0000912057-01-534321.txt : 20011009
0000912057-01-534321.hdr.sgml : 20011009
ACCESSION NUMBER: 0000912057-01-534321
CONFORMED SUBMISSION TYPE: 8-K/A
PUBLIC DOCUMENT COUNT: 1
CONFORMED PERIOD OF REPORT: 20011003
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011003
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ANTEON CORP
CENTRAL INDEX KEY: 0001090709
STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
IRS NUMBER: 541023915
STATE OF INCORPORATION: VA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 333-84835
FILM NUMBER: 1751424
BUSINESS ADDRESS:
STREET 1: 3211 JERMANTOWN RD
STREET 2: SUITE 700
CITY: FAIRFAX
STATE: VA
ZIP: 22030
BUSINESS PHONE: 7032460300
MAIL ADDRESS:
STREET 1: 3211 JERMANTOWN RD
STREET 2: SUITE 700
CITY: FAIRFAX
STATE: VA
ZIP: 22030
8-K/A
1
a2060363z8-ka.txt
8-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
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 3, 2001
ANTEON INTERNATIONAL CORPORATION
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
VIRGINIA 333-84835 54-1023915
---------------------------- ------------------ -------------------
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
(703) 246-0200
---------------
(Registrants telephone number, including area code)
N/A
-----------------
(Former name or former address, if changed since last report)
ANTEON INTERNATIONAL CORPORATION AND SUBSIDIARIES
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) In accordance with Item 7 (a) (4) of Form 8-K, and because it was
impractical to provide the required financial statements for the acquired
business at the time the Company's current report on Form 8-K dated August 3,
2001 was filed, the Audited Financial Statements for the SIGCOM, Inc. Training
Division, as of December 31, 2000 and 1999 and for the years ended December 31,
2000 and 1999 and related Independent Auditors' Report thereon, and the
Unaudited Balance Sheet as of June 30, 2001 and Unaudited Statements of
Operations and Cash Flows for the six-month periods ended June 30, 2001 and 2000
are being filed as part of this Form 8-K/A beginning on page 4.
(b) In accordance with Item (7) (b) (2) of Form 8-K, and because it was
impractical to provide the required pro forma financial information relative to
the acquired and disposed businesses at the time the Company's current report on
Form 8-K dated August 3, 2001 was filed, the Unaudited Pro Forma Condensed
Consolidated Statements of Operations, Unaudited Pro Forma Condensed
Consolidated Balance Sheet, and Notes to Unaudited Pro Forma Condensed
Consolidated Financial Statements are being filed as part of this Form 8-K/A
beginning on page 17.
(c) Exhibits.
Exhibit No. Document
1. Asset Purchase Agreement dated as of July 20,
2001, by and among Anteon Corporation and SIGCOM,
Inc. (incorporated by reference to the registrant's
current report on Form 8-K as filed August 3, 2001
(Commission File No. 333-84835)).
2. Stock Purchase Agreement dated July 20, 2001, by and
among Anteon Corporation, Interactive Media
Corporation (IMC) and FTK Knowledge (Holding) Inc.
(incorporated by reference to the registrant's
current report on Form 8K as filed August 3, 2001
(commission File No. 333-84835)).
3. Asset Purchase Agreement dated June 29, 2001 by and
among Anteon Corporation, and B&G, LLC (incorporated
by reference to the registrant's current report on
Form 8-K as filed August 3, 2001 (Commission File
No. 333-84835)).
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
ANTEON INTERNATIONAL CORPORATION
Date: October 3, 2001 By: /s/ Joseph M. Kampf
---------------------------------
Joseph M. Kampf
President and
Chief Executive Officer
Date: October 3, 2001 By: /s/ Carlton B. Crenshaw
---------------------------------
Carlton B. Crenshaw
Sr. Vice President of Finance
and Chief Financial Officer
3
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Anteon International Corporation:
We have audited the accompanying balance sheets of the Sigcom, Inc. Training
Division as of December 31, 2000 and 1999 and the related statements of
operations and divisional equity, and cash flows for each of the years then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards 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. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Sigcom, Inc. Training
Division as of December 31, 2000 and 1999, and the results of its operations and
its cash flows for each of the years then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/ Bason & Company
September 7, 2001
Greensboro, NC
4
SIGCOM, INC. TRAINING DIVISION
Balance Sheets
December 31, 2000 and 1999
2000 1999
CURRENT ASSETS
Accounts receivable $ 3,471,613 $ 1,106,843
Costs and estimated earnings in excess of billings
on uncompleted contracts 1,300,258 1,210,262
----------- -----------
TOTAL CURRENT ASSETS 4,771,871 2,317,105
----------- -----------
EQUIPMENT
Equipment 181,426 171,844
Accumulated depreciation (100,718) (66,159)
----------- -----------
80,708 105,685
----------- -----------
TOTAL ASSETS $ 4,852,579 $ 2,422,790
=========== ===========
CURRENT LIABILITIES
Accounts payable $ 1,051,281 $ 560,551
Accrued salaries and related benefits 87,683 89,095
----------- -----------
TOTAL CURRENT LIABILITIES 1,138,964 649,646
DIVISIONAL EQUITY 3,713,615 1,773,144
----------- -----------
TOTAL LIABILITIES AND DIVISIONAL EQUITY $ 4,852,579 $ 2,422,790
=========== ===========
See notes to financial statements.
SIGCOM, INC. TRAINING DIVISION
Statements of Operations and Divisional Equity
For the Years Ended December 31, 2000 and 1999
2000 1999
REVENUES $ 12,450,243 $ 12,278,454
COSTS OF REVENUES 9,143,534 8,330,504
------------ ------------
GROSS PROFIT 3,306,709 3,947,950
GENERAL AND ADMINISTRATIVE EXPENSES 1,398,278 1,190,165
------------ ------------
NET INCOME 1,908,431 2,757,785
DIVISIONAL EQUITY, BEGINNING 1,773,144 2,341,712
DIVISIONAL EQUITY CONTRIBUTIONS
(DISTRIBUTIONS), NET 32,040 (3,326,353)
------------ ------------
DIVISIONAL EQUITY, ENDING $ 3,713,615 $ 1,773,144
============ ============
See notes to financial statements.
SIGCOM, INC. TRAINING DIVISION
Statements of Cash Flows
For the Years Ended December 31, 2000 and 1999
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,908,431 $ 2,757,785
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation expense 34,559 17,184
Increase in accounts receivable (2,364,770) (1,800,669)
Increase (decrease) in costs and estimated earnings
in excess of billings on uncompleted contracts (89,996) 2,111,388
Increase in accounts payable 490,730 228,246
Increase (decrease) in accrued salaries and related benefits (1,412) 12,419
----------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES (22,458) 3,326,353
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of equipment (9,582) --
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Divisional equity contributions (distributions), net 32,040 (3,326,353)
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ -- $ --
=========== ===========
See notes to financial statements.
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION, BUSINESS AND BASIS OF PRESENTATION
Sigcom, Inc. was incorporated in October 1985 to provide information technology
and communications solutions to government and commercial customers. The
Training Division of Sigcom, Inc. concentrates on the integration and
replication of real-life, urban battlefield environments, as they exist in third
world countries. The Training Division's primary customer has been the U. S.
Army Simulation, Training and Instrumentation Command, an agency of the U.S.
Government.
On July 20, 2001, Sigcom, Inc. sold certain of the assets and liabilities of the
Training Division to Anteon International Corporation for approximately $10.4
million. The accompanying financial statements present the financial condition,
results of operations and cash flows of the Training Division of Sigcom, Inc.
(the "Training Division"). The accompanying financial statements include no
adjustments related to the sale of the Training Division.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure 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.
EQUIPMENT AND DEPRECIATION
Equipment is stated at cost. Depreciation of equipment is provided using
accelerated methods over the estimated useful lives of 5 to 7 years.
The Training Division follows the provisions of Statement of Financial
Accounting Standards No. 121, ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS
AND LONG-LIVED ASSETS TO BE DISPOSED OF ("SFAS No. 121"). SFAS No. 121 requires
that long-lived assets be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future undiscounted net cash
flows expected to be generated by the asset. If such assets are considered to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amount of the assets exceeds the fair value of the assets.
REVENUE RECOGNITION
Revenue from long-term fixed price contracts is recognized on the
percentage-of-completion method, measured by the proportion of costs incurred to
date to estimated total costs for each contract. Revenue under time and
materials contracts is recognized as labor hours and materials costs are
incurred, based on the contractually agreed-upon hourly rates and cost
reimbursement methods.
Costs of revenues include all direct material and labor costs and those indirect
costs related to contract performance. General and administrative costs are
charged to expense as incurred. Provisions for estimated losses on the
uncompleted contracts are made in the period in which such losses are
determined. Changes in estimated profitability are recognized in the period in
which the revisions are determined.
8
NOTE A - ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
S CORPORATION - INCOME TAX STATUS
Sigcom, Inc., with the consent of its shareholders, has elected under the
Internal Revenue Code to be an S corporation and is not directly subject to
federal and state income taxes. In lieu of corporation income taxes, the
shareholders of an S corporation are taxed on their proportionate share of the
Company's taxable income. Therefore, no provision or liability for income taxes
has been included in the Training Division's financial statements.
DIVISIONAL EQUITY
Divisional equity represents Sigcom, Inc.'s ownership of the net assets of the
Training Division. The Training Division does not maintain its own cash
accounts. All payments of Training Division expenses are made by Sigcom, Inc.,
and all receipts of contract payments are made to Sigcom, Inc. Such payments and
receipts of cash increase and decrease, respectively, the divisional equity
account.
CORPORATE ALLOCATIONS
Overhead consists of facilities costs such as rent, maintenance, and utilities
and infrastructure costs. These costs are allocated to the overhead pool based
on the ratio of direct employees to general and administrative employees. Fringe
costs consist of payroll taxes, health insurance, 401(k) employer match, and
other employee benefit costs. Overhead costs and fringe costs were allocated to
the Training Division based on the ratio of Training Division direct labor to
total direct labor. For the years ended December 31, 2000 and 1999, Sigcom, Inc.
allocated overhead of $782,232 and $467,936 and fringes of $456,481 and
$328,023, respectively, to the Training Division.
General and administrative costs consist primarily of sales and marketing costs,
accounting costs, and other miscellaneous costs not charged directly to jobs or
to overhead. Sigcom, Inc. allocates general and administrative costs to the
Training Division based on the ratio of Training Division direct costs to total
direct costs. Management of the Training Division believes that the amount
allocated for such general and administrative costs is consistent with the
amount that would have been incurred had the Training Division been a separate
entity during 2000 and 1999.
9
NOTE B - COSTS AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS
Costs, estimated earnings, and billings on uncompleted contracts are summarized
as follows at December 31,:
2000 1999
Costs incurred on uncompleted contracts $ 32,617,270 $ 22,075,457
Estimated earnings 7,309,996 5,451,089
------------- ------------
39,927,266 27,526,546
Billings to date 38,627,008 26,316,284
------------- ------------
Costs and Estimated Earnings in Excess of Billings
Uncompleted Contracts $ 1,300,258 $ 1,210,262
============= ============
Approximately 100% of the Training Division's revenues for 2000 and 1999 have
been earned, and 100% of the accounts receivable as of December 31, 2000 and
1999 are due, from agencies of the U.S. Government.
The Training Division anticipates that costs and estimated earnings in excess of
billings on uncompleted contracts as of December 31, 2000 will primarily be
billed and due within one year.
The accuracy and appropriateness of the Training Division's direct and indirect
costs and expenses under its government contracts, and therefore its accounts
receivable recorded pursuant to such contracts, are subject to extensive
regulation and audit, including by the U.S. Defense Contract Audit Agency
("DCAA") or by other appropriate agencies of the U.S. Government. Such agencies
have the right to challenge the Training Division's cost estimates or
allocations with respect to any government contracts. Additionally, a portion of
the payments to the Training Division under government contracts are provisional
payments that are subject to potential adjustment upon audit by such agencies.
Although no assurances can be given, in the opinion of management, any
adjustments likely to result from inquiries or audits of its contracts would not
have a material adverse impact on the Training Division's financial condition or
results of operations.
NOTE C - NOTE PAYABLE TO BANK
Sigcom, Inc. has a line of credit not to exceed $5,000,000 at Bank of America.
This line of credit calls for interest at a variable rate equal to 90 day
L.I.B.O.R. plus 200 basis points and contains certain covenants to be followed
by Sigcom, Inc. As of December 31, 2000, Sigcom, Inc. was either in compliance
or had received waivers of non-compliance under the loan covenants. The balance
drawn on this line was $3,250,016 at December 31, 2000. Sigcom, Inc. was not
indebted on this line at December 31, 1999. The line of credit is secured by
substantially all of the assets of Sigcom, Inc., including those of the Training
Division. No interest expense from the line of credit has been directly
allocated to the Training Division.
10
NOTE D - LEASE COMMITMENTS
While the Training Division is not directly obligated under noncancelable
operating leases, Sigcom, Inc. is obligated under noncancelable operating leases
for property and equipment that expire over the next three years.
Rent expense is allocated to the Training Division both directly and through
Sigcom, Inc.'s allocation of general and administrative expenses. Rent expense
directly allocated to the training division was approximately $49,000 and
$18,000 for the years ended December 31, 2000 and 1999, respectively.
NOTE E - PENSION PLAN
Sigcom, Inc. maintains a 401-K pension plan for all eligible employees.
Employees of the Training Division are eligible to participate in the plan each
January 1 and July 1 of each year, if they have reached age 20 1/2 and work at
least 1,000 hours per year. Generally, employees can defer up to 15% of their
gross salary into the plan. The employer can make a matching discretionary
contribution for the employee, not to exceed 50% of the first 5% of the
employees' annual contribution (excluding employee contributions made on bonuses
and commissions). Employer contributions to the plan for Training Division
employees were $34,349 and $27,743 for the years ended December 31, 2000 and
1999, respectively.
NOTE F - STOCK OPTION PLAN
During 1998, Sigcom, Inc. adopted two stock option plans. Certain employees of
the Training Division also participate in these plans. Under the plans, Sigcom,
Inc. may grant options for up to 3,000,000 and 1,000,000 shares of common stock
under the key and non-key plans respectively. The exercise price for options
granted under the plans is fifty cents ($.50) per share. The options under the
key plan begin vesting at the rate of 1/3 each year and as such are fully vested
after three years. Options granted under the non-key plan may be exercised only
upon a Change of Control (as defined in the plan). The options expire three
years after full vesting. At December 31, 2000 and 1999, there were 290,000 and
21,000 options outstanding under the key and non-key plans, respectively, which
had been granted to Training Division employees.
11
SIGCOM, INC. TRAINING DIVISION
Unaudited Balance Sheet
June 30, 2001
CURRENT ASSETS
Accounts receivable $ 2,102,079
Costs and estimated earnings in excess of billings
on uncompleted contracts 1,654,081
-----------
TOTAL CURRENT ASSETS 3,756,160
-----------
EQUIPMENT
Equipment 181,426
Accumulated depreciation (118,595)
-----------
62,831
TOTAL ASSETS $ 3,818,991
===========
CURRENT LIABILITIES
Accounts payable $ 848,102
Accrued salaries and related benefits 164,220
Billings in excess of costs and estimated earnings
on uncompleted contracts 39,798
-----------
TOTAL CURRENT LIABILITIES 1,052,120
DIVISIONAL EQUITY 2,766,871
-----------
TOTAL LIABILITIES AND DIVISIONAL EQUITY $ 3,818,991
===========
See note to financial statements and accountant's report.
SIGCOM, INC. TRAINING DIVISION
Uaudited Statements of Operations and Divisional Equity
For the Six Months Ended June 30, 2001 and 2000
2001 2000
REVENUES $ 7,238,672 $ 5,985,978
COSTS OF REVENUES 6,022,090 4,376,566
----------- -----------
GROSS PROFIT 1,216,582 1,609,412
GENERAL AND ADMINISTRATIVE EXPENSES 578,578 669,417
----------- -----------
NET INCOME 638,004 939,995
DIVISIONAL EQUITY, BEGINNING 3,713,615 1,773,144
DIVISIONAL EQUITY CONTRIBUTIONS
(DISTRIBUTIONS), NET (1,584,748) 836,877
----------- -----------
DIVISIONAL EQUITY, ENDING $ 2,766,871 $ 3,550,016
=========== ===========
See note to financial statements and accountant's report.
SIGCOM, INC. TRAINING DIVISION
Unaudited Statements of Cash Flows
For the six Months Ended December 31, 2001 and 2000
2001 2000
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 638,004 $ 939,995
Adjustments to reconcile net income to
net cash provided (used) by operating activities:
Depreciation expense 17,877 17,184
Decrease (increase) in accounts receivable 1,369,534 (1,815,804)
Increase in costs and estimated earnings
in excess of billings on uncompleted contracts (353,823) (270,921)
Increase (decrease) in accounts payable (203,179) 250,030
Increase in accrued salaries and related benefits 76,537 42,639
Increase in billings in excess of costs and
estimated earnings on uncompleted contracts 39,798 --
----------- -----------
NET CASH PROVIDED (USED) BY
OPERATING ACTIVITIES 1,584,748 (836,877)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Divisional equity contributions (distributions), net (1,584,748) 836,877
----------- -----------
NET INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS $ -- $ --
=========== ===========
See note to financial statements and accountant's report.
NOTE A - BASIS OF PRESENTATION
The information furnished in the accompanying unaudited balance sheet,
statements of operations and divisional equity, and statements of cash flows
have been prepared in accordance with accounting principles generally accepted
in the United States of America for interim financial information. In the
opinion of management, such information contains all adjustments, consisting of
only normal recurring adjustments, considered necessary for a fair presentation
of such information. The operating results for the six months ended June 30,
2001 may not be indicative of the results of operations for the year ending
December 31, 2001 or any future period. This financial information should be
read in conjunction with the Sigcom, Inc. Training Division's December 31, 2000
audited financial statements and footnotes thereto.
On July 20, 2001, Sigcom, Inc. sold certain assets and liabilities of the
Training Division to Anteon International Corporation for approximately $10.4
million. The accompanying unaudited financial statements include no adjustments
related to the sale of the Training Division.
16
UNAUDITED PRO FORMA CONDENSED
CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma condensed consolidated financial information
has been prepared by Anteon's management and gives effect to the acquisition of
Sherikon, Inc. (Sherikon) completed on October 20, 2000, the sale of the
Company's Center for Information Technology Education (CITE) on June 29, 2001,
the closure of the Company's operations of CITI-SIUSS LLC (formerly known as
Anteon-CITI, LLC) (CITI) on June 22, 2001, the sale of the stock of Interactive
Media Corporation (IMC) on July 20, 2001, and the acquisition of the assets,
contracts and personnel of the SIGCOM, Inc. training division (SIGCOM) on
July 20, 2001.
The unaudited pro forma condensed consolidated statement of operations
for the year ended December 31, 2000, has been prepared to give effect to the
Sherikon and SIGCOM acquisitions as if they had occurred on January 1, 2000, and
to give further effect to removing the operating results of the IMC commercial
division, CITE and CITI for the twelve months ended December 31, 2000. The
unaudited pro forma condensed consolidated statement of operations for the
six-month period ended June 30, 2001, has been prepared to give effect to the
SIGCOM acquisition as if it had occurred as of January 1, 2000, and to give
further effect to removing the operating results of the IMC commercial division,
CITE and CITI for the six-month period ended June 30, 2001. The unaudited pro
forma condensed consolidated balance sheet as of June 30, 2001, has been
prepared to give effect to the SIGCOM acquisition as if it had occurred as of
June 30, 2001 and to give further effect to removing the assets and liabilities
associated with the IMC commercial division.
The pro forma adjustments, which are based on available information and
certain assumptions that Anteon believes are reasonable under the circumstances,
are applied to the historical financial statements of Anteon. The acquisitions
are accounted for under the purchase method of accounting. Anteon's allocation
of the Sherikon purchase price is based upon an independent appraisal and other
studies completed subsequent to the Sherikon acquisition. Anteon's allocation of
the SIGCOM purchase price is based upon the preliminary estimated fair value of
assets acquired and liabilities assumed. The purchase price allocations for the
SIGCOM acquisition reflected in the accompanying unaudited pro forma condensed
consolidated financial statements may be different from the final allocation of
the purchase price, and any such differences may be material.
The accompanying unaudited pro forma condensed consolidated financial
information should be read in conjunction with the historical financial
statements and the notes thereto for Anteon and SIGCOM. The Sherikon historical
financial statements and the notes thereto have been previously included in
Anteon's Form 8-K/A as filed on November 14, 2000. The unaudited pro forma
condensed consolidated financial information is provided for informational
purposes only and does not purport to represent what Anteon's financial position
or results of operations would actually have been had the acquisitions occurred
on such dates or to project Anteon's results of operations or financial position
for any future period.
17
Anteon International Corporation and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(in thousands)
Year Ended December 31, 2000
---------------------------------------------------------------------------------------
Pro forma
Sherikon
Historical Business Anteon as Historical acquisition Anteon as
Anteon Dispositions (a) adjusted Sherikon (b) adjustments further adjusted
---------------------------------------------------------------------------------------
Revenues $ 542,807 $ (21,471) $ 521,336 $ 57,021 $ -- $ 578,357
Costs of revenues 474,924 (20,936) 453,988 49,594 -- 503,582
---------------------------------------------------------------------------------------
Gross profit 67,883 (535) 67,348 7,427 -- 74,775
---------------------------------------------------------------------------------------
Operating expenses:
General & administrative expenses 38,506 (1,938) 36,568 3,506 (1,939) c 38,135
Amortization of noncompete agreements 866 -- 866 -- -- 866
Goodwill amortization 4,714 -- 4,714 -- 841 d 5,555
Other intangible amortization 2,673 -- 2,673 -- 431 e 3,104
Costs of acquisitions 86 -- 86 -- -- 86
---------------------------------------------------------------------------------------
Total operating expenses 46,845 (1,938) 44,907 3,506 (667) 47,746
---------------------------------------------------------------------------------------
Operating income 21,038 1,403 22,441 3,921 667 27,029
Interest expense, net of interest income 22,746 (1,418) 21,328 (2) 2,295 f 23,621
Minority interest in (earnings) losses
of subsidiaries 24 (31) (7) -- -- (7)
---------------------------------------------------------------------------------------
Income (loss) before provision (benefit)
for income taxes (1,684) 2,790 1,106 3,923 (1,628) 3,401
Provision (benefit) for income taxes 1,225 1,111 k 2,336 1,445 (191) k 3,590
---------------------------------------------------------------------------------------
Net income (loss) $ (2,909) $ 1,679 $ (1,230) $ 2,478 $ (1,437) $ (189)
=======================================================================================
---------------------------------------
Pro forma
SIGCOM
Historical acquisition Pro forma
SIGCOM (g) adjustments Anteon
---------------------------------------
Revenues $ 12,450 $ -- $ 590,807
Costs of revenues 9,144 (346) h 512,380
---------------------------------------
Gross profit 3,306 346 78,427
---------------------------------------
Operating expenses:
General & administrative expenses 1,398 (925) h 38,608
Amortization of noncompete agreements -- -- 866
Goodwill amortization -- -- 5,555
Other intangible amortization -- 174 i 3,278
Costs of acquisitions -- -- 86
---------------------------------------
Total operating expenses 1,398 (751) 48,393
---------------------------------------
Operating income 1,908 1,097 30,034
Interest expense, net of interest income -- 1,351 j 24,972
Minority interest in (earnings) losses
of subsidiaries -- -- (7)
---------------------------------------
Income (loss) before provision (benefit)
for income taxes 1,908 (254) 5,055
Provision (benefit) for income taxes -- 662 k 4,252
---------------------------------------
Net income (loss) $ 1,908 $ (916) $ 803
=======================================
See accompanying notes to the unaudited pro forma condensed consolidated
financial information.
Anteon International Corporation and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Operations
(in thousands)
Six Months Ended June 30, 2001
----------------------------------------------------------------------------------
Pro forma
Historical Business Anteon as Historical Acquisition Pro forma
Anteon Dispositions (a) adjusted SIGCOM (g) Adjustments Anteon
----------------------------------------------------------------------------------
Revenues $ 351,152 $ (12,662) $ 338,490 $ 7,239 $ -- $ 345,729
Costs of revenues 310,335 (15,406) 294,929 6,022 (274) h 300,677
----------------------------------------------------------------------------------
Gross profit 40,817 2,744 43,561 1,217 274 45,052
----------------------------------------------------------------------------------
Operating expenses:
General & administrative expenses 23,435 (1,059) 22,376 579 (303) h 22,652
Amortization of noncompete agreements 349 -- 349 -- -- 349
Goodwill amortization 2,892 -- 2,892 -- -- 2,892
Other intangible amortization 1,106 -- 1,106 -- 87 i 1,193
Costs of acquisitions -- -- -- -- -- --
----------------------------------------------------------------------------------
Total operating expenses 27,782 (1,059) 26,723 579 (216) 27,086
----------------------------------------------------------------------------------
Operating income 13,035 3,803 16,838 638 490 17,966
Other Income 587 (587) -- -- -- --
Interest expense, net of interest income 12,016 (577) 11,439 -- 547 j 11,986
Minority interest in (earnings) losses
of subsidiaries 5 (32) (27) -- -- (27)
----------------------------------------------------------------------------------
Income (loss) before provision (benefit)
for income taxes 1,611 3,761 5,372 638 (57) 5,953
Provision (benefit) for income taxes 1,187 1,927 k 3,114 -- 232 k 3,346
----------------------------------------------------------------------------------
Net income (loss) $ 424 $ 1,834 $ 2,258 $ 638 $ (289) $ 2,607
==================================================================================
See accompanying notes to the unaudited pro forma condensed consolidated
financial information.
ANTEON INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
The following adjustments have been reflected in the Unaudited Pro Forma
Condensed Consolidated Statements of Operations:
(a) To remove the historical results of operations for businesses disposed of
or sold including the Company's Center for Information Technology Education
(CITE) sold on June 29, 2001, the closure of the Company's operations of
CITI-SIUSS LLC (formerly known as Anteon-CITI, LLC) (CITI) on June 22,
2001, and the Interactive Media Corporation (IMC) commercial division, sold
on July 20, 2001, for the year ended December 31, 2000 and for the
six-month period ended June 30, 2001.
Included in these adjustments are reductions of interest expense of
$1,418,000 and $577,000 for the year ended December 31, 2000, and six
months ended June 30, 2001, respectively, related to the use of the net
proceeds from the sale of IMC of $12,069,000 to reduce borrowings under
Anteon's revolving credit facility. The reductions in interest expense are
recognized at rates of 11.75% ( the Company's average incremental borrowing
rate for the period) for the year ended December 31, 2000 and 9.50% (the
Company's average incremental borrowing rate for the period) for the six
months ended June 30, 2001.
(b) To reflect the historical results of operations of Sherikon, Inc. for the
period prior to the acquisition date of October 20, 2000.
(c) To reflect reductions in Sherikon's historical executive compensation
costs, duplicate facilities costs and other costs that were eliminated
subsequent to the acquisition, as follows:
Year Ended
December 31, 2000
-----------------
Executive compensation $ 1,277,000
Duplicate facilities 637,000
Other 25,000
-----------
$ 1,939,000
===========
(d) To record the amortization of goodwill of $20,177,000 for the period
January 1, 2000 to October 20, 2000 associated with the purchase of
Sherikon. Goodwill resulting from the Sherikon acquisition is amortized on
a straight-line basis over 20 years.
(e) To record amortization expense related to the identifiable intangible
assets associated with the acquisition of Sherikon. The Company obtained
an independent appraisal in November 2000 for the allocation of the
purchase price related to the acquisition of Sherikon. Based upon the
results of the valuation the Company recorded the following intangible
assets:
(Continued)
21
ANTEON INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
Adjustment for the
period from
January 1, 2000 to
October 20, 2000
----------------
Workforce $ 760,000 4 years $ 158,000
Contract backlog $1,310,000 4 years 273,000
----------
$ 431,000
==========
(f) To record interest expense at an average rate of 11.75% related to the
additional average borrowings of $22.1 million from the Sherikon
acquisition and to record a reduction in interest income at a rate of 5.0%
to reflect the use of the Company's available cash balance of $4.1
million.
(g) To reflect the historical results of operations of the SIGCOM, Inc.
training division.
(h) To reflect the reduction in historical SIGCOM, Inc. training division
allocated overhead and general and administrative costs associated with
functions not acquired by the Company. Existing Anteon personnel will
perform such functions.
(i) To record amortization expense related to the preliminary estimate of the
fair value of identifiable intangible assets associated with the
acquisition of SIGCOM, as follows:
Year Ended Six months ended
December 31, 2000 June 30, 2001
----------------- -------------
Contract backlog $ 697,000 4 years $174,000 $87,000
(j) To record interest expense at an average rate of 11.75% for the year ended
December 31, 2000, and 9.5% for the six months ended June 30, 2001,
related to the additional average borrowings of $11.5 million from the
SIGCOM acquisition.
(k) To recognize Federal and state income taxes at a combined rate of 40%,
after adjusting income (loss) before taxes for non-deductible expenses,
primarily for goodwill amortization expense.
(l) On July 20, 2001, the Financial Accounting Standards Board issued
Statement No. 141 ("SFAS No. 141"), BUSINESS COMBINATIONS, and Statement
No. 142 ("SFAS No. 142"), GOODWILL AND OTHER INTANGIBLE ASSETS. SFAS No.
141 addresses the accounting for acquisitions of businesses and is
effective for acquisitions occurring on or after July 1, 2001. SFAS No. 142
addresses the method of identifying and measuring goodwill and other
intangible assets acquired in a business combination, eliminates further
amortization of goodwill, and requires periodic evaluations of impairment
of goodwill balances. SFAS No. 142 is effective January 1, 2002.
(Continued)
22
ANTEON INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
The pro forma financial information gives effect to the acquisition of the
SIGCOM, Inc. training division using the provisions of SFAS No. 141 and
SFAS No. 142. Accordingly, acquired goodwill and intangibles with
indefinite lives have not been amortized. The acquired intangible asset for
contract backlog is being amortized over a 4-year period.
For the Company's acquisitions consummated prior to July 1, 2001, no pro
forma adjustments have been included to apply the provisions of SFAS No.
141 and SFAS No. 142 to goodwill or separately identifiable intangible
assets, or related amortization expense. Beginning January 1, 2002, the
Company will no longer amortize goodwill and intangibles with indefinite
lives related to such acquisitions. Had the provisions of SFAS No. 141 and
SFAS No. 142 been applied in the accompanying unaudited Pro Forma condensed
consolidated statements of operations to acquisitions consummated prior to
July 1, 2001, amortization expense would have decreased by $6,283,000 and
$3,164,000 and net income would have increased by $5,705,000 and $2,863,000
for the year ended December 31, 2000, and the six months ended June 30,
2001, respectively.
(m) The accompanying unaudited pro forma condensed consolidated statement of
operations for the six months ended June 30, 2001 excludes gains on the
sales of CITE and IMC of approximately $100,000 and $3,600,000,
respectively, since such gains are considered non-recurring in nature.
(n) An increase of 1/8% in the interest rates for the additional average
borrowings described in notes (f) and (j) above will result in an increase
in pro forma interest expense of $25,000 and $12,000 and pro forma net
income of $780,000 and $2,586,000 for the year ended December 31, 2000, and
the six months ended June 30, 2001, respectively.
23
ANTEON INTERNATIONAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands)
As of June 30, 2001
--------------------------------------------------------------------------
Pro forma
Business
Historical Business disposition Anteon as Historical
Anteon Dispositions (a) adjustments(b) adjusted SIGCOM (c)
-------------------------------------------------------------------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,502 $ (6) $ -- $ 1,496 $ --
Accounts receivable, net 133,291 (3,695) -- 129,596 3,756
Prepaid expenses and other current assets 8,477 (291) -- 8,186 --
Deferred tax assets, net 1,564 -- -- 1,564 --
-------------------------------------------------------------------------
Total current assets 144,834 (3,992) -- 140,842 3,756
Property and equipment, net 14,343 (216) -- 14,127 63
Goodwill, net 137,611 (4,641) -- 132,970 --
Other assets, net 15,505 (833) -- 14,672 --
-------------------------------------------------------------------------
Total assets $ 312,293 $ (9,682) $ -- $ 302,611 $ 3,819
=========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Term loan, current portion $ 9,863 $ -- $ -- $ 9,863 $ --
Subordinated notes payable, current portion 4,831 -- -- 4,831 --
Business purchase consideration payable 1,120 -- -- 1,120 --
Accounts payable 36,303 (108) -- 36,195 848
Accrued expenses 51,139 (1,210) 553 50,482 164
Income taxes payable 253 -- 1,271 1,524 --
Deferred revenue 3,181 -- -- 3,181 40
Other current liabilities,net 89 (26) -- 63 --
-------------------------------------------------------------------------
Total current liabilities 106,779 (1,344) 1,824 107,259 1,052
Revolving credit facility 22,600 -- (12,069) 10,531 --
Term loan facility, less current portion 42,123 -- -- 42,123 --
Senior subordinated notes payable 100,000 -- -- 100,000 --
Subordinated notes payable, less current portion 2,165 -- -- 2,165 --
Deferred tax liabilities, net 7,954 -- -- 7,954 --
Other long term liabilities 861 -- -- 861 --
-------------------------------------------------------------------------
Total liabilities 282,482 (1,344) (10,245) 270,893 1,052
Minority interest in subsidiaries 109 -- -- 109 --
Stockholders' equity:
Common stock 713 -- -- 713 --
Additional paid-in capital 40,313 -- -- 40,313 --
Accumulated other comprehensive income (loss):
Foreign currency translation (39) -- -- (39) --
Interest rate swaps (1,115) -- -- (1,115) --
Treasury stock (9) -- -- (9) --
Due from parent (12,417) -- -- (12,417) --
Retained earnings 2,256 (8,338) 10,245 4,163 2,767
-------------------------------------------------------------------------
Total stockholders' equity 29,702 (8,338) 10,245 31,609 2,767
-------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 312,293 $ (9,682) $ -- $ 302,611 $ 3,819
=========================================================================
-------------------------
Pro forma
SIGCOM
acquisition Pro forma
adjustments Anteon
-------------------------
ASSETS
Current assets:
Cash and cash equivalents $ -- $ 1,496
Accounts receivable, net -- 133,352
Prepaid expenses and other current assets -- 8,186
Deferred tax assets, net -- 1,564
-------------------------
Total current assets -- 144,598
Property and equipment, net -- 14,190
Goodwill, net 8,013 e 140,983
Other assets, net 697 e 15,369
-------------------------
Total assets $ 8,710 $ 315,140
=========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Term loan, current portion $ -- $ 9,863
Subordinated notes payable, current portion -- 4,831
Business purchase consideration payable -- 1,120
Accounts payable -- 37,043
Accrued expenses -- 50,646
Income taxes payable -- 1,524
Deferred revenue -- 3,221
Other current liabilities,net -- 63
-------------------------
Total current liabilities -- 108,311
Revolving credit facility 11,477 e 22,008
Term loan facility, less current portion -- 42,123
Senior subordinated notes payable -- 100,000
Subordinated notes payable, less current portion -- 2,165
Deferred tax liabilities, net -- 7,954
Other long term liabilities -- 861
-------------------------
Total liabilities 11,477 283,422
Minority interest in subsidiaries -- 109
Stockholders' equity:
Common stock -- 713
Additional paid-in capital -- 40,313
Accumulated other comprehensive income (loss):
Foreign currency translation -- (39)
Interest rate swaps -- (1,115)
Treasury stock -- (9)
Due from parent -- (12,417)
Retained earnings (2,767) 4,163
-------------------------
Total stockholders' equity (2,767) 31,609
-------------------------
Total liabilities and stockholders' equity $ 8,710 $ 315,140
=========================
See accompanying notes to unaudited pro forma condensed consolidated financial
statements.
ANTEON INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The following adjustments have been reflected in the Unaudited Pro Forma
Condensed Consolidated Balance Sheet:
(a) To remove the historical assets and liabilities related to the IMC
commercial division.
(b) To reflect the use of the net proceeds from the sale of IMC to reduce
borrowings under Anteon's revolving credit facility, as follows:
Consideration received $13,318,000
Payments to IMC option holders (810,000)
Management bonus for IMC sale
completion (100,000)
Costs and expenses related to the sale (339,000)
------------
Net proceeds from sale $12,069,000
In addition, certain costs relating to employee severance, accelerated
royalty payments and other non-income taxes were incurred and accrued
for in connection with the sale of IMC totaling approximately
$553,000. Pro Forma income taxes payable of $1,271,000 associated with
the gain on sale of IMC has also been accrued as of June 30, 2001.
(c) To reflect the historical financial position of the SIGCOM, Inc.
training division. Certain reclassifications to SIGCOM's historical
balance sheet accounts have been made to conform to the presentation
of Anteon.
(d) The SIGCOM acquisition will be accounted for as a purchase pursuant to
the provisions of SFAS No. 141 and SFAS No. 142. Accordingly, the
identifiable tangible and separately identifiable intangible assets
acquired and liabilities assumed will be recognized at their estimated
fair values as of the date of combination. The pro forma adjustments
herein are based on management's preliminary estimates of fair value.
The final allocation of the purchase price, when completed, may differ
materially from the preliminary purchase price allocation herein.
(e) The purchase price paid for SIGCOM is as follows:
Cash consideration paid at closing $11,204,000
Estimated costs and expenses 273,000
-----------
Total consideration $11,477,000
===========
The total consideration for the acquisition was financed with
borrowings under Anteon's revolving credit facility.
(Continued)
25
ANTEON INTERNATIONAL CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
The preliminary allocation of the purchase price is as follows:
Historical net assets of the
SIGCOM training division, as of July 20, 2001 $ 3,058,000
Goodwill 7,722,000
Contract backlog 697,000
-----------
Total consideration $11,477,000
===========
The adjustment for the elimination of SIGCOM's historical
stockholders' equity as of June 30, 2001 and the resulting goodwill
from the acquisition in the accompanying unaudited Pro Forma condensed
consolidated balance sheet differs from the amount described above by
approximately $291,000 due to the timing of the acquisition.
26