-----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, Ly2GGpwFpXyYRO0gKyiSXIM4Ag/zG8c3ssYXN5zwIaU3H6t69+4pUk1i6cagQjuo ee3X/Mo/wZnujxYleo1wJQ== 0000950109-97-002199.txt : 19970317 0000950109-97-002199.hdr.sgml : 19970317 ACCESSION NUMBER: 0000950109-97-002199 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19961231 ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970314 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: INDUSTRIAL TRAINING CORP CENTRAL INDEX KEY: 0000764867 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-MOTION PICTURE & VIDEO TAPE PRODUCTION [7812] IRS NUMBER: 521078263 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-13741 FILM NUMBER: 97556380 BUSINESS ADDRESS: STREET 1: 13515 DULLES TECHNOLOGY DR CITY: HERNDON STATE: VA ZIP: 22071 BUSINESS PHONE: 7037133335 MAIL ADDRESS: STREET 1: 13515 DULLES TECHNOLOGY DRIVE CITY: HERNDON STATE: VA ZIP: 22071 8-K/A 1 FORM 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): December 31, 1996 INDUSTRIAL TRAINING CORPORATION (Exact name of registrant as specified in its charter) MARYLAND 0-13741 52-1078263 (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification Number) 13515 DULLES TECHNOLOGY DRIVE HERNDON, VIRGINIA 20171-3413 (Address of principal executive offices) Registrant's telephone number, including area code: (703) 713-3335 NONE (Former name and address, if changed since last report) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS The following financial statements and pro forma financial information concerning the Company are being provided in accordance with the instructions to this item not later than 60 days from the date of the Company's Form 8-K previously filed on January 13, 1997. (a) Financial Statements of Business Acquired (b) Pro forma Financial Information (c) Exhibits 2.1 Agreement and Plan of Reorganization dated as of December 31, 1996, by and among Industrial Training Corporation, ITC Acquisition Corp. and Anderson Soft- Teach, without annexes or schedules.* 4.1 Registration Rights and Shareholders Agreement dated as of December 31, 1996 between Industrial Training Corporation and the former shareholders of Anderson Soft-Teach identified therein.* 22.1 Press Release dated January 3, 1997 issued by Industrial Training Corporation.* 23 Independent Auditor's Consent * These exhibits are incorporated herein by reference to the corresponding exhibit in the Company's Form 8-K (Commission File No. 0-13741) filed with the Securities and Exchange Commission on January 13, 1997. 2 (a) ANDERSON SOFT-TEACH Financial Statements for the Six Months Ended December 30, 1996 and the Years Ended June 30, 1996 and 1995 and Independent Auditors' Report 3 INDEPENDENT AUDITORS' REPORT Anderson Soft-Teach: We have audited the accompanying balance sheets of Anderson Soft-Teach (the "Company") as of December 30, 1996 and June 30, 1996 and 1995, and the related statements of operations, shareholders' equity, and cash flows for the six months ended December 30, 1996 and the years ended June 30, 1996 and 1995. 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 audit. We conducted our audits in accordance with generally accepted auditing standards. 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 audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Anderson Soft-Teach at December 30, 1996 and June 30, 1996 and 1995, and the results of its operations and its cash flows for the six months ended December 30, 1996 and the years ended June 30, 1996 and 1995 in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP San Francisco, California February 21, 1997 4 ANDERSON SOFT-TEACH BALANCE SHEETS DECEMBER 30, 1996, JUNE 30, 1996 AND 1995 - --------------------------------------------------------------------------------------------------------------- June 30, December 30, -------------------------- 1996 1996 1995 ASSETS CURRENT ASSETS: Cash $ 157,002 $ 117,551 $ 95,472 Trade receivables (net of allowance: December 30, 1996, $33,000; June 30, 1996, $21,000; June 30, 1995, $33,000) 793,032 706,815 926,300 Multimedia and video production costs and inventories 857,568 896,175 814,409 Prepaid expenses 22,828 24,619 21,789 Income taxes receivable 278,001 127,112 -- Deferred tax assets 133,116 14,369 14,476 ---------- ---------- ---------- Total current assets 2,241,547 1,886,641 1,872,446 PROPERTY AND EQUIPMENT - Net 254,023 239,881 193,726 OTHER ASSETS 96,946 91,920 80,055 ---------- ---------- ---------- TOTAL $2,592,516 $2,218,442 $2,146,227 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 345,375 $ 308,978 $ 523,252 Accrued liabilities 222,614 184,807 179,488 Income tax payable -- -- 108,573 Deferred revenue 306,241 -- -- Bank line of credit 515,000 520,000 -- ---------- ---------- ---------- Total current liabilities 1,389,230 1,013,785 811,313 ---------- ---------- ---------- DEFERRED RENT 26,407 22,124 2,700 ---------- ---------- ---------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' EQUITY: Common stock (no par value - 20,000,000 authorized) 457,143 62,332 59,412 Shareholders' notes receivable (93,615) -- -- Retained earnings 813,351 1,120,201 1,272,802 ---------- ---------- ---------- Total shareholders' equity 1,176,879 1,182,533 1,332,214 ---------- ---------- ---------- TOTAL $2,592,516 $2,218,442 $2,146,227 ========== ========== ==========
See notes to financial statements. 5 ANDERSON SOFT-TEACH STATEMENTS OF OPERATIONS SIX MONTHS ENDED DECEMBER 30, 1996 AND YEARS ENDED JUNE 30, 1996 AND 1995 - ----------------------------------------------------------------------------- Six Months Year Ended Ended June 30, December 30, ------------------------ 1996 1996 1995 NET REVENUES $2,503,238 $4,707,569 $6,787,524 ---------- ---------- ---------- COSTS AND EXPENSES: Cost of revenues 887,056 1,832,313 2,449,121 Sales and marketing 1,083,111 1,838,683 2,333,857 General and administrative 570,068 1,086,843 1,250,831 Research and development 139,317 207,674 154,929 Acquisition expenses 123,277 -- -- ---------- ---------- ---------- Total costs and expenses 2,802,829 4,965,513 6,188,738 ---------- ---------- ---------- INCOME (LOSS) FROM OPERATIONS (299,591) (257,944) 598,786 OTHER INCOME -- 39,564 38,826 INTEREST EXPENSE - Net (23,857) (28,789) (11,234) ---------- ---------- ---------- INCOME (LOSS) BEFORE INCOME TAXES (323,448) (247,169) 626,378 INCOME TAX BENEFIT (PROVISION) 16,598 94,568 (251,821) ---------- ---------- ---------- NET INCOME (LOSS) $ (306,850) $ (152,601) $ 374,557 ========== ========== ========== See notes to financial statements. 6 ANDERSON SOFT-TEACH STATEMENT OF SHAREHOLDERS' EQUITY SIX MONTHS ENDED DECEMBER 30, 1996 AND YEARS ENDED JUNE 30, 1996 AND 1995 - --------------------------------------------------------------------------------------------------------- Common Stock Shareholders' -------------------- Notes Retained Shares Amount Receivable Earnings Total BALANCE, July 1, 1994 2,013,958 $ 58,586 $ 898,245 $ 956,831 Exercise of stock options 7,396 826 -- 826 Net income -- -- 374,557 374,557 --------- -------- ---------- ---------- BALANCE, June 30, 1995 2,021,354 59,412 1,272,802 1,332,214 Exercise of stock options 27,166 2,920 -- 2,920 Net loss -- -- (152,601) (152,601) --------- -------- ---------- ---------- BALANCE, June 30, 1996 2,048,520 62,332 1,120,201 1,182,533 Exercise of stock options 280,750 93,615 -- -- 93,615 Shareholders' notes receivable -- -- $(93,615) -- (93,615) Tax benefit of stock options exercised -- 251,789 -- -- 251,789 Stock option compensation -- 49,407 -- -- 49,407 Net loss -- -- -- (306,850) (306,850) --------- -------- -------- ---------- ---------- BALANCE, December 30, 1996 2,329,270 $457,143 $(93,615) $ 813,351 $1,176,879 ========= ======== ======== ========== ==========
See notes to financial statements. 7 ANDERSON SOFT-TEACH STATEMENT OF CASH FLOWS SIX MONTHS ENDED DECEMBER 30, 1996 AND YEARS ENDED JUNE 30, 1996 AND 1995 - -------------------------------------------------------------------------------------------------------------------------- Six Months Year Ended Ended June 30, December 30, -------------------------- 1996 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (306,850) $ (152,601) $ 374,557 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Stock option compensation 49,407 -- -- Write-off of obsolete inventory -- 264,048 101,437 Depreciation and amortization: Video production costs 291,178 258,074 645,208 Property and equipment 41,691 75,610 84,150 Deferred income taxes (118,747) 107 (2,768) Changes in assets and liabilities: Trade receivables (86,217) 219,485 156,943 Inventories 8,961 136,438 (137,069) Prepaid expenses 1,792 (2,830) (7,819) Income taxes receivable 100,900 (127,112) 70,248 Accounts payable 36,397 (214,274) 9,841 Accrued liabilities 37,807 5,319 (33,547) Deferred revenue 306,241 -- -- Deferred rent 4,283 19,424 (50,736) Income taxes payable -- (108,573) 108,573 --------- --------- -------- Net cash provided by operating activities 366,843 373,115 1,319,018 --------- --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Multimedia and video production cost additions (261,532) (740,326) (672,894) Property and equipment additions (55,834) (121,765) (95,984) Other (5,026) (11,865) (21,640) --------- --------- -------- Net cash used in investing activities (322,392) (873,956) (790,518) --------- --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayments under bank line of credit, net (5,000) 520,000 (450,000) Exercise of stock options -- 2,920 826 --------- --------- -------- Net cash (used in) provided by investing activities (5,000) 522,920 (449,174) --------- --------- -------- NET INCREASE IN CASH 39,451 22,079 79,326 CASH, Beginning of period 117,551 95,472 16,146 --------- --------- -------- CASH, End of period $ 157,002 $ 117,551 $ 95,472 ========= ========= ======== SUPPLEMENTAL DISCLOSURE: Cash paid for interest $ 27,096 $ 33,890 $ 16,309 Cash paid for income taxes -- 141,011 69,708 Noncash financing activities: Common stock issued in exchange for shareholder notes receivable 93,615 Tax benefit of stock options exercised 251,789
See notes to financial statements. 8 ANDERSON SOFT-TEACH NOTES TO FINANCIAL STATEMENTS SIX MONTHS ENDED DECEMBER 30, 1996 - -------------------------------------------------------------------------------- 1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES Organization and Operations - Anderson Soft-Teach (the "Company") develops, produces and markets multimedia and videotape training courses in the use of personal computers and software for business professionals. The Company's customers are primarily large and mid-sized corporations, and federal, state and local governments. Products are sold worldwide by the Company's sales offices in the United States, England, and Australia and by an international network of distributors. Fiscal Year End - The Company's fiscal year ends June 30, 1996. The accompanying financial statements present the Company's financial statements at December 30, 1996, immediately prior to the December 31, 1996 acquisition by Industrial Training Corporation (see Note 2). Use of Estimates - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the 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. Fair Value of Financial Instruments - The carrying amount of the Company's cash and cash equivalents approximates fair value because of the short-term maturity of those instruments. The carrying amounts of accounts receivable, accounts payable, and bank line of credit approximate their fair values. Multimedia and video production costs, which consist of costs associated with the production of the Company's multimedia and videotape training products, are capitalized and amortized using the straight-line method based on estimated product lives, generally 500 units or one year, whichever occurs first. Product lives are evaluated and adjusted periodically on a product-by-product basis. Inventories of CD's, diskettes, videotapes, printed materials and packaging materials are stated at the lower of cost (weighted average) or market. Property and equipment are stated at cost. Depreciation is computed using the straight-line method over estimated useful lives which range from three to seven years. Revenue Recognition - Revenues from the sale of training courses are recognized upon shipment. Royalty revenues from training courses marketed under other companies' labels are recognized when earned. Revenues from certain licensing agreements are recognized over the life of the agreement, generally one year. Deferred revenues represent cash collections in advance under such license agreements. Income Taxes - The Company utilizes the asset and liability method of accounting and reporting income taxes under Statement of Financial Accounting Standards ("SFAS") No. 109, Accounting for Income Taxes. Under this approach, the Company computes its tax liabilities and assets at each financial statement date by applying provisions of current tax laws to temporary differences between financial statement and income tax bases. The measurement of current tax assets is reduced, if necessary, by tax benefits which are not 9 expected to be realized. Changes in tax laws, including rate changes, result in a cumulative adjustment to deferred tax accounts during the period of change. Stock-Based Compensation - The Company accounts for its stock-based awards to employees using the intrinsic value method in accordance with APB No. 25, Accounting for Stock Issued to Employees. The Company adopted the disclosure requirements of Statement of Financial Accounting Standards No. 123 ("SFAS 123"), Accounting for Stock-Based Compensation, effective July 1, 1996. Principally because there were no stock option grants since the fiscal year beginning July 1, 1995, pro forma disclosures of net income (loss) under the provisions of SFAS 123 are not required. New Accounting Standards - The Company adopted SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, effective July 1, 1996. SFAS 121 establishes recognition and measurement criteria for impairment losses whenever events or changes in circumstances indicate that the carrying value of assets may not be recoverable. There was no financial statement impact of adopting SFAS 121. 2. ACQUISITION BY INDUSTRIAL TRAINING CORPORATION Effective December 31, 1996, the Company was acquired by Industrial Training Corporation ("ITC") pursuant to the Agreement of Reorganization (the "Agreement"). Total consideration for the acquisition was $4,500,000 in cash and 300,000 shares of ITC common stock. Pursuant to the Agreement, such total consideration is subject to certain working capital and other adjustments. In conjunction with the acquisition, certain shareholders exercised their rights under the Company's Stock Option Plan. The Company financed such exercises through the issuance of shareholder notes receivable. Such shareholders' notes receivable of $93,615 are presented as a reduction in shareholders' equity at December 30, 1996. The notes were fully repaid in January 1997. 3. MULTIMEDIA AND VIDEO PRODUCTION COSTS AND INVENTORIES Multimedia and video production costs and inventories consist of:
June 30, December 30, ----------------------------------- 1996 1996 1995 CDs, videotapes, printed materials and packaging materials $310,696 $319,657 $456,095 Multimedia and video production costs (net of accumulated amortization: December 30, 1996, $4,616,038; June 30, 1996, $4,325,860; June 30, 1995, $3,803,738) 546,872 576,518 358,314 -------- -------- -------- Total $857,568 $896,175 $814,409 ======== ======== ========
During the years ended June 30, 1996 and 1995, the Company wrote off $264,048 and $101,437, respectively, in obsolete inventory. 10 4. PROPERTY AND EQUIPMENT Property and equipment consist of:
December 30, June 30, 1996 1996 1995 ----------- ------------------------ Computer and office equipment $ 423,259 $ 367,626 $ 323,315 Furniture and fixtures 229,214 229,014 233,550 --------- --------- --------- Total 652,473 596,640 556,865 Accumulated depreciation and amortization (398,450) (356,759) (363,139) --------- --------- --------- Total $ 254,023 $ 239,881 $ 193,726 ========= ========= =========
5. BANK LINE OF CREDIT AGREEMENTS At December 30, 1996, the Company had $515,000 outstanding under two revolving bank line of credit agreements totaling $915,000 which expire March 15, 1997. Borrowings bear interest at prime (8.25% at December 30, 1996) plus 1.25%. Borrowings under these agreements are collateralized by trade receivables and property and equipment not otherwise used as collateral. At December 30, 1996 and June 30, 1996, the Company was not in compliance with the covenants regarding cash flow coverage and profitability of the bank line of credit agreements, which the bank subsequently waived. In January 1997, subsequent to the acquisition by ITC (see Note 2), all outstanding balances under bank line of credit agreements were repaid and the agreements were canceled. 6. LEASE OBLIGATIONS The Company leases its corporate and shipping facilities under noncancelable operating leases which expire in 2001. The corporate facility lease contains a five-year renewal option. Rent expense is being recognized on a straight-line basis over the term of the lease. Rent expense, principally for facilities, was $158,963 for the six months ended December 30, 1996 and $312,257 and $205,400 for the years ended June 30, 1996 and 1995, respectively. Future minimum annual lease payments are as follows: Twelve months ending December 31: 1997 $ 297,733 1998 307,040 1999 316,352 2000 186,802 ---------- Total minimum lease payments $1,107,927 ========== 11 7. INCOME TAXES The income tax provision consists of the following:
Six Months Year Ended Ended June 30, December 30, ------------------------ 1996 1996 1995 Currently (receivable) payable: Federal $ 48,070 $(101,686) $189,264 State 54,079 800 59,255 Foreign -- 6,211 6,069 --------- --------- -------- Total currently (receivable) payable 102,149 (94,675) 254,588 --------- --------- -------- Deferred: Federal (103,442) 9,935 (1,290) State (15,305) (9,828) (1,477) --------- --------- -------- Total deferred (118,747) 107 (2,767) --------- --------- -------- Total income tax benefit $ (16,598) $ (94,568) $251,821 ========= ========= ========
A reconciliation of the federal statutory rate to the Company's effective tax rate was as follows for the periods ended:
Six Months Year Ended Ended June 30, December 30, ----------------------------------- 1996 1996 1995 ----------------- ---------------- -------------- Federal benefit at statutory rate $(109,972) (34)% $(84,037) (34)% $212,969 34% State benefit, net of federal benefit (7,747) (2) (10,531) (4) 38,852 6 Increase in valuation allowance 35,057 11 Nondeductible acquisition expenses 53,379 16 Other 12,685 4 --------- --- -------- --- -------- -- Income tax (benefit) expense $ (16,598) (5)% $(94,568) (38)% $251,821 40% ========= === ======== === ======== ==
12 Deferred income taxes reflect the net tax effects of (a) temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes and (b) operating loss carryforwards. The deferred tax balances consisted of the following: June 30, Decenber 30, ---------------------------- 1996 1996 1995 Deferred tax assets: Reserves not currently deductible $ 17,507 $10,854 $16,230 Deferred revenue 132,602 - - Net operating loss carryforward 35,057 12,723 -- -------- ------- ------- 185,166 23,577 16,429 Valuation allowance (35,057) - - -------- ------- ------- Deferred tax assets 150,109 23,577 16,429 -------- ------- ------- Deferred tax liabilities: Deferred sales expenses (5,859) - - Excess tax over book depreciation and other (11,134) (9,208) (1,953) -------- ------- ------- Deferred tax liabilities (16,993) (9,208) (1,953) -------- ------- ------- Net deferred tax assets $133,116 $14,369 $14,476 ======== ======= =======
At December 30, 1996, the Company has established a valuation allowance of $35,057 related to the state net operating loss carryforwards which it believes are unlikely to be realized. At December 30, 1996, the Company had state net operating loss carryforwards of $35,057. The net operating loss carryforward expires in 2002. 8. INCENTIVE STOCK OPTION PLAN Under the 1987 Incentive Stock Plan, options to purchase 500,000 shares of common stock may be granted to key employees, officers, directors, and consultants at not less than fair market value at the date of grant as determined by the Board of Directors. Nonqualified options under this Plan may also be granted at not less than 85% of the fair market value at the date of grant as determined by the Board of Directors. Options become exercisable over four years and expire generally at the earlier of ten years from the date of grant or upon termination of employment. The Company has the right of first refusal on any sale of stock issued under this plan. This right expires over a period as determined by the Board of Directors, generally over four years. 13 Activity in the Incentive Stock Plan is as follows: Weighted Average Exercise Price Options Per Share Outstanding - July 1, 1994 260,750 $ 0.14 Granted 126,000 $ 1.05 Exercised (7,396) $ 0.11 Cancelled (15,604) $ 0.23 -------- Outstanding - June 30, 1995 (225,629 exercisable at a weighted average price of $0.29) 363,750 $ 0.45 Exercised (27,166) $ 0.11 Cancelled (3,834) $ 0.93 -------- Outstanding - June 30, 1996 (251,448 exercisable at a weighted average price of $0.29) 332,750 $ 0.47 Exercised (280,750) $ 0.33 Cancelled (52,000) $ 1.09 -------- ------ Outstanding - December 30, 1996 - $ - ======== ====== Compensation expense of $49,407 was recognized in the six months ended December 30, 1996 as a result of the Company's Board of Directors decision to accelerate vesting on 35,117 employee stock options in contemplation of the acquisition by ITC (see Note 2). In addition, the Company recorded an income tax benefit of $251,789 related to employee stock option exercises. Such amount has been shown as an income tax receivable and reflected as an increase in common stock in the statement of shareholders' equity at December 30, 1996 due to the Company's ability to carry back net operating losses to prior years and claim a refund. As of December 30, 1996, prior to the consummation of the December 31, 1996 acquisition by ITC (see Note 2), all options to purchase shares had been exercised. There were no shares available for future grant under the Stock Option Plan. 9. EMPLOYEE BENEFIT PLANS The Company has a 401(k) tax-deferred savings plan whereby all employees meeting certain age and service requirements may contribute up to 15% of their eligible compensation (up to a maximum allowed under IRS rules). Contributions may be made by the Company at the discretion of the Board of Directors. No contributions by the Company have been made to the plan since its inception. ****** 14 (b) INDUSTRIAL TRAINING CORPORATION PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) As Adjusted Retroactively for the Acquisition of Anderson Soft-Teach, Inc. ("AST") For the Year Ended December 31, 1996
Pro forma ITC AST Adjustments ITC (Historical) (Historical) Dr. (Cr.) Pro forma ------------ ------------ ----------- ----------- Revenues, net: Courseware $18,002,803 $ 4,716,170 $22,718,973 Hardware 4,140,767 -- 4,140,767 ----------- ----------- ----------- Total revenues, net 22,143,570 4,716,170 26,859,740 Costs and expenses: Courseware cost of sales 10,999,376 1,935,648 12,935,024 Hardware cost of sales 4,031,627 -- 4,031,627 Reduction in capitalized program development costs 3,300,000 -- 3,300,000 Acquired research and development 2,500,000 -- 2,500,000 Selling, general and administrative expenses 9,316,163 2,938,255 198,000 12,452,418 Costs of Acquisition -- 123,000 123,000 Equity in earnings of affiliates (216,832) -- (216,832) ----------- ----------- ----------- Total costs and expenses 29,930,334 4,996,903 35,125,237 ----------- ----------- ----------- Income (loss) before interest and provision for income taxes (7,786,764) (280,733) (8,265,497) Interest income, net 467,454 (23,327) 225,000 219,127 ----------- ----------- ----------- Income (loss) before provision for income taxes (7,319,310) (304,060) (8,046,370) Income tax expense (benefit) (1,660,000) (57,634) (23,000) (1,740,634) ----------- ----------- ----------- Net income (loss) $(5,659,310) $ (246,426) $(6,305,736) =========== =========== =========== Net income (loss) per common share $(1.59) $(1.63) =========== =========== Weighted average number of shares outstanding 3,566,000 300,000 3,866,000 =========== ======= ===========
See accompanying notes to Pro forma Consolidated Statement of Operations 15 INDUSTRIAL TRAINING CORPORATION NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) The following pro forma adjustments have been made: (1) Effective December 31, 1996, the Company purchased the common stock of Anderson Soft-Teach, Inc. (AST), a California corporation, for $4,500,000 in cash and 300,000 shares of the Company's stock. The acquisition of AST has been accounted for as a purchase in accordance with APB No. 16 Business Combinations. The fair value of the assets and liabilities of AST assumed in the purchase has been reflected in the historical balance sheet of ITC at December 31, 1996. The accompanying unaudited Pro Forma Consolidated Statement of Operations is presented as if the acquisition of AST occurred as of January 1, 1996. The Pro Forma Statement of Operations does not purport to represent what the Company's results of operations would actually have been if the acquisition, in fact, had occurred on January 1, 1996, nor does it purport to represent the results of operations for future periods. (2) Amortization of intangibles associated with the acquisition of AST include workforce investment, customer base, and goodwill, totaling $2,180,000. (3) Weighted average number of shares outstanding has been adjusted by 300,000 shares to reflect the issuance of shares of common stock in the acquisition of AST. (4) Interest income has been adjusted to reflect interest forgone as a result of $4,500,000 cash payment for acquisition of AST. (5) Income tax benefit has been adjusted as result of pro forma adjustments. 16 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Industrial Training Corporation By: /s/ Frank A. Carchedi --------------------------------------- Frank A. Carchedi Vice President and Chief Financial Officer Date: March 13, 1997 17 EXHIBIT INDEX The following Exhibits to this Report are incorporated herein by reference to the corresponding exhibits in the Company's Form 8-K (Commission File No. 0- 13741) filed with the Securities and Exchange Commission on January 13, 1997: Exhibit Description No. 2.1 Agreement and Plan of Reorganization dated as of December 31, 1996, by and among Industrial Training Corporation, ITC Acquisition Corp. and Anderson Soft-Teach, without annexes or schedules. 4.1 Registration Rights and Shareholders Agreement dated as of December 31, 1996 between Industrial Training Corporation and the former shareholders of Anderson Soft-Teach identified therein. 22.1 Press Release dated January 3, 1997 issued by Industrial Training Corporation. 23 Independent Auditor's Consent 18 EX-23 2 INDEPENDENT AUDITOR'S CONSENT EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 33- 45036, 333-18941 and 333-18939 of Industrial Training Corporation on Forms S-8 of our report dated February 21, 1997 on the financial statements of Anderson Soft-Teach, Inc. appearing in this Form 8-K/A of Industrial Training Corporation. DELOITTE & TOUCHE LLP San Francisco, California March 11, 1997 -----END PRIVACY-ENHANCED MESSAGE-----