-----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, SKqUMSj3OBVggxFmOLwrzPt8x/WdTwd2vcMHJNnNLKnN1OmHIgbpgJGXtPXJ+uKe pYs+jPya4bwtv01qiybzcg== 0000950135-99-005578.txt : 19991214 0000950135-99-005578.hdr.sgml : 19991214 ACCESSION NUMBER: 0000950135-99-005578 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991001 ITEM INFORMATION: FILED AS OF DATE: 19991213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONESOURCE INFORMATION SERVICES INC CENTRAL INDEX KEY: 0001079880 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 043204522 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-25849 FILM NUMBER: 99773225 BUSINESS ADDRESS: STREET 1: 300 BAKER AVENUE CITY: CONCORD STATE: MA ZIP: 01742 BUSINESS PHONE: 9783184300 MAIL ADDRESS: STREET 1: 300 BAKER AVE CITY: CONCORD STATE: MA ZIP: 01742 8-K/A 1 ONESOURCE INFORMATION SERVICES, INC. 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 8-K/A CURRENT REPORT AMENDMENT NO. 1 TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) October 1, 1999 ONESOURCE INFORMATION SERVICES, INC. -------------------------------------------------- (Exact Name of Registrant as Specified in Charter) Delaware 000-25849 04-3204522 - ---------------------------- ------------- ------------------- (State or Other Jurisdiction (File Number) (IRS Employer of Incorporation) Identification No.) 300 Baker Avenue 150 CambridgePark Drive Concord, MA 01742 Cambridge, MA 02140 (Address of Principal Executive Offices) (Former Address) (978) 318-4300 (Registrant's telephone number, including area code) 2 The undersigned registrant hereby amends Item 7, of its current report on form 8-K dated October 1, 1999 to read in its entirety as follows: ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) FINANCIAL STATEMENTS OF CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. The following financial statements required by Item 7 with respect to the registrant's acquisition of Corporate Technology Information Services, Inc. are filed as part of this report: Report of independent accountants Balance sheet as of March 31, 1999 and September 30, 1999 (unaudited) Statement of operations for the year ended March 31, 1999 and for the six months ended September 30, 1998 and 1999 (unaudited) Statement of stockholders' deficit for the year ended March 31, 1999 and for the six months ended September 30, 1999 (unaudited) Statement of cash flow for the year ended March 31, 1999 and for the six months ended September 30, 1998 and 1999 (unaudited) Notes to financial statements (b) PRO FORMA FINANCIAL INFORMATION The following pro forma financial information of OneSource Information Services, Inc. required by Item 7 with respect to the Registrant's acquisition of Corporate Technology Information Services, Inc. Pro forma condensed balance sheet as of September 30, 1999 (unaudited) Pro forma condensed statement of operations for the year ended December 31, 1998 (unaudited) Pro forma condensed statement of operations for the nine months ended September 30, 1999 (unaudited) Notes to pro forma condensed financial statements (c) EXHIBITS 2.1* Agreement and plan of merger among OneSource Information Services, Inc. and Corporate Technology Information Services, Inc. dated September 8, 1999. 2.2* Escrow Agreement dated September 8, 1999 by and among the Registrant, Corporate Technology Information Services, Inc., Andrew Campbell and Citizens Bank of Massachusetts. 23.1 Consent of PricewaterhouseCoopers LLP 27.1 Financial Data Schedule 99.1* Press release of registrant dated September 9, 1999. 99.2* Press release of registrant dated October 1, 1999. * previously filed 2 3 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors of Corporate Technology Information Services, Inc. In our opinion, the accompanying balance sheet as of March 31, 1999 and the related statements of operations, of stockholders' deficit and of cash flows present fairly, in all material respects, the financial position of Corporate Technology Information Services, Inc. ("CTI") at March 31, 1999 and the results of its operations and its cash flows for the year then ended in conformity with generally accepted accounting principles. These financial statements are the responsibility of CTI's management; our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with generally accepted auditing standards, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for the opinion expressed above. PricewaterhouseCoopers LLP October 22, 1999 Boston, Massachusetts 3 4 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. BALANCE SHEET - --------------------------------------------------------------------------------
SEPTEMBER 30, MARCH 31, 1999 1999 ------------ ---------- (UNAUDITED) ASSETS Current assets: Cash and cash equivalents $ 45,683 $ 15,086 Accounts receivable, net of allowance for doubtful accounts of $69,000 and $51,000 at September 30, 1999 (unaudited) and March 31, 1999, respectively 562,017 840,620 Inventory 43,257 65,783 Prepaid expenses and other current assets 50,436 70,659 ---------- ----------- Total current assets 701,393 992,148 Property and equipment, net 326,170 342,339 ---------- ----------- Total assets $1,027,563 $ 1,334,487 ========== =========== LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Current portion of capital lease obligations and long-term debt $ 75,360 $ 68,518 Notes payable to stockholders -- 145,000 Loan payable to vendor -- 111,082 Line of credit 341,500 -- Accounts payable and accrued expenses 218,773 761,397 Deferred revenue 1,727,569 1,799,700 ---------- ----------- Total current liabilities 2,363,202 2,885,697 Capital lease obligations and long-term debt, net of current portion 100,603 137,153 ---------- ----------- Total liabilities 2,463,805 3,022,850 ---------- ----------- Commitments (Note 9) -- -- Stockholders' deficit: Common stock, $0.01 par value; 3,500,000 shares authorized; 2,813,493 and 2,697,772 shares issued and outstanding at September 30, 1999 (unaudited) and March 31, 1999, respectively 28,135 26,978 Additional paid-in capital 2,241,969 1,949,935 Accumulated deficit (3,706,346) (3,665,276) ---------- ----------- Total stockholders' deficit (1,436,242) (1,688,363) ---------- ----------- Total liabilities and stockholders' deficit $1,027,563 $ 1,334,487 ========== ===========
The accompanying notes are an integral part of these financial statements. 4 5 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. STATEMENT OF OPERATIONS - --------------------------------------------------------------------------------
SIX MONTHS ENDED SEPTEMBER 30, YEAR ENDED ------------------------ MARCH 31, 1999 1998 1999 ---------- ---------- ---------- (unaudited) Revenues $2,463,736 $2,109,416 $5,162,392 Cost of revenues 407,526 519,748 1,000,365 ---------- ---------- ---------- Gross profit 2,056,210 1,589,668 4,162,027 Selling, general and administrative expenses 2,049,735 1,816,581 4,234,398 ---------- ---------- ---------- Income (loss) from operations 6,475 226,913 (72,371) Interest expense 46,845 62,899 127,420 ---------- ---------- ---------- Loss before provision for income taxes (40,370) (289,812) (199,791) Provision for income taxes 700 4,500 9,840 ---------- ---------- ---------- Net loss $ (41,070) $ (294,312) $ (209,631) ========== ========== ==========
The accompanying notes are an integral part of these financial statements. 5 6 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. STATEMENT OF STOCKHOLDERS' DEFICIT - --------------------------------------------------------------------------------
COMMON STOCK ADDITIONAL TOTAL -------------------- PAID-IN ACCUMULATED STOCKHOLDERS' SHARES PAR VALUE CAPITAL DEFICIT DEFICIT --------- --------- ---------- ----------- ----------- Balance, March 31, 1998 2,697,772 $26,978 $1,648,639 $(3,455,645) $(1,780,028) Compensation expense associated with equity awards -- -- 301,296 -- 301,296 Net loss -- -- -- (209,631) (209,631) --------- --------- ---------- ----------- ----------- Balance, March 31, 1999 2,697,772 26,978 1,949,935 (3,665,276) (1,688,363) Issuance of common stock pursuant to conversion of stockholders' notes (unaudited) 115,721 1,157 192,101 -- 193,258 Compensation expense associated with equity awards (unaudited) -- -- 99,933 -- 99,933 Net loss (unaudited) -- -- -- (41,070) (41,070) --------- --------- ---------- ----------- ----------- Balance, September 30, 1999 (unaudited) 2,813,493 $28,135 $2,241,969 $(3,706,346) $(1,436,242) ========= ======= ========== =========== ===========
The accompanying notes are an integral part of these financial statements. 6 7 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. STATEMENT OF CASH FLOWS - --------------------------------------------------------------------------------
SIX MONTHS ENDED SEPTEMBER 30, YEAR ENDED --------------------- MARCH 31, 1999 1998 1999 --------- --------- ---------- (unaudited) Cash flows relating to operating activities: Net loss $ (41,070) $(294,312) $(209,631) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 48,356 47,672 97,222 Compensation expense associated with equity awards 99,933 155,218 301,296 Changes in assets and liabilities: Accounts receivable 278,603 158,295 (36,322) Inventory 22,526 39,650 23,277 Prepaid expenses and other current assets 20,223 (14,579) (31,442) Deposits -- 4,061 3,770 Accounts payable (103,492) 17,015 (3,507) Accrued expenses and accrued compensation (390,874) 2,961 256,218 Deferred revenue (72,131) 57,123 323,152 --------- --------- --------- Net cash provided by (used in) operating activities (137,926) 173,104 724,033 --------- --------- --------- Cash flows relating to investing activities: Purchases of property and equipment (32,187) (11,115) (17,857) --------- --------- --------- Cash flows relating to financing activities: Net (payments) borrowings on line of credit 341,500 (200,000) (410,000) Borrowings of long-term debt -- -- 200,000 Payments of long-term debt (3,334) (49,232) (525,000) Borrowings under loan payable to vendor -- -- 111,082 Payments of loan payable to vendor (111,082) -- (139,231) Payments of capital lease obligations (26,374) (26,889) (52,361) --------- --------- --------- Net cash used by financing activities 200,710 (276,121) (815,510) --------- --------- --------- Increase (decrease) in cash and cash equivalents 30,597 (114,132) (109,334) Cash and cash equivalents, beginning of period 15,086 124,420 124,420 --------- --------- --------- Cash and cash equivalents, end of period $ 45,683 $ 10,288 $ 15,086 ========= ========= ========= Supplemental disclosures of cash flow information: Cash paid for interest $ 74,203 $ 69,654 $ 102,329 Cash paid for taxes $ 1,388 $ 9,000 $ 15,239 Supplemental disclosures of noncash investing and financing activities: Property and equipment acquired under capital lease obligations $ -- $ 39,262 $ 47,738 Conversion of notes payable to stockholders and accrued interest into common stock $ 193,258 $ -- $ --
The accompanying notes are an integral part of these financial statements. 7 8 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. NATURE OF BUSINESS Corporate Technology Information Services, Inc. ("CTI") researches technology companies and publishes detailed information in print directories and on CD-ROM. These products are marketed primarily to corporations, government agencies and universities worldwide. CTI sells its products through a direct sales force located throughout the United States and manages its business as a single segment. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES CASH AND CASH EQUIVALENTS All highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. REVENUE RECOGNITION CTI's CD-ROM products are sold on a subscription basis pursuant to customer contracts that span varying periods of time but generally are for a period of one year. In accordance with its customer agreements, CTI initially records receivables and defers the related revenue at the time amounts are billed to customers. Revenues are recognized ratably over the related subscription period. CTI also produces print directories on an annual basis. The related revenue is recognized upon shipment, provided that fees are fixed and determinable and collection of the related receivable is probable. INVENTORY Inventory consists of the printing cost of directories and electronic media. Inventory is stated at the lower of cost or market, cost being determined using the first-in, first-out method. PROPERTY AND EQUIPMENT Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the related assets. Major renewals and betterments are capitalized and repairs and maintenance are charged to expense in the period incurred. Equipment held under capital leases is stated at the fair value of the equipment at inception of the leases and is amortized on the straight-line method over the term of the leases. ADVERTISING AND MARKETING COSTS Advertising and marketing costs are expensed when incurred. Advertising expense was $100,954 for the year ended March 31, 1999. CONCENTRATION OF CREDIT RISK Financial instruments which potentially expose CTI to a concentration of credit risk include cash and cash equivalents and accounts receivable. CTI maintains cash in excess of federally insured deposits at a financial institution from time to time. CTI does not believe that such deposits are subject to any unusual credit risk beyond the normal credit risk associated with operating its business. Credit risk with respect to accounts receivable is limited due to the large number of customers comprising CTI's client base. CTI maintains reserves for potential credit losses and such losses, in the aggregate, have not historically exceeded management's expectations. 8 9 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- ACCOUNTING FOR STOCK-BASED COMPENSATION CTI accounts for stock-based compensation to employees in accordance with Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees" and related interpretations. CTI follows the disclosure requirements of Statement of Financial Accounting Standards ("SFAS")No. 123, "Accounting for Stock-Based Compensation." UNAUDITED INTERIM FINANCIAL STATEMENTS Data and information as of September 30, 1999 and for the six months ended September 30, 1998 and 1999 is unaudited. In the opinion of CTI's management, the September 30, 1998 and 1999 unaudited interim financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair representation of the financial position and results of operations for those periods. The results of operations for the six-month period ended September 30, 1999 are not necessarily indicative of the results of operations for the year ended March 31, 2000. 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 reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. PROPERTY AND EQUIPMENT Property and equipment, net, as of March 31, 1999 consisted of the following:
USEFUL LIFE (IN YEARS) ----------- Computer equipment 5 $410,706 Software 5 77,327 Office furniture and equipment 5-7 125,300 Equipment under capital lease 5 246,694 Leasehold improvements 5 51,088 -------- 911,115 Less: accumulated depreciation and amortization 568,776 -------- $342,339 ========
Depreciation and amortization expense relating to fixed assets was $97,222 for the year ended March 31, 1999, of which $39,380 related to amortization of assets held under capital leases. Accumulated amortization of equipment held under capital leases was $82,780 at March 31, 1999. 9 10 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 4. BORROWINGS LINE OF CREDIT CTI has a line of credit agreement with a bank which permits borrowings up to $500,000. Borrowings are secured by all business assets of CTI and are guaranteed by a principal stockholder. Any borrowings under the line of credit are due on demand and bear interest at the bank's prime rate plus 1.5%. There were no borrowings outstanding at March 31, 1999 and $341,500 was outstanding at September 30, 1999 (unaudited). NOTES PAYABLE TO STOCKHOLDERS CTI issued notes payable to stockholders and an entity controlled by a stockholder in November 1997. The convertible subordinated notes bear interest at 18% and are due in November 1999. The notes, including accrued interest, may be converted into common stock in whole or in part at any time under terms in the agreement at an option price of $1.67 per share. CTI recorded related interest expense of $26,100 for the year ended March 31, 1999. In June 1999, the notes plus accrued interest of $48,258 were converted into 115,721 shares of common stock. LOAN PAYABLE TO VENDOR CTI has two loans payable to its principal vendor for printing services to finance its annual directory printing costs. The loans are payable in principal only in six monthly installments of $29,548 through July 1999. Interest is due on the notes monthly at the bank's prime rate plus 2% (10.25% at March 31, 1999). CTI repaid the loan in full at September 30, 1999. LONG-TERM DEBT CTI has a term loan with a bank secured by all business assets of CTI and guaranteed by a principal stockholder. The loan is payable interest only through August 1999 at the bank's prime rate plus 1.5% (9.25% at March 31, 1999). Thereafter, principal will be repaid at $1,667 per month with the remaining outstanding balance due in September 2000. In connection with this loan, CTI issued a warrant exercisable at $1.67 per share for up to 30,000 shares of CTI's common stock. The value ascribed to these warrants was insignificant. Future maturities of long-term debt as of March 31, 1999 were as follows: Fiscal year ended March 31, 2000 $ 11,667 2001 88,333 -------- $100,000 ========
10 11 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- CAPITAL LEASE OBLIGATIONS CTI leases certain equipment under capital lease obligations which expire through February 2002. Future minimum lease payments under capital lease obligations as of March 31, 1999 were as follows: Fiscal year ended March 31, 2000 $ 69,939 2001 43,330 2002 10,007 -------- 123,276 Less imputed interest 17,605 -------- Present value of minimum lease payments $105,671 ========
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses as of March 31, 1999 consisted of the following: Accounts payable $103,492 Accrued compensation 460,482 Other accrued expenses 197,423 -------- $761,397 ========
6. STOCK PLANS CTI adopted a Non-Qualified Stock Option Plan in 1997 ("1997 Plan"). Under the 1997 Plan, CTI may grant options to employees for up to 303,000 shares of its common stock. Options vest in accordance with operational goals and upon maintaining standards of professional behavior set by CTI, and are exercisable for $0.01 per share over a period ending the shorter of a) ten years after grant, b) CTI is purchased or c) CTI offers its shares to the public. Transactions under the 1997 Plan during the year ended March 31, 1999 are summarized below:
WEIGHTED- NUMBER OF AVERAGE SHARES EXERCISE PRICE --------- -------------- Outstanding - March 31, 1998 246,266 $0.01 Forfeited (34,061) 0.01 ------- Outstanding - March 31, 1999 212,205 0.01 =======
11 12 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- As of March 31, 1999, 56,976 options were vested under the 1997 Plan at an option price of $0.01 per share and options outstanding had a weighted average remaining contractual life of eight years. Under APB No. 25, option awards under the 1997 Plan are variable as to the number of shares to be received. Accordingly, CTI recognizes compensation expense under the intrinsic method until the option awards vest. During the year ended March 31, 1999 and the six months ended September 30, 1999 (unaudited), CTI recorded compensation expense of $301,296 and $99,933 related to the unvested options outstanding under the 1997 Plan. As discussed in Note 2, CTI follows SFAS No. 123 through disclosure only. Had compensation cost for CTI's option plans been determined based on the fair value at the grant dates, as prescribed by SFAS No. 123, CTI's net loss would have been substantially the same for the year ended March 31, 1999. The fair value of each option award outstanding at March 31, 1999 is estimated using the minimum value method with the following assumptions: dividend yield of 0.0%; risk-free interest rate of 5.1%; and a weighted-average expected option term of eight years. Because additional option awards are expected to be made each year and options vest over several years, the above pro forma disclosures are not representative of pro forma effects of reported net income for future years. 7. INCOME TAXES Because CTI has provided a valuation allowance for the full amount of its net deferred tax assets, CTI has no provision for deferred income taxes for the year ended March 31, 1999. The components of the provision for current income taxes for the year ended March 31, 1999 were as follows: Current: Federal $ 8,840 State 1,000 -------- $ 9,840 ======== The income tax provision for the year ended March 31, 1999 differs from the U.S. federal statutory tax rate of 34% as a result of the following items: Income tax benefit at U.S. federal statutory tax rate $(68,516) State taxes, net of federal benefit 660 Increase in valuation allowance 79,418 Other (1,722) -------- Provision for income taxes $ 9,840 ========
12 13 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The net deferred tax assets and liabilities as of March 31, 1999 were comprised of the following: Deferred tax assets: Deferred revenue $ 724,739 Deferred compensation expense related to equity awards 121,332 Net operating loss carryforwards 527,493 Investment tax credits 6,105 Other 12,030 ---------- Gross deferred tax assets 1,391,699 Valuation allowance (1,374,645) ---------- Total deferred tax assets 17,054 ---------- Deferred tax liabilities: Capitalized inventory costs (16,444) Property and equipment related (610) ---------- Total deferred tax liabilities (17,054) ---------- Net deferred tax asset $ -- ==========
For income tax purposes, CTI has $1,310,000 of net operating loss carryforwards expiring at various dates through 2018. Realization of these deferred tax benefits is dependent on generating sufficient taxable income in the future. Due to the uncertainty of realization of these tax benefits, CTI has provided a valuation allowance for the full amount of its net deferred tax assets. Under the Internal Revenue Code, certain substantial changes in CTI's ownership will limit the amount of net operating loss and tax credit carryforwards that can be utilized in any one year to offset future taxable income or tax liability. 8. RETIREMENT PLANS CTI has a profit sharing 401(k) salary reduction plan with employer matching provisions covering substantially all of its employees. CTI's contribution to the 401 (k) plan is determined annually at the discretion of the Board of Directors. CTI's contribution totaled $12,176 for the year ended March 31, 1999. 13 14 CORPORATE TECHNOLOGY INFORMATION SERVICES, INC. NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 9. COMMITMENTS CTI leases office facilities under an operating lease which expires in June 2001. In addition to base rent, CTI is responsible to pay its proportionate share of real estate tax and operating costs as specified in the agreement. The operating lease also provides for annual base rent increases. Rent expense was $203,725 for the year ended March 31, 1999. Future minimum lease payments under all noncancellable operating leases as of March 31, 1999 were as follows: Fiscal year ended March 31, 2000 $204,491 2001 208,531 2002 52,259 -------- $465,281 ========
10. SUBSEQUENT EVENT On September 8, 1999, CTI entered into an Agreement and Plan of Merger to sell CTI's outstanding common stock for $7.6 million, including the assumption of liabilities as of September 30, 1999. The merger was completed on October 1, 1999. 14 15 (b) Pro Forma Financial Information ONESOURCE INFORMATION SERVICES, INC. UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION The following unaudited pro forma condensed financial information gives effect to the acquisition of Corporate Technology Information Services, Inc. ("CTI") by OneSource Information Services, Inc. ("OneSource") in a transaction to be accounted for as a purchase in accordance with APB Opinion No. 16 (the "Acquisition"). Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their fair values at the date of the Acquisition. Estimates of the fair values of the assets and liabilities of CTI have been combined with the recorded values of the assets and liabilities of OneSource in the unaudited pro forma condensed balance sheet as of September 30, 1999. The unaudited pro forma condensed balance sheet has been prepared to reflect the Acquisition as if it occurred on September 30, 1999. The unaudited pro forma condensed statements of operations reflect the results of operations of OneSource and CTI for the year ended December 31, 1998 and the nine months ended September 30, 1999 as if the Acquisition occurred on January 1, 1998 and January 1, 1999, respectively. The unaudited pro forma condensed financial information is presented for illustrative purposes only and is not necessarily indicative of the combined financial position or results of operations in future periods or the results that actually would have been realized had OneSource and CTI been a combined company during the specified periods. The unaudited pro forma condensed financial information, including the notes thereto, is qualified in its entirety by reference to, and should be read in conjunction with, the historical consolidated financial statements of OneSource, included in its Registration Statement on Form S-1, as amended, as filed with the Securities and Exchange Commission on March 3, 1999 and its quarterly report Form 10-Q for the nine months ended September 30, 1999 and the historical financial statements of CTI included elsewhere in this Form 8-K/A. 15 16 ONESOURCE INFORMATION SERVICES, INC. UNAUDITED PRO FORMA CONDENSED BALANCE SHEET (In thousands, except share data)
OneSource CTI September 30, September 30, 1999 1999 Adjustments Pro Forma ------------ ------------ ----------- --------- Assets Current assets: Cash and cash equivalents ................................... $14,665 $ 46 $ -- $14,711 Deposit for subsequent acquisition .......................... 7,610 -- (7,610)(A) -- Accounts receivable, net .................................... 6,212 562 -- 6,774 Deferred subscription costs ................................. 5,972 -- (249)(E) 5,723 Inventory ................................................... -- 43 -- 43 Prepaid expenses and other current assets ................... 219 51 4 (A) 174 (100)(D) ------- ------ ------ ------- Total current assets ..................................... 34,678 702 (7,955) 27,425 Property and equipment, net ..................................... 2,749 326 -- 3,075 Other assets .................................................... 1,033 -- -- 1,033 Intangible assets ............................................... -- -- 7,606 (A) 9,582 232 (B) 1,436 (C) 204 (D) 104 (E) ------- ------ ------ ------- Total assets ........................................... $38,460 $1,028 $1,627 $41,115 ======= ====== ====== ======= Liabilities and Stockholders' Equity (Deficit) Current liabilities: Current portion of capital lease obligations ................ $ 285 $ 75 $ -- $ 360 Line of credit .............................................. -- 341 -- 341 Accounts payable and accrued expenses ....................... 4,397 219 232 (B) 4,952 104 (D) Accrued royalties ........................................... 4,192 -- (145)(E) 4,047 Deferred revenues ........................................... 15,448 1,728 -- 17,176 ------- ------ ------ ------- Total current liabilities ................................ 24,322 2,363 191 26,876 Capital lease obligations and long-term debt .................... 59 101 -- 160 ------- ------ ------ ------- Total liabilities ...................................... 24,381 2,464 191 27,036 ------- ------ ------ ------- Stockholders' equity (deficit): Common stock ................................................ 100 28 (28)(C) 100 Additional paid-in capital .................................. 28,246 2,242 (2,242)(C) 28,246 Unearned compensation ....................................... (399) -- -- (399) Accumulated deficit ......................................... (13,736) (3,706) 3,706 (C) (13,736) Accumulated other comprehensive loss ........................ (132) -- -- (132) ------- ------ ------ ------- Total stockholders' equity (deficit) ................... 14,079 (1,436) 1,436 14,079 ------- ------ ------ ------- Total liabilities and stockholders' equity (deficit) ... $38,460 $1,028 $1,627 $41,115 ======= ====== ====== =======
See accompanying notes to the unaudited pro forma condensed financial information. 16 17 ONESOURCE INFORMATION SERVICES, INC. UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS (In thousands, except share and per share data)
OneSource CTI Year ended Year ended December 31, 1998 March 31, 1999 Adjustments Pro Forma ----------------- -------------- ----------- --------- Revenues ................................................... $ 30,428 $5,162 $ (487)(E) $ 35,103 Cost of revenues ........................................... 13,655 1,000 (428)(E) 14,227 ----------- ------ ------- ----------- Gross profit ............................................... 16,773 4,162 (59) 20,876 ----------- ------ ------- ----------- Operating expenses: Selling and marketing .................................. 11,577 1,880 13,457 Platform and product development ....................... 6,313 592 6,905 General and administrative ............................. 3,847 1,763 5,610 Amortization of Intangibles ............................ -- -- 1,446 (F) 1,446 ----------- ------ ------- ----------- Total operating expenses ............................ 21,737 4,235 1,446 27,418 ----------- ------ ------- ------------ Loss from operations ................................ (4,964) (73) (1,505) (6,542) Interest expense, net ...................................... (595) (127) (574)(G) (1,296) Gain on sale of product line ............................... 12,797 -- -- 12,797 ----------- ------ ------- ----------- Income (loss) before income taxes ................... 7,238 (200) (2,079) 4,959 Provision for income taxes ................................. 250 10 -- 260 ----------- ------ ------- ----------- Net income (loss) ................................... 6,988 (210) (2,079) 4,699 Less: income attributable to Class P common stock .......... 1,367 -- (228) 1,139 ----------- ------ ------- ----------- Net income (loss) attributable to common stock ...... $ 5,621 $ (210) $(1,851) $ 3,560 =========== ====== ======= =========== Class P common stock: Basic and diluted earnings per share ................... $ 1.91 $ 1.59 Weighted average Class P common shares outstanding ..... 717,541 717,541 Common stock: Basic earnings per share ............................... $ 0.85 $ 0.54 Diluted earnings per share ............................. $ 0.59 $ 0.37 Weighted average common shares outstanding: Basic ............................................... 6,640,834 6,640,834 Diluted ............................................. 9,563,151 9,563,151 Pro forma earnings per share: Basic .................................................. $ O.92 $ 0.62 Diluted ................................................ $ 0.66 $ 0.45 Weighted average common shares outstanding: Basic ............................................... 7,620,172 7,620,172 Diluted ............................................. 10,542,489 10,542,489
See accompanying notes to the unaudited pro forma condensed financial information. 17 18 ONESOURCE INFORMATION SERVICES, INC. UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS (In thousands, except share and per share data)
OneSource CTI Nine months ended Nine months ended September 30, 1999 September 30, 1999 Adjustments Pro Forma ------------------ ------------------ ----------- --------- Revenues .......................................... $ 25,241 $4,434 $ (450)(E) $ 29,225 Cost of revenues .................................. 10,805 718 (346)(E) 11,177 ---------- ------ ------- ---------- Gross profit ...................................... 14,436 3,716 (104) 18,048 ---------- ------ ------- ---------- Operating expenses: Selling and marketing ......................... 9,205 1,674 10,879 Platform and product development .............. 5,739 452 6,191 General and administrative .................... 4,185 1,647 5,832 Amortization of Intangibles ................... -- -- 1,085 (F) 1,085 ---------- ------ ------- ---------- Total operating expenses .................. 19,129 3,773 1,085 23,987 ---------- ------ ------- ---------- Loss from operations ...................... (4,693) (57) (1,189) (5,939) Interest expense, net ............................. (99) (75) (285)(G) (459) Other income ...................................... 1,500 -- -- 1,500 ---------- ------ ------- ---------- Loss before income taxes .................. (3,292) (132) (1,474) (4,898) Provision for income taxes ........................ -- (31) -- (31) ---------- ------ ------- ---------- Net loss .................................. $ (3,292) $(101) $(1,474) $ (4,867) ========== ====== ======= ========== Common stock: Basic and diluted earnings per share .......... $ (0.39) $ (0.58) Weighted average common shares outstanding: Basic and diluted ......................... 8,340,049 8,340,049 Pro forma earnings per share: Basic and diluted ............................. $ (0.37) $ (0.55) Weighted average common shares outstanding: Basic and diluted ......................... 8,845,204 8,845,204
See accompanying notes to the unaudited pro forma condensed financial information. 18 19 ONESOURCE INFORMATION SERVICES, INC. NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION BASIS OF PRESENTATION: On October 1, 1999, OneSource Information Services, Inc. ("OneSource") acquired Corporate Technology Information Services, Inc. ("CTI"), a Delaware corporation located in Woburn, Massachusetts. CTI is a provider of high technology company profiles with a focus on emerging private companies. Pursuant to the terms of an Agreement and Plan of Merger, the consideration paid by OneSource was $7.6 million in cash. A portion of the cash consideration is being held in escrow to be released in accordance with the Agreement and Plan of Merger and an Escrow Agreement. For financial statement purposes, this acquisition was accounted for as a purchase and; accordingly, the results of operations of CTI subsequent to September 30, 1999, will be included in OneSource's consolidated statements of operations. Under the purchase method of accounting, the purchase price is allocated to the assets acquired and liabilities assumed based on their estimated values at October 1, 1999, the date of the acquisition. Estimates of the fair values of the assets and liabilities of CTI have been combined with the recorded values of the assets and liabilities of OneSource in the unaudited pro forma condensed financial information. The following summarizes the purchase accounting by OneSource Information Services, Inc. to record the Acquisition, including the fair value of the assets acquired and liabilities assumed and the excess of the acquisition price over the fair value of the assets acquired and liabilities assumed. The book value of tangible assets acquired and liabilities assumed approximate their fair value. Cash purchase price $ 7,606 Fair value of liabilities assumed 2,464 Cash to be paid for unvested stock options 232 Acquisition related expenses of OneSource 204 Elimination of intercompany accounts 104 ------- $10,610 =======
The purchase price is allocated to the tangible and intangible assets acquired based on their fair values as follows: Net tangible assets $ 1,028 Trademark 145 Subscriber list 1,150 Database 986 Non-compete agreement 400 Goodwill 6,901 ------- $10,610 =======
The following describes the pro forma adjustments in the accompanying unaudited pro forma condensed financial information: (A) To record the cash consideration exchanged in the Acquisition. (B) To record liability for cash to be paid for unvested stock options of CTI. (C) To eliminate the historical stockholders' deficit of CTI. 19 20 (D) To record OneSource's acquisition related costs. (E) To eliminate intercompany transactions and balances between OneSource and CTI. (F) To record amortization of intangible assets over useful lives of three to seven years. (G) To eliminate interest income associated with the funds used for acquisition of CTI. 20 21 SIGNATURES Pursuant to the requirements of the Securities Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. OneSource Information Services, Inc. Date: December 13, 1999 By: /s/ Roy D. Landon -------------------- --------------------------------------- Roy D. Landon Vice President, Chief Financial Officer (Principal Financial Officer) 21 22 EXHIBIT INDEX Exhibit Index 2.1* Agreement and Plan of Merger among OneSource Information Services, Inc. and Corporate Technology Information Services, Inc. dated September 8, 1999. 2.2* Escrow Agreement dated September 8, 1999 by and among the Registrant, Corporate Technology Information Services, Inc., Andrew Campbell and Citizens Bank of Massachusetts. 23.1 Consent of PricewaterhouseCoopers LLP 27.1 Financial Data Schedule 99.1* Press release of the registrant dated September 9, 1999. 99.2* Press release of the registrant dated October 1, 1999. * previously filed 22 EX-23.1 2 CONSENT OF PRICEWATERHOUSECOOPERS, LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-85363) of OneSource Information Services, Inc. of our report dated October 22, 1999, relating to the financial statements of Corporate Technology Information Services, Inc., appearing in Amendment 1 to the Current Report in Form 8-K/A of OneSource Information Services, Inc. dated December 13, 1999. PricewaterhouseCoopers LLP Boston, Massachusetts December 13, 1999 23 EX-27.1 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ONESOURCE INFORMATION SERVICES INC.'S PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED) FOR SEPTEMBER 30, 1999 AND PRO FORMA CONDENSED STATEMENT OF OPERATIONS (UNAUDITED) FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 U.S. DOLLARS 9-MOS DEC-31-1998 JAN-01-1999 SEP-30-1999 1 14,711 0 7,131 357 43 27,425 8,626 5,551 41,115 26,876 0 0 0 100 13,979 41,115 29,225 29,225 11,177 11,177 23,987 0 459 (4,898) (31) (4,867) 0 0 0 (4,867) (0.58) (0.58)
-----END PRIVACY-ENHANCED MESSAGE-----