8-K/A. |
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||||||||
SIX MONTHS ENDED JUNE 30, 2014 | |||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||
Six Months Ended June 30, 2014 KVH | Six Months Ended June 30, 2014 Videotel | Pro Forma KVH | |||||||||||||||||||
(in USD) | (in GBP) | (in USD) | Pro Forma Adjustments | Note | (in USD) | ||||||||||||||||
Sales: | |||||||||||||||||||||
Product | $ | 39,005 | £ | — | $ | — | $ | — | $ | 39,005 | |||||||||||
Service | 38,902 | 6,769 | 11,295 | — | 50,197 | ||||||||||||||||
Net sales | 77,907 | 6,769 | 11,295 | — | 89,202 | ||||||||||||||||
Costs and expenses: | |||||||||||||||||||||
Costs of product sales | 23,410 | — | — | — | 23,410 | ||||||||||||||||
Costs of service sales | 22,419 | 1,927 | 3,216 | 228 | 5(a)ii, 5(a)iii, 5(c) | 25,863 | |||||||||||||||
Research and development | 7,549 | — | — | — | 7,549 | ||||||||||||||||
Sales, marketing and support | 15,147 | 1,820 | 3,036 | 34 | 5(g) | 18,217 | |||||||||||||||
General and administrative | 10,402 | 1,332 | 2,223 | 374 | 5(a)iii, 5(c), 5(f) | 12,999 | |||||||||||||||
Total costs and expenses | 78,927 | 5,079 | 8,475 | 636 | 88,038 | ||||||||||||||||
(Loss) income from operations | (1,020 | ) | 1,690 | 2,820 | (636 | ) | 1,164 | ||||||||||||||
Interest income | 415 | — | — | — | 415 | ||||||||||||||||
Interest expense | 377 | — | — | 561 | 5(b) | 938 | |||||||||||||||
Other income, net | 86 | 79 | 132 | — | 218 | ||||||||||||||||
(Loss) income before income tax expense | (896 | ) | 1,769 | 2,952 | (1,197 | ) | 859 | ||||||||||||||
Income tax expense | 172 | 364 | 607 | (205 | ) | 5(d) | 574 | ||||||||||||||
Net (loss) income | $ | (1,068 | ) | £ | 1,405 | $ | 2,345 | $ | (992 | ) | $ | 285 | |||||||||
Pro forma per share information: | |||||||||||||||||||||
Net (loss) income per share, basic | $ | (0.07 | ) | $ | 0.02 | ||||||||||||||||
Net (loss) income per share, diluted | $ | (0.07 | ) | $ | 0.02 | ||||||||||||||||
Number of shares used in pro forma per share calculation: | |||||||||||||||||||||
Basic | 15,365 | 5(h) | 15,365 | ||||||||||||||||||
Diluted | 15,365 | 5(h) | 15,546 | ||||||||||||||||||
See accompanying Notes to Pro Forma Combined Consolidated Financial Information |
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS | |||||||||||||||||||||
YEAR ENDED DECEMBER 31, 2013 | |||||||||||||||||||||
(In thousands, except per share amounts) | |||||||||||||||||||||
Year Ended December 31, 2013 KVH | Year Ended December 31, 2013 Videotel | Pro Forma KVH | |||||||||||||||||||
(in USD) | (in GBP) | (in USD) | Pro Forma Adjustments | Note | (in USD) | ||||||||||||||||
Sales: | |||||||||||||||||||||
Product | $ | 90,295 | £ | — | $ | — | $ | — | $ | 90,295 | |||||||||||
Service | 71,993 | 13,422 | 20,979 | — | 92,972 | ||||||||||||||||
Net sales | 162,288 | 13,422 | 20,979 | — | 183,267 | ||||||||||||||||
Costs and expenses: | |||||||||||||||||||||
Costs of product sales | 51,518 | — | — | — | 51,518 | ||||||||||||||||
Costs of service sales | 45,058 | 4,032 | 6,302 | 551 | 5(a)ii, 5(a)iii, 5(c) | 51,911 | |||||||||||||||
Research and development | 12,987 | — | — | — | 12,987 | ||||||||||||||||
Sales, marketing and support | 28,792 | 3,738 | 5,842 | 67 | 5(g) | 34,701 | |||||||||||||||
General and administrative | 17,764 | 1,522 | 2,379 | 1,977 | 5(a)iii, 5(c) | 22,120 | |||||||||||||||
Total costs and expenses | 156,119 | 9,292 | 14,523 | 2,595 | 173,237 | ||||||||||||||||
Income from operations | 6,169 | 4,130 | 6,456 | (2,595 | ) | 10,030 | |||||||||||||||
Interest income | 657 | — | — | — | 657 | ||||||||||||||||
Interest expense | 637 | — | — | 972 | 5(b) | 1,609 | |||||||||||||||
Other income, net | 494 | 480 | 750 | — | 1,244 | ||||||||||||||||
Income before income tax expense | 6,683 | 4,610 | 7,206 | (3,567 | ) | 10,322 | |||||||||||||||
Income tax expense | 2,150 | 965 | 1,508 | (692 | ) | 5(d) | 2,966 | ||||||||||||||
Net income | $ | 4,533 | £ | 3,645 | $ | 5,698 | $ | (2,875 | ) | $ | 7,356 | ||||||||||
Pro forma per share information: | |||||||||||||||||||||
Net income per share, basic | $ | 0.30 | $ | 0.49 | |||||||||||||||||
Net income per share, diluted | $ | 0.30 | $ | 0.48 | |||||||||||||||||
Number of shares used in pro forma per share calculation: | |||||||||||||||||||||
Basic | 15,144 | 5(h) | 15,144 | ||||||||||||||||||
Diluted | 15,341 | 5(h) | 15,341 | ||||||||||||||||||
See accompanying Notes to Pro Forma Combined Consolidated Financial Information |
UNAUDITED PRO FORMA COMBINED CONSOLIDATED BALANCE SHEET | |||||||||||||||||||||
June 30, 2014 | |||||||||||||||||||||
(In thousands, except share data) | |||||||||||||||||||||
As of June 30, 2014 KVH | As of June 30, 2014 Videotel | Pro Forma KVH | |||||||||||||||||||
(in USD) | (in GBP) | (in USD) | Pro Forma Adjustments | Note | (in USD) | ||||||||||||||||
ASSETS | |||||||||||||||||||||
Cash and cash equivalents | $ | 13,361 | £ | 2,334 | $ | 3,974 | $ | (14,068 | ) | 5(b) | $ | 3,267 | |||||||||
Marketable securities | 40,970 | — | — | — | 40,970 | ||||||||||||||||
Accounts receivable, net | 30,649 | 3,166 | 5,391 | — | 36,040 | ||||||||||||||||
Inventories | 20,111 | — | — | — | 20,111 | ||||||||||||||||
Deferred income taxes | 3,235 | — | — | — | 3,235 | ||||||||||||||||
Prepaid expenses and other assets | 3,833 | 136 | 232 | — | 4,065 | ||||||||||||||||
Total current assets | 112,159 | 5,636 | 9,597 | (14,068 | ) | 107,688 | |||||||||||||||
Property and equipment, less accumulated depreciation | 36,512 | 3,484 | 5,933 | — | 42,445 | ||||||||||||||||
Film production costs, net | — | 597 | 1,017 | (1,017 | ) | 5(a)ii | — | ||||||||||||||
Intangible assets, less accumulated amortization | 14,500 | 1,337 | 2,277 | 23,247 | 5(a)i, 5(a)iii | 40,024 | |||||||||||||||
Goodwill | 18,737 | — | — | 23,813 | 5(a)vi | 42,550 | |||||||||||||||
Deferred income taxes | — | 981 | 1,670 | (1,670 | ) | 5(a)v | — | ||||||||||||||
Other non-current assets | 4,879 | — | — | — | 4,879 | ||||||||||||||||
Total assets | $ | 186,787 | £ | 12,035 | $ | 20,494 | $ | 30,305 | $ | 237,586 | |||||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||||||||||||
Accounts payable | $ | 7,545 | £ | 1,200 | $ | 2,043 | $ | — | $ | 9,588 | |||||||||||
Accrued compensation and employee-related expenses | 4,932 | — | — | — | 4,932 | ||||||||||||||||
Accrued other | 9,110 | 2,460 | 4,189 | 800 | 5(f) | 14,099 | |||||||||||||||
Accrued product warranty costs | 1,616 | — | — | — | 1,616 | ||||||||||||||||
Deferred revenue | 6,951 | 1,794 | 3,055 | (1,432 | ) | 5(a)iv | 8,574 | ||||||||||||||
Current portion of long-term debt | 1,293 | — | — | 4,875 | 5(b) | 6,168 | |||||||||||||||
Total current liabilities | 31,447 | 5,454 | 9,287 | 4,243 | 44,977 | ||||||||||||||||
Other long-term liabilities | 296 | 665 | 1,133 | — | 1,429 | ||||||||||||||||
Line of credit | 30,000 | — | — | (30,000 | ) | 5(b) | — | ||||||||||||||
Long-term debt, excluding current portion | 6,443 | — | — | 60,125 | 5(b) | 66,568 | |||||||||||||||
Liability for uncertain tax positions | — | 2,227 | 3,792 | — | 3,792 | ||||||||||||||||
Deferred income taxes | 464 | — | — | 3,019 | 5(a)v | 3,483 | |||||||||||||||
Total liabilities | 68,650 | 8,346 | 14,212 | 37,387 | 120,249 | ||||||||||||||||
Stockholders' equity: | |||||||||||||||||||||
Preferred stock, $0.01 par value. Authorized 1,000,000 shares; none issued | |||||||||||||||||||||
Common stock, $0.01 par value. Authorized 30,000,000 shares, 17,099,149 issued and 15,440,158 shares outstanding | 171 | — | — | — | 171 | ||||||||||||||||
Additional paid-in capital | 119,106 | 2,400 | 4,087 | (4,087 | ) | 5(e) | 119,106 | ||||||||||||||
Accumulated earnings | 10,612 | 1,289 | 2,195 | (2,995 | ) | 5(e), 5(f) | 9,812 | ||||||||||||||
Accumulated other comprehensive income | 1,398 | — | — | — | 1,398 | ||||||||||||||||
131,287 | 3,689 | 6,282 | (7,082 | ) | 130,487 | ||||||||||||||||
Less: treasury stock at cost, common stock, 1,658,991 shares | (13,150 | ) | — | — | — | (13,150 | ) | ||||||||||||||
Total stockholders' equity | 118,137 | 3,689 | 6,282 | (7,082 | ) | 117,337 | |||||||||||||||
Total liabilities and stockholders' equity | $ | 186,787 | £ | 12,035 | $ | 20,494 | $ | 30,305 | $ | 237,586 | |||||||||||
See accompanying Notes to Pro Forma Combined Consolidated Financial Information |
Consideration transferred—cash | $ | 49,068 | ||||
Book value of net assets acquired | $ | 2,988 | ||||
Fair value adjustments to deferred revenue | 1,432 | |||||
Fair value of tangible net assets acquired | 4,420 | |||||
Identifiable intangibles at acquisition-date fair value | ||||||
Customer relationships | 12,759 | |||||
Proprietary content | 9,814 | |||||
Internally developed software | 2,160 | |||||
Favorable operating leases | 791 | |||||
25,524 | ||||||
Deferred income taxes | (4,689 | ) | ||||
Goodwill | $ | 23,813 |
i. | The intangible assets with finite lives of Videotel of $25,524 have been recorded to reflect our preliminary estimate of the fair value of the acquired intangible assets, including customer relationships, proprietary content, internally developed software and favorable operating leases. |
ii. | The historical carrying value of Videotel's film production costs, net, as of the acquisition date of $1,017 (which is included in the fair value of acquired proprietary content discussed above in (a)i.) was eliminated as well as the amortization expense recorded in cost of service sales of $215 and $404 for the six months ended June 30, 2014 and the year ended December 31, 2013, respectively. |
iii. | The historical carrying value of Videotel’s acquired intangibles, net, as of the acquisition date of $2,277 (which relates to prior Videotel acquisitions) was eliminated as well as amortization expense. The amortization expense was eliminated in general and administrative expense of $169 and $316 for the six months ended June 30, 2014 and the year ended December 31, 2013, respectively. The amortization expense was eliminated in cost of service sales of $538 and $1,008 for the six months ended June 30, 2014 and the year ended December 31, 2013, respectively. |
v. | Deferred income tax liabilities and goodwill were increased by $4,689 to reflect the estimated tax impact of the intangible assets acquired, the fixed assets and adjustment to deferred revenue at the statutory tax rate. These amounts are preliminary estimates and may differ materially in actual future results of operations. |
vi. | Goodwill representing the excess of the total purchase price over the fair value of the net assets acquired was $23,813. |
Intangible Asset | Fair Value | Life | Income Statement Category | ||||||
Customer relationships | $ | 12,759 | 8 | General and administrative expense | |||||
Proprietary content | 9,814 | 5 | Costs of service sales | ||||||
Internally developed software | 2,160 | 4 | General and administrative expense | ||||||
Favorable operating leases | 791 | 5 | General and administrative expense |