-----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, THL1ZB1D/xjPkkCztO7yCwfZUGAhA02Qqj1cdy9WQ6JhVZBbe3mECrKWb5DwbexE jy4Y28POXjGCb9R3DQt5aA== 0000893816-05-000062.txt : 20051212 0000893816-05-000062.hdr.sgml : 20051212 20051212162717 ACCESSION NUMBER: 0000893816-05-000062 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20051212 ITEM INFORMATION: Regulation FD Disclosure ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20051212 DATE AS OF CHANGE: 20051212 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INFOCROSSING INC CENTRAL INDEX KEY: 0000893816 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374] IRS NUMBER: 133252333 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20824 FILM NUMBER: 051258565 BUSINESS ADDRESS: STREET 1: 2 CHRISTIE HEIGHTS STREET CITY: LEONIA STATE: NJ ZIP: 07605 BUSINESS PHONE: 2018404700 MAIL ADDRESS: STREET 1: 2 CHRISTIE HEIGHTS STREET CITY: LEONIA STATE: NJ ZIP: 07605 FORMER COMPANY: FORMER CONFORMED NAME: COMPUTER OUTSOURCING SERVICES INC DATE OF NAME CHANGE: 19930328 8-K 1 k8_present.txt FILE THE CONTENTS OF A SLIDE PRESENTATION. ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 ------------------ Date of Report (Date of earliest event reported) DECEMBER 12, 2005 INFOCROSSING, INC. (Exact name of registrant as specified in its charter) DELAWARE 0-20824 13-3252333 (State or other jurisdiction (Commission (IRS Employer Of incorporation) File Number) Identification No.) 2 CHRISTIE HEIGHTS STREET LEONIA, NEW JERSEY 07605 (Address of principal executive offices) (Zip Code) (201) 840-4700 (Registrant's telephone number, including area code.) N/A (Former name and former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A. 2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240. 14a- 12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240. 14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240. 13e-4(c)) SAFE HARBOR FOR FORWARD-LOOKING AND CAUTIONARY STATEMENTS This report may contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. As such, final results could differ from estimates or expectations due to risks and uncertainties, including, but not limited to: incomplete or preliminary information; changes in government regulations and policies; continued acceptance of Infocrossing, Inc.'s products and services in the marketplace; competitive factors; closing contracts with new customers and renewing contracts with existing customers on favorable terms; expanding services to existing customers; new products; technological changes; Infocrossing, Inc.'s dependence upon third-party suppliers; intellectual property rights; difficulties with the identification, completion, and integration of acquisitions, including the integration of Infocrossing Healthcare Services, Inc., f/k/a Verizon Information Technologies Inc., and (i)Structure, LLC; and other risks. For any of these factors, Infocrossing, Inc. claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended. ITEM 7.01 REGULATION FD DISCLOSURE. The Company will webcast a slide presentation as part of its conference call for the financial community regarding the Company's recent acquisition of (i)Structure, LLC. today, December 12, 2005 at 4:30 p.m. EST. The slide presentation also contains previously-released guidance for 2006. A text version of the slide presentation is filed herewith as Exhibit 99. To access the call, dial 1-800-683-1565 or 1-973-409-9259 at least ten minutes prior to the start of the call. The slide presentation also will be available on the Company's website, http://www.infocrossing.com. An audio replay of the call can be accessed for seven days beginning five minutes after the conclusion of the call by calling 1-973-341-3080. The pass code for the replay is 6783356. A webcast replay of the conference call will be available for thirty days beginning five minutes after the conclusion of the call at http://www.infocrossing.com. This conference call is being webcast by ViaVid Broadcasting and also can be accessed at ViaVid's website at http://www.viavid.net. The webcast replay also can be accessed for thirty days beginning five minutes after the conclusion of the call at ViaVid's website. To access the webcast, you will need to have the Windows Media Player on your desktop. For the free download of the Media Player please visit: http://www.microsoft.com/windows/windowsmedia/en/download/default.asp. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (d) EXHIBITS. Exhibit # 99 Text version of slide presentation accompanying call for financial community. SIGNATURES 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. Date: December 12, 2005 INFOCROSSING, INC. Registrant By: /s/ ZACH LONSTEIN --------------------------- Name: Zach Lonstein Title: Chief Executive Officer EXHIBIT INDEX Exhibit # 99 Text version of slide presentation accompanying call for financial community. EX-99 2 present.txt TEXT VERSION OF SLIDE PRESENTATION In IT Together The power of two become one: (i)Structure has joined Infocrossing (i)Structure Acquisition Overview December 12, 2005 INFOCROSSING LOGO tm The Power of Selective IT Outsourcing 1 SAFE HARBOR STATEMENT The following slides contain forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, as amended. These statements involve a number of risks and uncertainties and as such, final results could differ from estimates or expectations due to a number of factors including, without limitation, incomplete or preliminary information; changes in government regulations and policies; continued acceptance of the Company's products and services in the market place; competitive factors; closing contracts with new customers and renewing contracts with existing customers on favorable terms; expanding services to existing customers; new products; technological changes; the Company's dependence upon third party suppliers; intellectual property rights; difficulties with the identification, completion and integration of acquisitions, including the integration of Infocrossing Healthcare Services Inc., formerly Verizon Information technologies Inc., and (i)Structure, LLC; and other risks and uncertainties. For any of these factors, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities and Litigation Reform Act of 1995, as amended. 2 NON-GAAP MEASURES The Company uses non-GAAP measures of (a) Earnings Before Interest Taxes Depreciation and Amortization ("EBITDA") and (b)Free Cash Flow ("FCF") because it considers the information an important supplemental measure of the Company's performance and believes that these measures are frequently used by security analysts, investors and other interested parties in the evaluation of companies with comparable market capitalization, many of which present EBITDA and FCF when reporting their results. When either non-GAAP measure is presented in these slides, a reference is made to another slide which contains a reconciliation to the most comparable GAAP financial measure. (a) EBITDA represents net income before interest, taxes, depreciation and amortization. The Company presents EBITDA because it considers such information an important supplemental measure of its performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies with comparable market capitalization, many of which present EBITDA when reporting their results. The Company also uses EBITDA for the following purposes: (1) EBITDA is one of the factors used to determine the total amount of bonuses available to be awarded to executive officers and other employees; (2) the Company's credit agreement uses EBITDA (with additional adjustments) to measure compliance with covenants such as interest coverage; (3) EBITDA is used by prospective and current lessors as well as potential lenders to evaluate potential transactions with the Company; and (4) EBITDA is used by the Company to evaluate and price potential acquisition candidates. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of these limitations are: (a) EBITDA does not reflect changes in, or cash requirements for, the Company's working capital needs; (b) EBITDA does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on the Company's debts; and (c) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA does not reflect any cash requirements for such capital expenditures. Because of these limitations, EBITDA should not be considered as a principal indicator of the Company's performance. The Company compensates for these limitations by relying primarily on the Company's GAAP results and using EBITDA only on a supplemental basis. (b) Free cash flow ("FCF") is defined as cash flow from operations less cash disbursed for capital expenditures. The Company presents FCF because it considers such information to be an important supplemental measure of the Company's performance and believes it is frequently used by securities analysts, investors and other interested parties in the evaluation of companies with comparable market capitalization, many of which present FCF when reporting their results. FCF has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of the Company's results as reported under U.S. Generally Accepted Accounting Principles ("GAAP"). These limitations include that FCF excludes other significant cash disbursements, such as principal payments on the Company's debts. Because of these limitations, FCF should not be considered as a principal indicator of the Company's performance. The Company compensates for these limitations by relying primarily on the Company's GAAP results and using FCF only on a supplemental basis. 3 CALL AGENDA >> (i)Structure Overview >> Acquisition Rationale >> Terms and Structure >> Go-Forward Strategy >> Update of IHS Integration >> Open to Questions 4 PARTICIPANTS Zach Lonstein CHAIRMAN AND CHIEF EXECUTIVE OFFICER Robert Wallach VICE CHAIRMAN, PRESIDENT AND COO William McHale CHIEF FINANCIAL OFFICER Michael Jones PRESIDENT, IT OUTSOURCING Lee Fields EXECUTIVE VICE PRESIDENT, MARKETING AND BUSINESS DEVELOPMENT 5 INFOCROSSING'S GROWTH STRATEGY o Grow organically through selective IT outsourcing services -High growth segment of the industry -Strong opportunity to add more clients and sell additional services -Sales organization staffed with senior executives o Accelerate growth through accretive acquisitions -Four significant acquisitions in four years -Complementary services delivered from a data center infrastructure -Recurring revenue model and long-term commitments -Enterprise client base -Expand capabilities that can be sold to our existing clients 6 (I)STRUCTURE OVERVIEW o Infocrossing's most direct competitor in the selective outsourcing market o Complementary IT Infrastructure Outsourcing Services - Mainframe, midrange, distributed systems, networks and security o Delivered from a data center infrastructure - Omaha, NE and Tempe, AZ o Long-term, recurring revenue agreements o Enterprise market focus o Established sales organization and industry recognition 7 BROAD INFRASTRUCTURE EXPERTISE (i)Structure has been moving up the stack to further extend its position with a broader range of Distributed Systems and Managed Services. o Developed strong expertise in the highest growth segments of infrastructure outsourcing - Distributed servers - Managed services - Hosted applications o Successfully sold these services to new and existing clients o Since 2000, server business has grown from zero to nearly 40% of $70.3M in revenue for the last twelve months ended Sept. 30, 2005. 8 TIER 1 DATA CENTER FACILITIES (i)Structure's state of the art data centers located in Tempe, Arizona and Omaha, Nebraska are designed to rigorous standards for reliability and security. -Omaha, Nebraska - 87,000 square feet -Tempe, Arizona - 60,000 square feet -Designed to withstand tornado-force winds -Capability to operate independently of public utilities -Self-contained with built-in redundancy -Cooling and electrical systems are capable of operating indefinitely -Redundant, diversely routed data connections -Multiple UPS systems, motor generators, and fuel storage -24 x 7 data and physical security 9 SALES STRENGTH o $77 Million in new revenue commitments (over terms up to 6 years in length) signed during the 90 days prior to the acquisition announcement on Oct 25, 2005. o Senior-level sales executives with deep industry knowledge o Multi-platform expertise o Established strategic alliances with industry leaders 10 ACQUISITION RATIONALE o Reinforces Infocrossing's position as one of the leading providers of selective IT outsourcing services in the United States o Significantly strengthens Infocrossing's server outsourcing and managed services capabilities o Adds approximately 50 outsourcing clients to Infocrossing's total outsourcing client base o Strengthens Infocrossing's sales and marketing organization o Significantly improves market awareness o Expected to add $76M in revenue over the 12 months following the close of the acquisition 11 PURCHASE PRICE AND FINANCING USES SOURCES Cash Consideration $82.3 Bank Term Loan $55.0 Stock Consideration 2.5 Revolving Line of Credit 15.0 -------- Less fees and costs (3.1) Total Uses of Funds $84.8 Stock Issued 2.5 Sale/Leaseback Net Proceeds (Omaha) 11.5 Cash on hand 3.9 ------ Total Sources of Funds $84.8 12 SENIOR CREDIT FACILITIES SUMMARY Placement Agent: Banc of America Securities LLC ("BAS") Senior Credit Facilities: $70.0 million senior secured credit facilities consisting of: - $55.0 million term loan - $15.0 million revolving credit facility Maturity: April 14, 2009 Interest: LIBOR plus 3.0%, or Prime plus 2.0%. Currently in use: LIBOR plus 3% Current interest rate: 7.33% Margin over either index will reduce depending on leverage ratio Amortization: Revolver: All outstanding due at Maturity Term Loan Quarter Amortization Per Quarter ------- ------------------------ 1-3 $0 4-7 $2.50M 8-11 $3.75M 12-13 $5.00M Maturity Balance 13 In IT Together The power of two become one: (i)Structure has joined Infocrossing Go-Forward Strategy INFOCROSSING LOGO tm The Power of Selective IT Outsourcing 14 COMBINED BUSINESS STRATEGY Selective Outsourcing - Focus on providing large and mid-sized companies with full range of selective IT outsourcing solutions Cross-Sell into Client Base - Cross-sell new services into the existing client base, such as distributed and managed network services, and MailWatch Add New Clients - Leverage greater market awareness and sales skills to add more clients to the revenue base Expand Channels - Expand relationships with channel partners and industry influencers to drive more opportunities to Infocrossing Targeted Acquisitions - Selective acquisitions that add to our capabilities and can be consolidated into our existing operations 15 EXPERIENCED MANAGEMENT TEAM Organization Chart Showing: Zach Lonstein - Chairman & CEO Reporting to Zach Lonstein: Robert Wallach - Vice Chairman, President & COO Reporting to Robert Wallach: Michael Luebke - President, Infocrossing Healthcare Services Michael Jones - President, IT Outsourcing Lee Fields - EVP, Marketing and Business Development Reporting to Zach Lonstein and Robert Wallach: Corporate Services - W. McHale; N. Letizia; M. Wilczak; T. Digan; G. Lazarewicz Reporting to Michael Luebke: IHS Sales Organization Reporting to Michael Jones with a dotted line to Lee Fields: ITO Sales Organization Dotted line between IHS Sales Organization and ITO Sales Organization 16 NATIONAL OPERATING INFRASTRUCTURE Map of United States showing the locations of our data centers in: Leonia, NJ Norcross, GA Omaha, NE Tempe, AZ Brea, CA 17 FULL PORTFOLIO OF SOLUTIONS o DATA CENTER OUTSOURCING -Mainframe -iSeries -UNIX, Windows, Linux Servers -Networks o BUSINESS PROCESS OUTSOURCING -Claims Processing -Medicare Part D -Medicaid Fiscal Agent Services o MANAGED SERVICES -WAN and LAN management -Remote server management -MailWatch o MANAGED APPLICATION SERVICES -ERP Application Hosting 18 STRONG MARKET POSITION Graphic showing Infocrossing's position between regional, hosting-based competitors and global, enterprised-based competitors: Enterprised- Based ^ | IBM | ACS | EDS | CSC | | | INFOCROSSING | | Internal IT | Department | & | Regional, niche | market providers v Hosting- Based Regional < --------------------------------- > Global The three groups are shown as spheres. Infocrossing's sphere is the largest and is shown overlapping the spheres of influence of the regional, hosting-based competitors on the lower end and the sphere of the global, enterprised-based competitors on the higher end. 19 2006 GUIDANCE (in millions) YE Dec 31, 2006 ---------------------------------- Low High - ------------------------------------------------------------------------------- Revenue $ 239.0 $ 246.0 ---------------------------------- EBITDA* $ 43.5 $ 46.1 Depreciation and Amortization 22.2 22.6 Interest 10.0 10.4 Tax Provision 4.5 5.2 ---------------------------------- Net Income $ 6.8 $ 7.9 * Refer to footnote (a) on slide 3 20 STRONG SALES MOMENTUM o (i)Structure closed $77M in new commitments during the ninety days prior to the announcement on October 25, 2005 o Additional $21.4M in new commitments achieved by Infocrossing and (i)Structure since the acquisition was announced o Combined revenue pipeline approaching half a billion dollars in total contract value o Adopting (i)Structure's sales methodology across the entire company o Expand alliances and outside channels to drive greater demand 21 REVENUE BREAKDOWN (in millions) 2006 Forecast Consolidated Revenue $220.0 (including pending installations) Forecasted Existing Client Growth Medicare Part D 5.0 ITO and other growth 5.0 Forecasted Revenue - New Clients 9.0 - 16.0 ----------------- TOTAL $239.0 - $246.0 22 EBITDA FORECAST (in millions) 2006 Forecast Base EBITDA* $30.3 Forecasted Existing Client Growth 3.5 Forecasted Integrated Savings 9.0 - 11.0 Sale/Leaseback (A) (2.3) Forecasted New Clients 3.0 - 5.6 FORECASTED EBITDA $43.5 - $46.1 (A) Represents rent expense from sale/leaseback of Omaha and Tempe * Refer to footnote (a) on slide 3. A reconciliation of EBITDA to net income appears on slide 20. 23 FREE CASH FLOW ANALYSIS (in millions) 2006 Forecast LOW HIGH -------------------------------------- Cash from operations $28.0 $32.0 Less cash capital expenditures (3.0) (3.0) -------------------------------------- Free Cash Flow $25.0 $29.0 * Refer to footnote (b) on slide 4. 24 BUSINESS INTEGRATION o Expect annualized savings of $9 million to $11 million o Substantial reductions expected to be implemented in the first quarter of 2006 o Full benefits expected to be reflected by the end of 2006 o Reductions expected to be achieved through: -Elimination of duplicate headcount in SG&A and operations -Greater economies of scale to renegotiate infrastructure costs, including: >> Hardware >> Software >> Communications 25 VERIZON / IHS INTEGRATION STATUS Integration Milestones - - Completed the business integration - - Completed the operational integration - - Completed Medicaid data center migration in Nov. 2005 - - Operating Expense Reduction: $300K per month compared with expense at acquisition 26 POSITIONED FOR SUCCESS o Strong Recurring Revenue Base of Enterprise Accounts o Experienced Management Team o Free Cash Flow generation and de-leveraging o Leading position in selective IT outsourcing market o Favorable industry dynamics and growth opportunities o Solid sales organization and expanded market presence to capture the growth opportunity 27 Q & A 28 -----END PRIVACY-ENHANCED MESSAGE-----