<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): June 6, 1996
Caribiner International, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-14234 13-3466655
(Commission File Number) (I.R.S. Employer Identification No.)
16 West 61st Street, New York, NY 10023
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (212) 541-5300
(Former name or former address, if changed since last report)
<PAGE>
The Current Report on Form 8-K of Caribiner International, Inc. (the "Company"),
initially filed with the Securities and Exchange Commission (the "Commission")
on June 21, 1996, is hereby amended by this Form 8-K/A as follows:
Item 7 is hereby amended in its entirety to read as follows:
Item 7. Financial Statements and Exhibits
The following financial statements and pro forma financial information are filed
in this report:
(a) Financial Statements of the Business Acquired
Audited Financial Statements of Lighthouse, Ltd.
(1) Report of Independent Auditors
(2) Balance Sheet as of December 31, 1995
(3) Statement of Operations for the Year Ended December 31, 1995
(4) Statement of Changes in Stockholders' Equity for the Year Ended
December 31, 1995
(5) Statement of Cash Flows for the Year Ended December 31, 1995
(6) Notes to Financial Statements
Unaudited Interim Financial Statements of Lighthouse, Ltd.
(1) Balance Sheet as of March 31, 1996
(2) Statements of Operations for the Three Months Ended March 31,
1996 and 1995
(3) Statements of Cash Flows for the Three Months Ended March 31,
1996 and 1995
(4) Note to Unaudited Financial Statements
(b) Unaudited pro forma financial information:
Unaudited Pro Forma Consolidated Financial Statements of Caribiner
International, Inc.
(1) Unaudited Pro Forma Consolidated Balance Sheet as of March 31,
1996
-1-
<PAGE>
(2) Unaudited Pro Forma Consolidated Statement of Operations for
the Year Ended September 30, 1995
(3) Unaudited Pro Forma Consolidated Statement of Operations for
the Six Months Ended March 31, 1996
(4) Notes to Unaudited Pro Forma Consolidated Financial Statements
(c) Exhibits:
2.1 Agreement of Purchase and Sale of Assets, dated June 6, 1996, by
and among the Company, Lighthouse, Fitzgerald, Moore and Hunt
(schedules omitted -- the Company agrees to furnish a copy of any
schedule to the Commission upon request)
99.1 Press release, dated June 6, 1996
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, Caribiner International, Inc. has caused this report to be
signed on its behalf by the undersigned hereunto duly authorized.
Dated: August 12, 1996 CARIBINER INTERNATIONAL, INC.
By: /s/ Arthur F. Dignam
--------------------------------------
Name: Arthur F. Dignam
Title: Executive Vice President,
Chief Financial and Administrative
Officer
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<PAGE>
Report of Independent Auditors
To the Stockholders of
Lighthouse, Ltd.
We have audited the accompanying balance sheet of Lighthouse, Ltd. at December
31, 1995 and the related statements of operations, changes in stockholders'
equity and cash flows for the year 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 audit.
We conducted our audit 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 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 Lighthouse, Ltd. at December
31, 1995, and the results of its operations and its cash flows for the year then
ended, in conformity with generally accepted accounting principles.
New York, New York
July 3, 1996 Ernst & Young LLP
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<PAGE>
LIGHTHOUSE, LTD.
BALANCE SHEET
DECEMBER 31, 1995
ASSETS
Current assets:
Cash $ 644,720
Accounts receivable - trade (net of allowance for doubtful
accounts of $90,400) 1,409,884
Deferred charges 266,321
Prepaid expenses and other current assets 48,705
Deferred tax benefit 122,675
----------
Total current assets 2,492,305
----------
Property and equipment:
Production equipment 2,179,773
Office equipment 601,195
Leasehold improvements 152,269
Transportation equipment 46,246
----------
2,979,483
Less: accumulated depreciation 2,259,447
----------
Property and equipment, net 720,036
----------
Other assets:
Marketable securities 28,500
Deposits 10,539
Deferred tax benefit 25,154
----------
Total other assets 64,193
----------
TOTAL ASSETS $3,276,534
==========
See accompanying notes to financial statements.
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<PAGE>
LIGHTHOUSE, LTD.
BALANCE SHEET
DECEMBER 31, 1995
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of notes payable $ 154,149
Accounts payable 506,602
Deferred income 965,402
Accrued expenses 527,346
Income taxes payable 192,370
----------
Total current liabilities 2,345,869
----------
Long-term debt, net of current portion 181,985
----------
Deferred gain 33,038
----------
Stockholders' Equity:
Common stock - no par value; authorized 10,000 shares;
issued and outstanding 1,053 shares 1,053
Paid-in capital 442,444
Unrealized loss on securities available for sale (813)
Retained earnings 272,958
----------
TOTAL STOCKHOLDERS' EQUITY 715,642
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $3,276,534
==========
See accompanying notes to financial statements.
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<PAGE>
LIGHTHOUSE, LTD.
STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
Sales $10,396,342
Cost of sales 6,983,996
-----------
Gross profit 3,412,346
Operating expenses:
Selling, general and administrative expenses 2,828,556
Non-cash compensation expense 377,745
-----------
Operating income 206,045
-----------
Other income (expense):
Rental income 22,470
Interest expense, net (25,470)
Gain on sale of property and equipment 5,667
Other income, net 14,299
-----------
Other income, net 16,966
-----------
Income before income taxes 223,011
Income taxes 258,058
-----------
Net loss $ (35,047)
===========
See accompanying notes to financial statements.
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<PAGE>
LIGHTHOUSE, LTD.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1995
<TABLE>
<CAPTION>
Unrealized Loss
Common Stock Additional on Securities Total
--------------- Paid-in Available for Retained Stockholders'
Shares Amount Capital Sale Earnings Equity
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1995 1,000 $ 1,000 $ 39,752 $ - $ 308,005 $ 348,757
Issuance of common stock under
Stock Option Plan 53 53 24,947 25,000
Compensation expense incurred in
connection with the Stock Option Plan 377,745 377,745
Unrealized loss on securities available
for sale (813) (813)
Net loss (35,047) (35,047)
Balance at December 31, 1995 1,053 $ 1,053 $442,444 $ (813) $ 272,958 $ 715,642
</TABLE>
See accompanying notes to financial statements.
-8-
<PAGE>
LIGHTHOUSE, LTD.
STATEMENT OF CASH FLOWS
YEAR ENDED DECEMBER 31, 1995
Cash flows provided by (used in) operating activities:
Net loss $ (35,047)
Adjustments to reconcile net loss to net cash flows
provided by operating activities:
Depreciation 344,146
(Increase) in deferred tax benefit (25,794)
Non-cash compensation expense 377,745
Allowance for doubtful accounts 78,400
Amortization of deferred gain (17,234)
Gain on sale of property and equipment (5,667)
(Increase) decrease in:
Accounts receivable (63,553)
Inventories (16,401)
Deferred charges 312,311
Prepaid expenses and other current assets (8,355)
Deposits 9,280
Increase (decrease) in:
Accounts payable 36,773
Deferred income (382,312)
Accrued expenses 267,794
Income taxes payable 153,973
Due to related entities (44,524)
Customer deposits (62,195)
-----------
Net cash flows provided by operating activities 919,340
-----------
Cash flows provided by (used in) investing activities:
Proceeds from sales of property and equipment 20,460
Purchase of property and equipment (337,898)
Purchase of marketable securities (29,313)
-----------
Net cash flows used in investing activities (346,751)
-----------
(Continued on next page.)
-9-
<PAGE>
LIGHTHOUSE, LTD.
STATEMENT OF CASH FLOWS (CONTINUED)
Cash flows provided by (used in) financing activities:
Net repayments on bank lines of credit $(126,104)
Repayments of capital lease obligations (2,165)
Proceeds from borrowings on long-term notes payable 126,104
Repayments of long-term notes payable (125,192)
Proceeds from issuance of stock 25,000
---------
Net cash flows (used in) financing activities (102,357)
---------
Net increase in cash 470,232
Cash-- beginning of year 174,488
---------
Cash-- end of year $ 644,720
=========
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest $ 46,255
=========
Income taxes $ 129,879
=========
See accompanying notes to financial statements.
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<PAGE>
LIGHTHOUSE, LTD.
NOTES TO FINANCIAL STATEMENTS
December 31, 1995
1. Nature of Business and Summary of Significant Accounting Policies
Nature of Business
Lighthouse, Ltd. (the "Company") (formerly Lighthouse Productions, Inc.)
produces video productions and stages business events. In addition to these
services, which account for more than half of total revenues, the Company also
creates graphics supporting multi-media presentations, produces and creates
internet home pages and develops interactive and CD-ROM programs.
The Company's clients, which are predominantly publicly-held companies, are
principally located in the Midwest region of the United States. One of these
clients, which is in the electronics industry, accounted for approximately 56%
of total billings for the year ended December 31, 1995 and approximately 48% of
accounts receivable at December 31, 1995. The Company has over 300 individual
contacts at this client, spanning five divisions.
Management considers that, to a certain extent, these contacts act somewhat
independently.
Uses 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
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Revenue Recognition
Revenue is recorded principally on the completed contract method of accounting.
The recognition of revenue and production costs is deferred until a project is
completed which is often within a three to six month time period. For those
projects which provide for multiple events, the contract revenue and costs are
apportioned and revenue and profit are recognized as each event occurs.
Deferred income represents advance billings on uncompleted jobs. Deferred
charges represent costs incurred on uncompleted jobs.
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<PAGE>
LIGHTHOUSE, LTD.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Nature of Business and Summary of Significant Accounting Policies (continued)
Production Costs
Production costs include salaries, creative and technical personnel spent on
specific contracts, and other direct costs including contracted services,
equipment rentals and costs associated with the production of audio-visual
effects. Such costs are deferred until project completion.
Cash
The Company considers all highly liquid investments with a maturity of twelve
months or less when purchased, to be equivalent to cash. There were no cash
equivalents as of December 31, 1995.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed using
straight-line and accelerated methods over the following estimated useful lives:
Estimated
Asset Useful Life
----- -----------
Production equipment 5-7 years
Office equipment 5-7 years
Transportation equipment 5 years
Leasehold improvements 15 years
Accounts Receivable
The Company extends credit to its customers in the normal course of business and
performs ongoing credit evaluations of the customers. Management reviews its
customer receivables on an ongoing basis and writes off or provides an allowance
for those receivables that it considers uncollectible.
The actual amount of uncollectible receivables may differ from the allowance
estimated by management.
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<PAGE>
LIGHTHOUSE, LTD.
NOTES TO FINANCIAL STATEMENTS (Continued)
1. Nature of Business and Summary of Significant Accounting Policies (continued)
Inventories
Inventories consist of miscellaneous finished goods for resale and are valued at
the lower of cost or market.
Marketable Securities
Management determines the appropriate classifications of its investments in debt
and equity securities at the time of purchase and reevaluates such
determinations at each balance sheet date. At December 31, 1995, the
investments, which consisted entirely of equity securities, were classified as
available for sale and, accordingly, carried at market value, based on quoted
prices with the unrealized gains and losses, net of tax, reported as a separate
component of stockholders equity. These investments, which are being held for
non-current uses, are classified as other assets.
Advertising
Advertising costs amounting to $19,934 in 1995 are expensed as incurred.
2. Employee Benefit Plan
The Company maintains a savings, investment and retirement plan for all
employees. The plan, under Section 401(k) of the Internal Revenue Code, allows
for voluntary employee contributions of up to 15% of their gross pay or $9,600,
with a limited matching Company contribution and for other Company contributions
in such amounts as the Board of Directors may determine. The Company's policy is
to fund the benefit plan costs as accrued. The Company's contribution to the
plan amounted to $38,323 for the year ended December 31, 1995.
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<PAGE>
LIGHTHOUSE, LTD.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Notes Payable
Notes payable consist of the following:
<TABLE>
<S> <C>
LaSalle Bank--Westmont-
Term Loan--$199,300--Installment note bearing interest at 8.00% per
annum; Payable in monthly installments of $6,096; final payment due
July 1997 $103,076
Term Loan--$189,138 installment note bearing interest at 8.75% per
annum; Payable in monthly installments of $4,684; final payment due
June 1998 125,811
Term Loan--$126,104 installment note bearing interest at 8.50% per
annum; payable in monthly installments of $3,981; final payment due
June 1998 107,247
---------
Total notes payable 336,134
Less current portion 154,149
--------
Long term note payable $181,985
========
</TABLE>
The Company also has two lines of credit with LaSalle Bank-Westmont. The
borrowings against the Accounts Receivable line of credit are limited to the
lower of $750,000 or 65% of eligible accounts receivable, and the borrowings
against the equipment line of credit are limited to $400,000. Both agreements
provide for the loan to be collateralized by substantially all of the Company's
assets and the personal guarantees of the principal stockholders, and require
interest to be paid monthly at 0.75% over prime. The Company has no outstanding
borrowings against these lines of credit at December 31, 1995. The facility
expires on April 30, 1996.
The loan agreements with LaSalle Bank-Westmont contain various covenants which,
among other matters, require the maintenance of certain financial ratios.
-14-
<PAGE>
LIGHTHOUSE, LTD.
NOTES TO FINANCIAL STATEMENTS (Continued)
3. Notes Payable (continued)
The following is a summary of maturities due on the total notes payable at
December 31, 1995:
Amount
Year ended December 31:
1996 $154,149
1997 131,279
1998 50,706
--------
Total $336,134
========
It is management's best estimate, based on currently available market quotes and
the relatively short-term nature of the maturities involved, that the carrying
value of the total notes payable at December 31, 1995 approximates their fair
value.
4. Accrued Expenses
Accrued expenses at December 31, 1995, consist of the following:
Salaries and bonuses $332,700
Real estate taxes 124,000
Legal provision 40,000
Other 30,646
--------
Total $527,346
========
5. Transactions with Related Parties
The Company leases its main operating facilities in Rolling Meadows, Illinois
from MHB Partners, Ltd., a corporation owned and operated, in part, by the
stockholders of the Company, at a monthly base rent of $16,560. The lease, which
expired on December 31, 1994, also provides for the Company to pay the cost of
substantially all operating expenses, including real estate taxes, as additional
rent. The Company is continuing to lease the premises on a month-to-month basis
under the existing terms and conditions. For the year ended December 31, 1995,
rent expense on the premises, including real estate taxes, amounted to $323,342.
-15-
<PAGE>
LIGHTHOUSE, LTD.
NOTES TO FINANCIAL STATEMENTS (Continued)
5. Transactions with Related Entities (continued)
The Company also has nominal amounts of transactions with Lighthouse
Communications, Inc. and Lighthouse Business Incentives, entities owned wholly
or partly by the principal stockholders of the Company.
6. Income Taxes
Components of the provision for income taxes attributable to continuing
operations are as follows:
Current:
Federal $233,680
State 50,172
--------
Total current 283,852
Deferred (25,794)
--------
$258,058
========
Deferred income taxes reflect the net tax effect of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
Significant components of the Company's deferred tax assets and liabilities as
of December 31, 1995 are as follows:
Deferred tax assets:
Allowance for doubtful accounts $ 37,335
Deferred revenue, net deferred charges 48,170
Bonus accrual 20,650
Accrued legal provision 16,520
Deferred gain 13,644
Leasehold amortization 11,510
--------
Total deferred tax assets $147,829
========
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<PAGE>
6. Income Taxes (continued)
The reconciliation of income tax attributable to operations computed at the
U.S. federal statutory tax rates to income tax expense is as follows
Tax expense at 34% statutory rate $ 75,824
State income tax net of federal benefit 45,613
Non-deductible compensation expense 128,433
Other 8,188
--------
$258,058
========
7. Deferred Gain
In December 1994, the Company sold certain production equipment to LaSalle
Bank-Westmont who then leased the equipment back to the Company under an
equipment lease agreement requiring monthly payments of $7,247 and expiring on
November 30, 1997. The future annual minimum base rents due under the equipment
lease are $86,964 and $79,717 for December 31, 1996 and 1997, respectively.
The gain on sale of the equipment has been deferred and is being amortized over
the term of the lease as a reduction of rent expense for equipment. Amortization
for the year ended December 31, 1995 was $17,236.
8. Lease Commitments and Contingency
As more fully discussed in Note 5, the Company currently leases its Rolling
Meadows facility from a related entity on a month-to-month basis.
The Company also leases additional premises in Schaumburg, Illinois at a monthly
base rent of $3,292. The lease, which commenced on April 1, 1994, provides for
the Company to pay the cost of certain operating expenses, including real estate
taxes. The lease expires on March 31, 1996 with options to renew for up to six
years. For the year ended December 31, 1995, rent expense on these premises,
including real estate taxes, amounted to $39,508.
As more fully discussed in Note 7, the Company also leases certain production
equipment from LaSalle Bank-Westmont.
-17-
<PAGE>
LIGHTHOUSE, LTD.
NOTES TO FINANCIAL STATEMENTS (Continued)
8. Lease Commitments and Contingency (continued)
Total rent expense for equipment and other short-term leases for the year ended
December 31, 1995 amounted to $1,164,028.
Contingency
As of December 31, 1995, the Company is involved in a lawsuit. It is the opinion
of management that the ultimate liability resulting from this matter will not
have a material effect on the Company's financial condition.
9. Stock Option Agreement
Under the terms of the Company's restricted stock option agreement entered into
during 1992, an officer of the Company was granted the option to purchase 333
shares of the common stock of the Company, the exercise of which results in 25%
ownership of the Company. The total exercise price of these options to the
officer is $125,000. The options vest 5% per year and are exercisable for two
years after vesting.
As of December 31, 1995, options to purchase 280 shares were outstanding, 124 of
which were vested. During 1995, options to purchase 53 shares were exercised at
a price of $475 per share, for a total exercise price of $25,000.
This option plan was amended during May 1995 to extend the vesting periods,
among other things. This amendment resulted in a new measurement date for
accounting for these options. During the year ended December 31, 1995, the
Company recorded a one-time non-cash charge of $377,745, which is equal to the
difference between the exercise price of the vested options and the value of the
stock.
As a result of the change of control of the Company (see Note 10), all of the
options became fully vested during June 1996.
10. Subsequent Events
On June 6, 1996, substantially all of the assets of the Company were sold to of
the Company were assumed by Caribiner International, Inc. in a cash and stock
transaction. As a result of this sale, all outstanding debt was paid by the
acquiring company.
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<PAGE>
LIGHTHOUSE, LTD.
BALANCE SHEET
(unaudited)
March 31,
1996
ASSETS
Current Assets:
Cash $ 373,922
Trade accounts receivable, net 995,203
Deferred charges 557,534
Prepaid expenses and other current assets 133,550
-----------
Total Current Assets 2,060,209
Property and equipment, net 761,886
Other assets 202,922
-----------
TOTAL ASSETS $ 3,025,017
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of note payable $ 154,149
Trade accounts payable 312,710
Accrued expenses and other current liabilities 245,204
Deferred income 1,434,710
-----------
Total Current Liabilities 2,146,773
Long-term debt 135,167
Other liabilities 28,727
------------
TOTAL LIABILITIES 2,310,667
Stockholders' Equity:
Common stock 1,111
Additional paid-in capital 467,386
Unrealized (loss) (3,313)
Retained earnings 249,166
------------
TOTAL STOCKHOLDERS' EQUITY 714,350
------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 3,025,017
============
See accompanying note to the unaudited financial statements.
<PAGE>
LIGHTHOUSE, LTD.
STATEMENTS OF OPERATIONS
for the Three Months Ended
(unaudited)
March 31,
---------------------
1996 1995
---- ----
Sales $1,765,236 $1,228,184
Cost of sales 892,451 586,937
---------- ----------
Gross profit 872,785 641,247
Operating expenses:
Selling, general and administrative expenses 919,282 878,087
---------- ---------
Operating loss (46,497) (236,840)
Other income (expense), net 6,172 (4,737)
---------- ----------
Loss before taxes (40,325) (241,577)
Income tax benefit 16,533 99,047
---------- ----------
Net loss ($ 23,325) ($ 142,530)
============ ===========
See accompanying note to the unaudited financial statements.
-20-
<PAGE>
LIGHTHOUSE, LTD.
STATEMENTS OF CASH FLOWS
for the Three Months Ended
(unaudited)
<TABLE>
<CAPTION>
March 31,
------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ($ 23,792) ($ 142,530)
Adjustments to reconcile net loss to net cash provided by
(used in) operating activities:
Depreciation expense 61,994 54,052
Change in assets and liabilities:
Decrease (increase) in accounts receivable 414,681 (60,513)
(Increase) in deferred charges (291,213) (466,772)
(Increase) in prepaid expenses and other assets (86,663) (3,772)
(Decrease) in accounts payable (193,892) (86,960)
Increase in deferred income 469,308 1,013,112
(Decrease) in accrued expenses and other liabilities (477,498) (324,881)
------------ -------------
Net cash used in operating activities (127,075) (18,264)
Cash flow used in provided by investing activities:
Purchase of property and equipment (101,905) (24,426)
Cash Flow (used in) provided by financing activities:
Net (repayments) borrowings of bank debt (46,818) 30,294
Proceeds from sale of stock 25,000 --
Loans to shareholders (20,000) --
------------ -------------
Net cash (used in) provided by financing activities (41,818) 30,294
------------ -------------
Net (decrease) in cash (270,798) (12,396)
Cash, beginning of period 644,720 174,488
----------- --------------
Cash, end of period $ 373,922 $ 162,092
=========== ==============
</TABLE>
See accompanying note to the unaudited financial statements.
-21-
<PAGE>
LIGHTHOUSE, LTD.
NOTE TO UNAUDITED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles from interim financial
information and should be read in conjunction with Lighthouse, Ltd.'s audited
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments considered
necessary for a fair presentation have been included. Such adjustments are of a
normal recurring nature. Operating results for the three months ended March 31,
1996 and 1995 are not necessarily indicative of the results that may be expected
for any other period or for a full fiscal year.
-22-
<PAGE>
CARIBINER INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following unaudited pro forma consolidated financial information of
Caribiner International, Inc. (the "Company") gives effect to the acquisition of
substantially all of the assets and assumption of certain of the liabilities
(the "Lighthouse Acquisition") of Lighthouse, Ltd. ("Lighthouse"). Additionally,
the pro forma consolidated financial information assumes an issuance and sale of
only that number of the Company's shares of common stock as would generate net
proceeds sufficient to repay substantially all indebtedness outstanding at the
beginning of each period presented and to finance the Lighthouse Acquisition.
The Company believes that the accompanying unaudited consolidated pro forma
financial information contains all adjustments necessary to fairly present its
financial position as of March 31, 1996, and the results of its operations for
the six months ended March 31, 1996 and the year ended September 30, 1995 as if,
in the case of the Unaudited Pro Forma Consolidated Balance Sheet, the
Lighthouse Acquisition had occurred on March 31, 1996, and, in the case of the
Unaudited Pro Forma Consolidated Statements of Operations for the six months
ended March 31, 1996 and the year ended September 30, 1995, the acquisition had
occurred on October 1, 1995 and October 1, 1994, respectively.
The unaudited pro forma consolidated financial information has been included as
required by the rules of the Commission and is provided for comparative purposes
only. The unaudited pro forma consolidated financial information presented
herein is based upon the historical consolidated financial statements of each of
the Company and Lighthouse and should be read in conjunction with such financial
statements and the related notes thereto, all of which are included elsewhere in
this Form 8-K/A or in the Company's other filings with the Commission.
Lighthouse's fiscal year end (December 31) differs from the Company's fiscal
year end (September 30). The unaudited Pro Forma Consolidated Statements of
Operations for the six months ended March 31, 1996 and the year ended September
30, 1995 include Lighthouse's results of operations for Lighthouse's six months
ended March 31, 1996 and its year ended December 31, 1995, respectively. As a
result of the differing year ends of the Company and of Lighthouse, the results
of operations of Lighthouse for the three months ended December 31, 1995 are
included in both periods. The unaudited Pro Forma Consolidated Balance Sheet at
March 31, 1996 includes Lighthouse's historical balance sheet at May 31, 1996,
which is not materially different than the historical balance sheet at March 31,
1996.
The pro forma financial information presented does not purport to be indicative
of the financial position or operating results which would have been achieved
had the Lighthouse Acquisition taken place at the dates indicated and should not
be construed as representative of the Company's financial position or results of
operations for any future date or period.
-23-
<PAGE>
CARIBINER INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
March 31, 1996
(all amounts in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
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Caribiner Caribiner
International, Lighthouse, Pro Forma International,
Inc. Ltd. Adjustments Inc.
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<S> <C> <C> <C> <C>
ASSETS
Cash $ 20,395 -- ($ 6,274) (a) $ 14,121
Trade accounts receivable, net 31,558 1,318 32,876
Deferred charges 11,514 717 -- 12,231
Prepaid expenses and other current assets 1,610 202 (65) (b) 1,747
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Total Current Assets 65,077 2,237 (6,339) 60,975
Property and equipment - net 7,566 743 (250) (c) 8,059
Intangible assets - net 15,978 -- 6,969 (d) 22,947
Other assets 531 84 -- 615
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Total Assets $ 89,152 $ 3,064 $ 380 $ 92,596
==========================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Current Portion of long-term debt 710 -- -- 710
Trade accounts payable 4,464 353 -- 4,817
Accrued expenses and other current liabilities 11,542 515 300 (e) 11,971
(386) (f)
Deferred income 18,092 1,663 -- 19,755
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Total Current Liabilities 34,808 2,531 (86) 37,253
Long-term debt 1,225 273 (273) (g) 1,225
Deferred income 8,339 -- -- 8,339
Other liabilities 91 -- -- 91
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TOTAL LIABILITIES 44,463 2,804 (359) 46,908
Stockholders' Equity (Deficit)
Common stock 95 1 (1) (h) 95
Additional paid-in capital 59,583 90 (90) (h) 60,582
999 (i)
Accumulated (deficit) earnings (14,989) 169 (169) (h) (14,989)
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TOTAL STOCKHOLDERS' EQUITY 44,689 260 739 45,688
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 89,152 $ 3,064 $ 380 $ 92,596
==========================================================================
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Balance Sheet.
-24-
<PAGE>
CARIBINER INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Six Months Ended March 31, 1996
(all amounts, except per share data, in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
--------------------------------------------------------------------------------
Caribiner Caribiner
International, Lighthouse, Ltd. Pro Forma International,
Inc. Adjustments(j) Inc.
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 51,627 $ 6,234 -- $ 57,861
Production costs 34,371 3,342 -- 37,713
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Gross Profit 17,256 2,892 -- 20,148
Operating expenses:
Selling, general and
administrative expenses 13,372 1,908 -- 15,280
Non-cash compensation expense
1,072 -- -- 1,072
Depreciation and amortization
1,322 152 139 (k) 1,613
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Total operating expenses 15,766 2,060 139 17,965
--------------------------------------------------------------------------------
Operating income (loss) 1,490 832 (139) 2,183
Interest expense with related parties
1,199 -- (1,199) (l) --
Interest expense (income), other
668 15 (719) (l) (36)
Other expense (income), net -- (31) -- (31)
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(Loss) income before taxes (377) 848 1,779 2,250
(Provision) benefit for taxes 124 (348) (519) (m) (743)
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Net (loss) income ($ 253) $ 500 $ 1,260 $ 1,507
================================================================================
Pro forma net income per common share
$ 0.05 -- -- $ 0.18
================================================================================
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statement of Operations.
-25-
<PAGE>
CARIBINER INTERNATIONAL, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
For the Year Ended September 30, 1995
(all amounts, except per share data in thousands)
<TABLE>
<CAPTION>
Historical Pro Forma
--------------------------------------------------------------------------------
Caribiner Caribiner
International, Lighthouse, Pro Forma International,
Inc. Ltd. Adjustments (j) Inc.
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 81,131 $ 10,396 $-- $ 91,527
Production costs 54,312 6,984 -- 61,296
--------------------------------------------------------------------------------
Gross Profit 26,819 3,412 -- 30,231
Operating expenses:
Selling, general and administrative
expenses 19,306 2,484 -- 21,790
Non-cash compensation expense -- 378 -- 378
Depreciation and amortization 2,330 344 279 (k) 2,953
--------------------------------------------------------------------------------
Total operating expenses 21,636 3,206 279 25,121
--------------------------------------------------------------------------------
Operating income 5,183 206 (279) 5,110
Interest expense with related parties 2,234 -- (2,234) (l) --
Interest expense, other 1,259 25 (1,087) (l) 197
Other income, net -- (42) -- (42)
--------------------------------------------------------------------------------
Income before taxes 1,690 223 3,042 4,955
(Provision) benefit for taxes (264) (258) 131 (m) (391)
--------------------------------------------------------------------------------
Net income (loss) $ 1,426 ($ 35) $ 3,173 $ 4,564
================================================================================
Pro forma net income per common share $ 0.49 -- -- $ 0.58
================================================================================
</TABLE>
See Notes to Unaudited Pro Forma Consolidated Statement of Operations.
-26-
<PAGE>
CARIBINER INTERNATIONAL, INC.
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
(a) To reflect (i) the aggregate purchase price of approximately $5.3 million
in cash and approximately $1.0 million in common stock of the Company
(31,821 shares) for substantially all of the assets and the assumption of
certain of the liabilities of Lighthouse, (ii) the repayment at closing
of approximately $0.3 million of Lighthouse's outstanding debt and
approximately $0.3 million of Lighthouse's existing bank overdraft; and,
(iii) the payment of approximately $0.4 million of other
transaction-related costs.
(b) To adjust the book value of certain equipment held for resale to reflect
its estimated net realizable value.
(c) To adjust the net carrying value of Lighthouse's fixed assets to reflect
the write-off, net of salvage value, of certain leasehold improvements
and computer and office equipment not usable post-closing.
(d) To record the goodwill resulting from the acquisition after allocation of
the purchase price to the net tangible assets.
(e) To accrue for transaction costs which include professional fees,
duplicative salary and severance, and certain other costs incurred or to
be incurred in order to consummate the acquisition.
(f) To reflect payment of certain employee-related accrued liabilities and
other current liabilities at closing.
(g) To reflect repayment of Lighthouse's outstanding debt at closing.
(h) To eliminate the stockholders' equity accounts of Lighthouse upon
acquisition.
(i) To record additional paid-in capital resulting from the issuance of the
Company's common stock in connection with the acquisition.
(j) Pro forma adjustments to the Unaudited Pro Forma Statements of Operations
give effect to the acquisition of Lighthouse, Ltd. and the issuance and
sale of only that number of shares of the Company's common stock as would
generate net proceeds sufficient to repay substantially all outstanding
indebtedness of the Company and to finance the acquisition of Lighthouse,
as if such transactions had occurred at the beginning of each period
presented.
(k) To record amortization expense related to the goodwill resulting from
the acquisition.
(l) To decrease interest expense relating to the repayment of all bank
borrowings and other long-term obligations, as if such amounts were
repaid as of the beginning of each period presented.
(m) To reflect the tax effect of the pro forma adjustments, assuming
utilization of the net operating loss benefits.
