8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

April 30, 2003

Date of Report (Date of Earliest Event Reported)

PROBUSINESS SERVICES, INC.

(Exact name of Registrant as specified in its charter)

Delaware	000-22227	94-2976066
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

4125 Hopyard Road
Pleasanton, CA 94588

(Address of principal executive offices)

(925) 737-3500

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report)

TABLE OF CONTENTS

	Item 9. Regulation FD Disclosure
SIGNATURES
INDEX TO EXHIBITS
EXHIBIT 99.1

Item 9. Regulation FD Disclosure

     This information furnished under this “Item 9. Regulation FD Disclosure” is intended to be furnished under “Item 12. Disclosure of Results of Operations and Financial Condition” in accordance with SEC Release No. 33-8216.

     On April 30, 2003, ProBusiness Services, Inc. issued a press release announcing third-quarter earnings results and a public webcast in connection with the issuance of the press release. A copy of the press release is attached as Exhibit 99.1.

     The press release includes a discussion of the Company’s historical financial results for each of the three- and nine-month periods ended March 31, 2003 using certain non-GAAP financial measures, including net loss before preferred dividends.

     A “non-GAAP financial measure” is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles (“GAAP”). Pursuant to the requirements of Regulation G, the Company has included in its press release a reconciliation of all non-GAAP financial measures disclosed in the press release to the most directly comparable GAAP financial measure. To the extent a non-GAAP financial measure discussed in the webcast has not been provided and reconciled in the press release, the Company will either provide an oral reconciliation of the non-GAAP financial measure to the most directly comparable GAAP financial measure during the webcast or post a reconciliation of such non-GAAP financial measure on the Company’s website at www.probusiness.com prior to the webcast.

     Management of the Company excludes preferred dividends from the net loss per share as an additional measure to monitor and evaluate the Company’s ongoing financial results and trends. Management believes these non-GAAP operating performance measures are useful for investors because they enhance investors’ ability to analyze trends in the Company’s operating results.

     The presentation of this additional information should not be considered in isolation or as a substitute for the Company’s financial results prepared in accordance with GAAP.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: April 30, 2003	PROBUSINESS SERVICES, INC.
	By:	/s/ Thomas H. Sinton
		Thomas H. Sinton Chairman of the Board, President and Chief Executive Officer

INDEX TO EXHIBITS

Index
Number	Description of Document
99.1	Press release dated April 30, 2003

EX-99.1 3 f89701exv99w1.htm EXHIBIT 99.1

Exhibit 99.1

4125 Hopyard Road
Pleasanton, CA 94588
(925) 737-3500

FOR IMMEDIATE RELEASE

Investor Contact:
Steven Klei
Executive Vice President, Finance
Chief Financial Officer
(925) 737-3110

ProBusiness Reports Third-Quarter Fiscal 2003 Results

PLEASANTON, Calif – April 30, 2003 — ProBusiness Services, Inc. (Nasdaq:PRBZ), a leading provider of outsourced employee administrative services for large employers providing payroll, payroll tax filing, benefits administration, Comprehensive Outsourcing, human resources, and Web self-service solutions, today announced its financial results for the third quarter of fiscal 2003 ended March 31, 2003.

The Company reported revenue for the third quarter of fiscal 2003 of $45.4 million and a net loss of $4.3 million, or $0.17 per share. This compared with revenue of $45.2 million and a net loss of $5.6 million, or $0.22 per share, for the same period last year.

Among the new clients that started services during the third quarter were Agere Systems, Inc., Brunswick Corporation, The Columbia House Company, CNA Financial, CNH Global, N.V., Mellon Financial Corporation, Perot Systems Corporation and Wireless Retail, Inc.

Revenue less the cost of providing services, or gross margin, was 55.7 percent for the third quarter of fiscal 2003, compared with 56.8 percent for the third quarter of fiscal 2002. Client acquisition costs decreased more than 39 percent to $9.1 million, from $14.9 million for the third quarter of fiscal 2002.

On January 6, 2003, ProBusiness and ADP announced that they had entered into a merger agreement providing for the acquisition of ProBusiness by ADP for $17.00 per common share in cash. The transaction is subject to customary closing conditions, including expiration or termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976. As announced on February 14, 2003, the Department of Justice, Antitrust Division (DOJ), requested additional information and documentary material in connection with its review of the proposed merger. On March 25, 2003, ProBusiness stockholders approved the merger at a special stockholders’ meeting.

“We are excited to report record levels of revenue despite the reduction in interest rates. Our clients remained committed to ProBusiness’ service excellence during the quarter as we continued to maintain our strong relationships with our clients. As expected, the transaction-related impact of the planned merger has been significant,” stated Thomas Sinton, president and chief executive officer.

“The impact of transaction-related costs on our third quarter earnings was in excess of $8.0 million, with the most significant impact resulting from legal and professional fees, and employee retention programs. We have begun to see a slowing of new sales as a result of the pending merger, and we will continue to experience significant transaction-related impacts,” commented Steven Klei, executive vice president, finance and chief financial officer.

ProBusiness will host a conference call at 5:00 p.m. ET / 2:00 p.m. PT today, Wednesday, April 30, 2003 to discuss its third-quarter results and review the company’s progress and outlook. Interested parties can access this conference call by going to the ProBusiness site at www.probusiness.com and selecting Third Quarter 2003 Results

Teleconference and then clicking on the teleconference link. ProBusiness encourages you to preview the site to ensure that your browser is configured properly prior to the call.

Note to Investors — Forward-Looking Statements

The statements in this press release regarding the expected transaction related impacts are forward-looking statements based on current expectations and actual results may differ materially. In addition, certain other written and oral statements made by ProBusiness Services, Inc.’s (the “Company”) management may constitute “forward-looking statements,” as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by such words and phrases as “we expect,” “we believe,” “expected to,” and “could be.” Because they are forward-looking, they should be evaluated in light of important risk factors. Some of the factors that could cause the expected results to differ materially from those projected include, but are not limited to, the ability to satisfy all of the conditions to the closing of the merger in a timely manner, if at all, and the risk that ProBusiness may not continue to maintain strong client relationships with its clients. In addition, other risk factors for all forward-looking statements include, among the other factors that could affect our future growth potential and the contribution to operating profit, continued client acquisition costs incurred in advance of revenues, investments in research and development, delays in or unsuccessful development or implementation of the Golden Gate™ integrated platform and the Comprehensive Outsourcing service offering, the extent and timing of market acceptance of these new products, the number and size of new clients starting services, the length of the sales cycle, a delay or cancellation of client services, the decline in interest rates, the reduction of the number of employees on the payrolls of our clients, expansion of sales efforts and operations to new geographic regions, expansion of new and existing technology and services, investment in management infrastructure to support the Company’s expected growth, the effect of implementing SAB 101 and other accounting regulation changes and our ability to accurately predict their impact on future quarters, execution of the stock repurchase program, changes in the regulatory environment, system failure, seasonality, overall economic trends and competition. Please refer to our public filings with the Securities and Exchange Commission for additional factors that could make actual results differ materially from those projected in forward-looking statements, including but not limited to ProBusiness’ Annual Report on Form 10-K for the year ended June 30, 2002 and its Quarterly Report on Form 10-Q for the quarter ended December 31, 2002. ProBusiness disclaims any intent or obligation to update the forward-looking statements included in this document.

ProBusiness Services, Inc. and the ProBusiness logo are registered trademarks of ProBusiness Services, Inc. All other trademarks and registered trademarks mentioned herein remain the property of their respective owners.

—Financial Statements Attached—

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per-share data)
(Unaudited)

			Three months ended						Nine months ended
			March 31,						March 31,
			2003			2002			2003			2002
Revenue:
	Service fees		$	34,635		$	30,536		$	99,546		$	92,306
	Interest income from payroll tax funds invested			10,717			14,675			28,570			36,035
		Total revenue		45,352			45,211			128,116			128,341
Operating expenses:
	Cost of providing services			20,086			19,515			57,404			57,697
	General and administrative			9,690			6,366			21,190			19,534
	Research and development			5,963			5,254			16,494			15,844
	Client acquisition costs			9,065			14,934			27,714			44,234
	Depreciation and amortization			5,288			5,206			15,626			14,292
		Total operating expenses		50,092			51,275			138,428			151,601
Loss from operations				(4,740	)		(6,064	)		(10,312	)		(23,260	)
Interest income and expense and other income, net				487			464			1,531			1,312
Net loss			$	(4,253	)	$	(5,600	)	$	(8,781	)	$	(21,948	)
Net loss applicable to common shareholders
	Net loss		$	(4,253	)	$	(5,600	)	$	(8,781	)	$	(21,948	)
	Preferred dividends			(605	)		(565	)		(1,768	)		(1,662	)
Net loss for calculation of basic and diluted net loss per share			$	(4,858	)	$	(6,165	)	$	(10,549	)	$	(23,610	)
Basic and diluted net loss per share			$	(0.17	)	$	(0.22	)	$	(0.37	)	$	(0.93	)
Basic and diluted net loss per share before preferred dividends			$	(0.15	)	$	(0.20	)	$	(0.31	)	$	(0.86	)
Shares used in computing basic and diluted net loss per share				28,655			27,641			28,532			25,509

CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)

		March 31, 2003		June 30, 2002
ASSETS
Current assets
	Cash and cash equivalents and short-term investments	$	49,462	$	60,019
	Accounts receivable, net of allowances		11,601		11,692
	Other current assets		16,292		22,686
			77,355		94,397
	Payroll tax funds invested		1,916,424		1,705,209
Total current assets			1,993,779		1,799,606
Long-term investments			34,298		33,217
Fixed assets, net			61,681		63,921
Other assets			35,904		19,786
Total assets		$	2,125,662	$	1,916,530
LIABILITIES
	Current liabilities	$	44,313	$	40,943
	Payroll tax funds collected but unremitted		1,916,424		1,705,209
Total current liabilities			1,960,737		1,746,152
Long-term deferred revenues and liabilities			18,513		23,209
Capital lease obligations and note payable, less current portion			431		822
Total liabilities			1,979,681		1,770,183
REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
Redeemable convertible preferred stock			35,239		33,471
Stockholders’ equity			110,742		112,876
Total redeemable convertible preferred stock and stockholders’ equity			145,981		146,347
Total liabilities, redeemable convertible preferred stock and stockholders’ equity		$	2,125,662	$	1,916,530

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EX-99.1

Exhibit 99.1