<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
COMMISSION FILE NUMBER: 1-14234
Caribiner International, Inc.
-----------------------------
(Exact name of registrant as specified in its charter)
Delaware 13-3466655
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ ] No [ X ]
The registrant had 9,566,338 shares of Common Stock (par value $0.01 per share)
outstanding as of May 13, 1996.
<PAGE>
INDEX
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
March 31, 1996 and September 30, 1995...................2
Consolidated Statements of Operations for
the six months ended March 31, 1996 and 1995............3
Consolidated Statements of Operations for
the three months ended March 31, 1996 and 1995..........4
Consolidated Statements of Cash Flows for
the six months ended March 31, 1996 and 1995............5
Consolidated Statement of Changes in Stockholders'
Equity for the six months ended March 31, 1996..........6
Notes to Consolidated Financial Statements..............7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..........10
PART II. Other Information
Item 4. Submission of Matters to a Vote of Security Holders....14
Item 6. Exhibits and Reports on Form 8-K.......................15
SIGNATURES.................................................................16
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<TABLE>
<CAPTION>
Caribiner International, Inc.
Consolidated Balance Sheets
March 31, September 30,
ASSETS 1996 1995
(unaudited) (Note 1)
------------ -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 20,394,935 $ 212,612
Trade accounts receivable - net of allowance for
doubtful accounts of $81,600 in 1996 and 1995 31,557,783 22,920,679
Deferred charges 11,513,640 3,804,858
Prepaid expenses and other current assets 1,610,910 607,494
------------ ------------
Total Current Assets 65,077,268 27,545,643
Property and equipment - net 7,565,628 6,383,975
Intangible assets - net 15,978,081 10,628,754
Other assets 531,509 740,040
------------ ------------
TOTAL ASSETS $ 89,152,486 $ 45,298,412
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Bank line of credit $ -- $ 4,220,000
Current portion of long-term debt 710,336 4,677,054
Trade accounts payable 4,464,159 4,581,165
Accrued expenses and other current liabilities 11,541,795 6,954,317
Deferred income 18,092,130 6,761,589
------------ ------------
Total Current Liabilities 34,808,420 27,194,125
Long-term debt 1,225,397 7,147,675
Convertible Note including accrued interest -- 17,346,397
Deferred income 8,338,807 3,275,023
Accrued preferred stock dividends -- 1,874,135
Other liabilities 90,675 895,288
------------ ------------
TOTAL LIABILITIES 44,463,299 57,732,643
Stockholders' Equity (Deficit):
Preferred stock, $.01 par value:
2,000,000 shares authorized, none issued and outstanding
at 1996; 1,150,000 shares authorized, 450,000 shares
issued and outstanding at 1995 -- 4,500
Common stock, $0.01 par value:
40,000,000 voting shares authorized, 9,566,338 shares
issued and outstanding at 1996; 12,330,000 voting and
685,000 non-voting shares authorized, 1,924,240 voting
shares and 577,239 non-voting shares issued and
outstanding at 1995 95,664 25,015
Additional paid-in capital 59,582,812 1,945,272
Accumulated deficit (14,989,289) (14,409,018)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 44,689,187 (12,434,231)
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ 89,152,486 $ 45,298,412
============ ============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
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Caribiner International, Inc.
Consolidated Statements of Operations
For the Six Months Ended
(unaudited)
March 31,
1996 1995
------------- --------------
Revenue $ 51,627,172 $ 30,443,785
Production costs 34,370,868 20,671,304
------------- -------------
Gross profit 17,256,304 9,772,481
Operating expenses:
Selling, general and administrative
expenses 13,371,610 8,839,345
Non-cash compensation expense 1,072,000 --
Depreciation and amortization 1,322,542 1,138,018
------------- -------------
Total operating expenses 15,766,152 9,977,363
------------- -------------
Operating income (loss) 1,490,152 (204,882)
Interest expense with related parties 1,199,281 1,100,132
Other interest expense, net 668,167 476,505
------------- -------------
Loss before taxes (377,296) (1,781,519)
Income tax benefit 124,508 278,756
------------- -------------
Net (loss) $ (252,788) $ (1,502,763)
============= =============
Pro forma net income (loss) per common share $ 0.05 $ (0.12)
============= =============
See accompanying notes to the unaudited consolidated financial statements.
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Caribiner International, Inc.
Consolidated Statement of Operations
For the Three Months Ended
(unaudited)
March 31,
1996 1995
------------- --------------
Revenue $ 31,219,805 $ 19,044,906
Production costs 21,030,289 13,184,284
------------- --------------
Gross profit 10,189,516 5,860,622
Operating expenses:
Selling, general and administrative
expenses 6,915,616 4,332,264
Non-cash compensation expense 979,000 --
Depreciation and amortization 718,406 590,477
------------- --------------
Total operating expenses 8,613,022 4,922,741
------------- --------------
Operating income 1,576,494 937,881
Interest expense with related parties 517,497 549,725
Other interest expense, net 255,877 280,190
------------- --------------
Income before taxes 803,120 107,966
Income tax expense (159,767) (16,659)
------------- ==============
Net income $ 643,353 $ 91,307
============= ==============
Pro forma net income per common share $ 0.11 $ 0.08
============= =============
See accompanying notes to the unaudited consolidated financial statements.
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Caribiner International, Inc.
Consolidated Statement of Cash Flows
For the Six Months Ended
(unaudited)
March 31,
1996 1995
------------ -----------
Cash flows from operating activities:
Net income (loss) $ (252,788) $(1,502,763)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 1,322,542 1,138,018
Non-cash compensation 1,072,000 --
Change in assets and liabilities:
(Increase) in trade accounts receivable (6,511,247) (462,555)
(Increase) in deferred charges (7,078,405) (2,214,933)
(Increase) in prepaid expenses and
other current assets (924,066) (692,957)
Decrease (increase) in other assets 111,400 (147,790)
(Decrease) increase in trade accounts
payable (573,714) 737,575
Increase in deferred income 12,750,180 305,531
Increase (decrease) in accrued expenses
and other liabilities 3,895,440 (343,053)
(Decrease) increase in
accrued interest payable (7,250,375) 1,074,179
------------ -----------
Net cash provided by (used in) operating
activities (3,439,033) (2,108,748)
------------ -----------
Cash flow used in investing activities:
Purchase of property and equipment (1,008,811) (801,455)
Acquisition of intangibles and
businesses, net of cash acquired (3,182,906) (2,320,478)
------------ -----------
Net cash used in investing activities (4,191,717) (3,121,933)
------------ -----------
Cash flow provided by financing activities:
Net proceeds from issuance of common
stock 44,137,922 --
Proceeds from exercise of warrants 1,690,500 --
Repayments of long term debt (14,590,994) (506,751)
Net (repayments) proceeds of bank
line of credit (4,220,000) 3,525,000
Proceeds from long-term debt 3,000,000 2,000,000
Payment of preferred stock dividends (2,201,618) --
Proceeds from issuance of common
stock under the Management Stock
Plan 174,167 --
Repurchase of common stock (176,904) (1,880)
------------ -----------
Net cash provided by financing activities 27,813,073 5,016,369
------------ -----------
Net increase (decrease) in cash 20,182,323 (214,312)
Cash, beginning of period 212,612 272,070
------------ -----------
Cash, end of period $ 20,394,935 $ 57,758
============ ===========
Supplemental disclosure of cash flow information:
Interest paid $ 7,844,344 $ 378,944
============ ===========
Income taxes paid $ 689,135 $ 60,393
============ ===========
See accompanying notes to the unaudited consolidated financial statements.
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Caribiner International, Inc.
Consolidated Statement of Changes in Stockholders' Equity
For the Six Months Ended March 31, 1996
(unaudited)
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------ --------------- Additional
Shares Amount Shares Amount Paid in Capital
--------- -------- ---------- -------- ----------------
<S> <C> <C> <C> <C> <C>
Balance at September 30, 1995 2,501,479 $ 25,015 450,000 $ 4,500 $1,945,272
Issuance of common stock under the
Management Stock Plan 87,210 872 -- -- 1,245,295
Issuance of warrants to purchase 75,593
shares of common stock -- -- -- -- 79,456
Repurchase of common stock (31,091) (311) -- -- (176,593)
Accrued preferred stock dividends -- -- -- -- --
Conversion of Convertible Note into
preferred stock -- -- 600,000 6,000 11,979,450
Conversion of preferred stock into
common stock 3,596,250 35,963 (1,050,000) (10,500) (10,913)
Exercise of warrants 534,505 5,345 -- -- 1,685,155
Issuance of common stock upon
consummation of initial public offering 2,877,985 28,780 -- -- 42,835,690
Non-cash compensation charge -- -- -- -- --
Net loss -- -- -- -- --
--------- -------- ---------- -------- ------------
9,566,338 $ 95,664 -- $ -- $59,582,812
========= ======== ========== ======== ============
<CAPTION>
Total
Deferred Accumulated Stockholders'
Compensation Deficit Equity (Deficit)
------------ ------------ ---------------
<S> <C> <C> <C>
Balance at September 30, 1995 $ -- ($14,409,018) ($12,434,231)
Issuance of common stock under the
Management Stock Plan (1,072,000) -- 174,167
Issuance of warrants to purchase 75,593
shares of common stock -- -- 79,456
Repurchase of common stock -- -- (176,904)
Accrued preferred stock dividends -- (327,483) (327,483)
Conversion of Convertible Note into
preferred stock -- -- 11,985,450
Conversion of preferred stock into
common stock -- -- 14,550
Exercise of warrants into common stock -- -- 1,690,500
Issuance of common stock upon
consummation of initial public offering -- -- 42,864,470
Non-cash compensation charge 1,072,000 -- 1,072,000
Net loss -- (252,788) (252,788)
----------- ------------ ------------
$ -- ($14,989,289) $ 44,689,187
=========== ============ ============
</TABLE>
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Caribiner International, Inc.
Notes To Consolidated Financial Statements
(Unaudited)
1. Interim Financial Information
The accompanying unaudited consolidated financial statements of Caribiner
International, Inc. (the "Company") have been prepared in accordance with
generally accepted accounting principles for interim financial information
and with the instructions to Form 10-Q and Article 10 of Regulation S-X.
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, the consolidated financial
statements contain all adjustments, consisting of normal recurring
adjustments, considered necessary to present fairly the consolidated
financial position, results of operations and cash flows of the Company. The
results of operations for the six month period ended March 31, 1996 are not
necessarily indicative of the results of operations that may be expected for
the fiscal year ending September 30, 1996.
The balance sheet at September 30, 1995 has been derived from the Company's
audited financial statements at that date, but does not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements.
2. Initial Public Offering
On March 15, 1996, the Company completed the initial public offering (the
"IPO") of 2,877,985 shares of its common stock, including 459,779 shares
granted to the underwriters upon exercise of their over-allotments, for
$17.00 per share. The Company received net proceeds of approximately $44.1
million after deducting underwriting discounts and expenses. Proceeds of
approximately $25.6 million were used to repay all outstanding bank
borrowings and substantially all other long-term indebtedness (including
accrued interest), and to pay accrued preferred stock dividends. The
remaining proceeds are available to fund working capital needs, to make
acquisitions and for general corporate purposes.
Immediately prior to the consummation of the IPO, the following
transactions occurred:
a) The Company's $12 million, 11.5% Convertible Promissory Note (the
"Convertible Note") was converted by the holder thereof into 600,000
shares of convertible preferred stock, which were immediately converted
into 2,055,000 shares of common stock. Upon conversion, approximately
$165,000 of unamortized debt issuance costs relating to the Convertible
Note were charged to additional paid in capital;
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b) Shares of convertible preferred stock outstanding on March 15, 1996
(other than shares of convertible preferred stock issued upon conversion
of the Convertible Note) were converted into 1,541,250 shares of common
stock;
c) All shares of non-voting common stock outstanding under the Company's
1993 Management Stock Plan (the "Management Stock Plan") were converted
without any action on the part of the holders thereof into 664,450
shares of voting common stock, and such Management Stock Plan was then
terminated; and
d) Outstanding warrants to purchase 534,505 shares of common stock, which
were issued in connection with one of the Company's loan facilities,
were exercised by the holder thereof for an aggregate exercise price of
approximately $1.7 million.
All share and per share data have been retroactively adjusted to reflect a
3.425-for-1 stock split completed prior to the IPO on March 4, 1996.
3. Management Stock
During the three months ended December 31, 1995, the Company sold common
stock pursuant to the Management Stock Plan at a price lower than its fair
market value and recorded non-cash compensation expense of $93,000 during
such period. Upon consummation of the IPO in March, 1996, the Company
incurred an additional non-cash compensation charge of $979,000 in
connection with the immediate vesting of such stock.
4. Business Acquisition
Effective January 1, 1996, the Company acquired substantially all of the
assets of Koors, Perry & Associates, Inc., a regional business
communications services provider based in Atlanta, Georgia with revenue of
$8.9 million for the nine month period ended September 30, 1995. The
purchase price for the acquisition consisted of $2.5 million in cash, which
was financed by an additional drawing on one of the Company's credit
facilities, a promissory note for $1.5 million payable over three years, the
assumption of certain liabilities, and contingent cash payments in the event
the acquired business meets certain performance goals in 1996, 1997 and
1998. The accounting for this acquisition is in accordance with the purchase
method and accordingly, operations of the acquired business are included in
the accompanying unaudited consolidated statements of operations from the
date of acquisition.
5. Pro Forma Net Income (Loss) Per Common Share
Pro forma net income (loss) per common share is calculated using the
weighted average number of shares of common stock outstanding during the
respective periods. Pursuant to the requirements of the Securities and
Exchange Commission, common stock issued under the Management Stock Plan and
warrants to purchase common stock issued at prices below the initial public
offering price per share during the twelve months immediately preceding the
date of the initial filing of the Company's Registration Statement on Form
S-1 have also been included in the calculation of common shares,
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<PAGE>
using the treasury stock method, as if they were outstanding for all periods
presented. In addition, shares of common stock issued upon the conversion of
all shares of convertible preferred stock into shares of common stock are
included in the calculation as if they were outstanding for all periods
presented.
The weighted average number of shares of common stock outstanding during
each of the three and six month periods ended March 31, 1996 is 7,220,901
and 6,918,810, respectively. The weighted average number of shares of common
stock outstanding during each of the three months and six months ended March
31, 1995 is 6,620,003.
Assuming the issuance and sale of only that number of shares of common
stock which would have generated net proceeds sufficient to repay
indebtedness of $25.6 million, and assuming that such indebtedness had been
repaid as of the beginning of each period presented, supplementary pro forma
net income per share would have been $0.13 for the three months and six
months ended March 31, 1996. For the three months and six months ended March
31, 1995, supplementary pro forma net income (loss) per share would have
been $0.11 and ($0.02), respectively. For purposes of this computation, the
weighted average number of shares of common stock outstanding during each of
the periods presented is 8,237,270.
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Caribiner International, Inc.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Six Months Ended March 31, 1996 Compared to
Six Months Ended March 31, 1995
Revenue. Revenue increased $21.2 million, or 70%, to $51.6 million in the
six months ended March 31, 1996 from $30.4 million in the six months ended
March 31, 1995. The increase resulted primarily from expanded activities
from existing clients, projects for new clients and the acquisition of other
business communications services companies.
Contributing to the increase were a product launch for an existing
pharmaceutical client, a franchisee meeting for a new food services client,
and increased business from both existing clients and clients developed
through acquisitions. Approximately $3.0 million of the increase resulted
from new model introduction meetings for certain import automotive clients
held in the quarter ended December 31, 1995, which had, in earlier years,
been held in the Company's previous fiscal quarter.
Gross profit. Gross profit increased 77% to $17.3 million in the six months
ended March 31, 1996 from $9.8 million in the same period of 1995, primarily
as a result of the revenue growth described above. As a percentage of revenue,
gross profit increased to 33.4% in the six month period ended March 31, 1996
from 32.1% in the prior comparable period as a result of changes in project mix.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $4.5 million, or 51%, to $13.4 million in the
six month period ended March 31, 1996 from $8.8 million in the six month period
ended March 31, 1995. The increase is attributable to the addition of new
offices and personnel resulting from acquisitions and in support of other
revenue growth as well as normal inflationary increases. The $1.1 million
nonrecurring, non-cash compensation charge was the result of the vesting of
common stock sold pursuant to the Company's management stock plan at a price
lower than its fair market value. Excluding the effect of the nonrecurring
non-cash compensation charge of $1.1 million, pro forma net income per common
share would have been $0.16 for the six months ended March 31, 1996.
Depreciation and amortization. Depreciation and amortization expense for the six
months ended March 31, 1996 was $1.3 million, an increase of $0.2 million, or
16%, as compared to $1.1 million for the corresponding period in the prior year.
This increase was primarily due to the purchase of computer equipment and
goodwill from acquisitions.
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Interest expense. Interest expense with related parties increased $0.1 million
due to compounding. Other interest expense, net increased due to slightly higher
average borrowings to finance acquisitions, office expansions, and increased
working capital requirements.
Loss Before Taxes. Loss before taxes decreased to $0.4 million in the six months
ended March 31, 1996 from a loss of $1.8 million in the six months ended March
31, 1995.
Taxes. Taxes reflect an allocation based on the full year anticipated effective
tax rate. For the six months ended March 31, 1996 and 1995, there were losses
before taxes and, accordingly, an assumed benefit has been reflected.
Three Months Ended March 31, 1996 Compared to
Three Months Ended March 31, 1995
Revenue. Revenue increased $12.2 million, or 64%, to $31.2 million in the
three months ended March 31, 1996 from $19.0 million in the three months ended
March 31, 1995. The increase resulted primarily from expanded activities from
existing clients, projects for new clients and the acquisition of other business
communications services companies. Contributing to the increase were a
product launch for an existing pharmaceutical client, a franchisee meeting for a
new food services client, and increased business from both existing clients
and clients developed through acquisitions.
Gross profit. Gross profit increased 74% to $10.2 million in the three months
ended March 31, 1996 from $5.9 million in the same period of 1995 primarily as
a result of the revenue growth described above. As a percentage of revenue,
gross profit increased to 32.6% in the three months ended March 31, 1996 from
30.8% in the three months ended March 31, 1995 as a result of changes in
project mix.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $2.6 million, or 60%, to $6.9 million in the
three month period ended March 31, 1996 from $4.3 million in the three month
period ended March 31, 1995. The increase is attributable to the addition of new
offices and personnel resulting from acquisitions and in support of other
revenue growth as well as normal inflationary increases. The $1.0 million
nonrecurring, non-cash compensation charge was the result of the vesting of
common stock sold pursuant to the Company's management stock plan at a price
lower than its fair market value. Excluding the nonrecurring non-cash
compensation charge of $1.0 million, pro forma net income per common share
would have been $0.21 for the three months ended March 31, 1996.
Depreciation and amortization. Depreciation and amortization expense for the
three months ended March 31, 1996 was $0.7 million, representing an increase of
$0.1 million, or 22%, as compared to $0.6 million for the corresponding period
in the prior year. This
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increase was primarily due to the purchase of computer equipment and goodwill
from acquisitions.
Interest expense. Interest expense with related parties decreased slightly due
to the repayment and conversion of debt as of March 15, 1996 in connection with
the initial public offering. Other interest expense, net decreased slightly due
to a lower average borrowing level and the repayment of outstanding balances as
of March 15, 1996 in connection with the initial public offering.
Income Before Taxes. Income before taxes increased to $0.8 million in the three
months ended March 31, 1996 from $0.1 million in the three months ended March
31, 1995.
Taxes. Taxes reflect an allocation based on the Company's estimate of its annual
effective tax rate.
Liquidity and Capital Resources
The Company has a bank line of credit (the "Line of Credit") which provides up
to $12 million to handle working capital requirements. The Line of Credit, which
is secured by trade receivables, is effective through April 1, 1997 and is
renewable upon mutual consent each year thereafter as of April 1st. In addition,
the Company has a term facility (the "Term Facility") which has been used
primarily to fund acquisitions and provides up to a maximum of $15 million.
Principal on the Term Facility is payable on a quarterly basis with final
maturity on June 30, 1997. Outstanding amounts under each of the Line of Credit
and the Term Facility bear interest at the lender's prime rate plus 1%. As of
March 31, 1996, there were no outstanding balances under either the Line of
Credit or the Term Facility.
The following table sets forth certain information from the Company's
Consolidated Statement of Cash Flows for the six month periods ended March 31,
1996 and 1995:
Six Months Ended March 31,
1996 1995
-------------------- ----------------------
Net cash provided by (used in):
Operating activities $ (3,439,033) $ (2,108,748)
Investing activities (4,191,717) (3,121,933)
Financing activities 27,813,073 5,016,369
For the six months ended March 31, 1996, $3.4 million was used in operating
activities. The net loss adjusted for depreciation and amortization and the
non-cash compensation charge of $1.0 million provided $2.1 million. The net
change in working capital used $5.6 million, with increases in deferred income
and accrued expenses more than offset by increases in accounts receivable,
deferred charges and a decrease in accrued interest.
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Investing activities required $4.2 million due to acquisition-related
expenditures and property and equipment additions. Financing activities provided
$27.8 million in the six month period ended March 31, 1996, of which an
aggregate of $46.0 million of net proceeds were received during the period from
the issuance of common stock and the exercise of warrants to purchase common
stock and $3.0 million was provided by the Term Loan, offset by $21.0 million
used to repay all outstanding bank borrowings and substantially all other
long-term indebtedness (including accrued interest), and pay all accrued
preferred stock dividends. In addition, $0.2 million was used to repurchase
common stock during the period.
For the six months ended March 31, 1995, $2.1 million was used in operating
activities. The net loss adjusted for depreciation and amortization used $0.4
million. The net change in working capital used $1.7 million with increases in
deferred charges, trade accounts receivable and prepaid expenses and other
assets, partially offset by increases in accrued interest payable, trade
accounts payable and deferred income. Investing activities required $3.1 million
due to acquisition-related expenditures and property and equipment additions.
Financing activities provided $5.0 million in the six month period ended March
31, 1995 from the Line of Credit and the Term Facility to fund working capital
requirements and acquisitions.
Capital expenditures were $1.0 million and $0.8 million during the six month
periods ended March 31, 1996 and 1995, respectively, with the purchase of
additional personal computers and expanded capabilities for the computer system
accounting for the largest areas of expenditure.
Taxes
The Company's effective tax rate for fiscal 1995 was 15.7%, which is lower than
the statutory tax rate, primarily resulted from the utilization of federal and
state net operating loss ("NOL") carryforwards. The Company's anticipated
effective tax rate for 1996, reflecting use of the NOL carryforwards, is
approximately 33%. After the available NOL carryforwards have been fully
recognized, the Company expects to reflect a tax rate in accordance with
statutory tax rates adjusted for book/tax differences such as non-deductible
expenses.
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PART II
OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) Not applicable.
(b) Not applicable.
(c) (1) On February 29, 1996, prior to the consummation of the
initial public offering (the "IPO") of common stock,
par value $0.01 per share (the "Common Stock"), of the
Company, stockholders holding an aggregate of 1,278,171
shares (approximately 80%) of the then outstanding
voting securities of the Company approved by written
consent (without a meeting) an amendment to the
Company's Certificate of Incorporation to increase the
authorized capital stock of the Company. Notice of such
action was mailed to all non-consenting stockholders.
(2) On March 11, 1996, prior to the consummation of the
IPO, stockholders holding an aggregate of 4,726,825
shares (approximately 86%) of the then outstanding
voting securities of the Company approved by written
consent (without a meeting) (i) various amendments to
the Company's Certificate of Incorporation contemplated
in connection with the IPO, including, among other
things, amendments to capitalization of the Company,
(ii) the establishment by the Company of the Caribiner
International, Inc. 1996 Stock Option Plan and (iii)
the establishment by the Company of the Caribiner
International, Inc. Non-Employee Directors' Stock Plan.
Notice of such action was mailed to all non-consenting
stockholders.
(d) Not applicable.
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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Required by Item 601 of Regulation S-K:
3.1 Restated Certificate of Incorporation
3.2 Second Amended and Restated By-laws (filed as Exhibit
3.2(b) to the Company's Registration Statement on Form
S-1 (Registration No. 33-80481) and incorporated herein
by reference)
11.1 Computation of Pro Forma Net Income (Loss) Per Share
for the six months ended March 31, 1996 and 1995
11.2 Computation of Pro Forma Net Income Per Share for the
three months ended March 31, 1996 and 1995
11.3 Computation of Supplementary Pro Forma Net Income
(Loss) Per Share for the six months ended March 31,
1996 and 1995
11.4 Computation of Supplementary Pro Forma Net Income Per
Share for the three months ended March 31, 1996 and
1995
27.1 Financial Data Schedule
99.1 Letter from Independent Auditors
Re: Unaudited Interim Financial
Statements
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the quarter for
which this Quarterly Report on Form 10-Q is filed.
-15-
<PAGE>
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 thereunto duly authorized.
CARIBINER INTERNATIONAL, INC.
(Registrant)
Date: May 15, 1996 By: /s/ Raymond S. Ingleby
------------------------
Raymond S. Ingleby
Chairman of the Board and
Chief Executive Officer
By: /s/ Arthur F. Dignam
------------------------
Arthur F. Dignam
Executive Vice President and
Chief Financial and Administrative Officer
(Principal Financial Officer and
Chief Accounting Officer)
-16-
<PAGE>
EXHIBIT INDEX
Page Number
-----------
3.1 Restated Certificate of Incorporation
3.2 Second Amended and Restated By-laws (filed as Exhibit 3.2(b)
to the Company's Registration Statement on Form S-1
(Registration No. 33-80481) and incorporated herein by
reference)
11.1 Computation of Pro Forma Net Income (Loss) Per Common Share
for the six months ended March 31, 1996 and 1995
11.2 Computation of Pro Forma Net Income Per Common Share for the
three months ended March 31, 1996 and 1995
11.3 Computation of Supplementary Pro Forma Net Income (Loss) Per
Common Share for the six months ended March 31, 1996 and
1995
11.4 Computation of Supplementary Pro Forma Net Income Per Common
Share for the three months ended March 31, 1996 and 1995
27.1 Financial Data Schedule
99.1 Letter from Independent Auditors
Re: Unaudited Interim Financial
Statements
-17-
EXHIBIT 3.1
RESTATED CERTIFICATE OF INCORPORATION
OF
CARIBINER INTERNATIONAL, INC.
Caribiner International, Inc., a corporation organized and
existing under the laws of the State of Delaware (the "Corporation"), hereby
certifies as follows:
1. The name of the Corporation is CARIBINER INTERNATIONAL, INC. The
Corporation's original Certificate of Incorporation was filed with the Secretary
of State on December 1, 1989 under the name Ingleby Enterprises Inc. An
amendment to the original Certificate of Incorporation was filed with the
Secretary of State on December 29, 1992, to change the Corporation's name to
Business Communications Group, Inc. A Restated Certificate of Incorporation was
filed with the Secretary of State on July 2, 1993, under the name Business
Communications Group, Inc. An amendment to the Restated Certificate of
Incorporation was filed with the Secretary of State on December 12, 1995 to
change the Corporation's name to its present name.
2. This Restated Certificate of Incorporation restates, integrates and further
amends the Restated Certificate of Incorporation, as amended, of the Corporation
by amending and restating in its entirety such Restated Certificate of
Incorporation, as amended.
3. The text of the Restated Certificate of Incorporation, as amended or
supplemented heretofore, is further amended and restated hereby to read as
herein set forth in full as:
FIRST: The name of the Corporation is:
CARIBINER INTERNATIONAL, INC.
SECOND: The address of the registered office of the
Corporation in the State of Delaware and the name of the
registered agent at such address are as follows: The
Prentice-Hall Corporation System, Inc., 1013 Centre Road,
Wilmington, Delaware 19805, New Castle County.
THIRD: The nature of the business or purposes to be
conducted or promoted is to engage in any lawful act or
activity for which corporations may be organized under the
General Corporation Law of Delaware (the "DGCL").
FOURTH: 4.1 Capitalization. (1) The aggregate number of
shares that the Corporation shall have authority to issue
is 42,000,000 shares of capital stock of which: (a)
40,000,000 shares shall be of a class of voting common
stock, par value $.01 per share (the "Common Stock"); and
(b) 2,000,000 shares shall be
-18-
of a class of Preferred Stock, par value $.01 per share
(the "Preferred Stock"), for which the Board of Directors
(the "Board") is authorized hereby, subject to the
limitations prescribed by law and the provisions of this
Article, to provide for the issuance of shares of
Preferred Stock in series, and by filing a certificate
pursuant to the DGCL to establish from time to time the
number of shares to be included in each such series, and
to fix the designation, powers, preferences and rights of
the shares of each such series of Preferred Stock and the
qualifications, limitations or restrictions thereof. The
authority of the Board with respect to each series of
Preferred Stock, not heretofore designated, shall include,
but not be limited to, determination of the following:
(a) the number of shares constituting that series
(which may be increased or decreased by the Board) and the
distinctive designation of that series (provided that the
aggregate number of shares constituting all series of
Preferred Stock shall not exceed 2,000,000);
(b) the dividend rate on the shares of that series,
whether dividends shall be cumulative, and if so, from
which date or dates, and the relative rights of priority,
if any, of payment of dividends on shares of that series;
(c) whether that series shall have voting rights,
in addition to the voting rights provided by law, and, if
so, the terms of such voting rights;
(d) whether that series shall have conversion
privileges, and, if so, the terms and conditions of such
conversion, including provision for adjustment of the
conversion rate in such events as the Board shall
determine;
(e) whether or not the shares of that series shall
be redeemable, and if so, the terms and conditions of such
redemption, including the date or dates upon or after
which they shall be redeemable, and the amount per share
payable in case of redemption, which amount may vary under
different conditions and at different redemption dates;
(f) whether that series shall have a sinking fund
for redemption or purchase of shares of that series, and,
if so, the terms and amount of such sinking fund;
(g) the rights of the shares of that series in the
event of voluntary or involuntary liquidation, dissolution
or winding up of the affairs of the Corporation, and the
relative rights of priority, if any, of payment of shares
of that series; and
(h) any other relative rights, powers, preferences,
qualifications, limitations or restrictions relating to
such series which may be authorized under the DGCL.
-19-
A merger or consolidation of the Corporation with
or into any other corporation, a share exchange involving
the Corporation, or a sale, lease, exchange or transfer of
all or any part of the assets of the Corporation shall not
result in the liquidation of the Corporation, and the
distribution of its assets to its stockholders shall not
be deemed to be a voluntary or involuntary liquidation,
dissolution or winding-up of the Corporation for purposes
of this Section.
(2) Each share of Series A Non-Voting Common Stock,
par value $0.01 per share, of the Corporation issued and
outstanding as of the filing of this Restated Certificate
of Incorporation shall, without any further action on the
part of the Corporation or the holders thereof, be
reclassified as and converted into one share of legally
and validly issued, fully paid and nonassessable Common
Stock.
4.2 Right to Vote. (1) Each holder of record of
shares of Common Stock shall be entitled to one vote for
each share of Common Stock standing in the holder's name
on the stock register of the Corporation.
(2) Cumulative voting shall not be allowed in the
election of directors or for any other purpose.
FIFTH: Election of Directors need not be by written
ballot.
SIXTH: Any action to be taken at any annual or
special meeting of stockholders must be taken at a
meeting. No action by written consent of stockholders is
permitted to be taken.
SEVENTH: The personal liability of the directors of the
Corporation is hereby eliminated to the fullest extent
permitted by the DGCL (including, without limitation,
paragraph (7) of subsection (b) of Section 102 thereof),
as the same may be amended and supplemented from time to
time.
EIGHTH: The Corporation shall, to the fullest extent
permitted by the DGCL (including, without limitation,
Section 145 thereof), as the same may be amended and
supplemented from time to time, indemnify any and all
persons whom it shall have power to indemnify under the
DGCL. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which those
seeking indemnification may be entitled whether as a
matter of law, under any By-law of the Corporation, by
agreement, by vote of stockholders or disinterested
directors of the Corporation or otherwise.
NINTH: The Board of the Corporation is authorized to
adopt, amend, or repeal By-Laws of the Corporation,
subject to the right of the stockholders of the
Corporation to adopt, amend or repeal any By-Law.
-20-
4. This third Restated Certificate of Incorporation was duly adopted by the
Board of Directors of the Corporation and by the holders of a majority of the
outstanding stock of the Corporation entitled to vote thereon in accordance with
Sections 141(f), 228 and 245 of the DGCL.
-21-
IN WITNESS WHEREOF, the Corporation has caused this certificate to be signed by
Raymond S. Ingleby, its Chairman and Chief Executive Officer, and attested by
Arthur F. Dignam, its Secretary, as of this _____ day of March, 1996.
CARIBINER INTERNATIONAL, INC.
By:_________________________________________
Raymond S. Ingleby
Chairman of the Board and Chief Executive Officer
ATTEST:
By:_________________________________________
Arthur F. Dignam
Secretary
-22-
EXHIBIT 11.1
<TABLE>
<CAPTION>
Caribiner International, Inc.
Computation of Pro Forma Net Income (Loss) Per Common Share
For the Six Months Ended March 31
1996 1995
----------- -----------
<S> <C> <C>
Weighted average common stock outstanding during the period (1) 2,887,496 2,588,689
Conversion of Convertible Note into shares of Series A
Preferred stock and the subsequent conversion of such shares
into shares of common stock 2,055,000 2,055,000
Conversion of all outstanding shares of Series A Preferred
stock and Series B Preferred stock into shares of common stock 1,541,250 1,541,250
Exercise of warrants 534,505 534,505
Effect of exercise of warrants computed in accordance with the
treasury stock method (99,441) (99,441)
----------- -----------
Total weighted average common stock outstanding during the
period 6,918,810 6,620,003
=========== ===========
(Loss) before taxes ($377,296) ($1,781,519)
Plus: reduction in interest expense from the conversion of the
Convertible Note 926,248 903,309
----------- -----------
Pro forma income (loss) before taxes 548,952 ($878,210)
Pro forma income tax (expense) benefit (179,617) 74,648
----------- -----------
Pro forma net income (loss) $369,335 ($803,562)
=========== ===========
Pro forma net income (loss) per common share $ 0.05 ($ 0.12)
=========== ===========
</TABLE>
(1) Pursuant to the Securities and Exchange Commission Staff Accounting Bulletin
No. 83, common stock and common stock equivalents issued at prices below the
assumed initial public offering price per share during the twelve month period
immediately preceding the initial filing date of the Company's Registration
Statement for its public offering have been included as outstanding for all
periods presented prior to the initial public offering.
-23-
EXHIBIT 11.2
<TABLE>
<CAPTION>
Caribiner International, Inc.
Computation of Pro Forma Net Income Per Common Share
For the Three Months Ended March 31
1996 1995
----------- -----------
<S> <C> <C>
Weighted average common stock outstanding during the period (1) 3,189,587 2,588,689
Conversion of Convertible Note into shares of Series A Preferred
stock and the subsequent conversion of such shares into shares
of common stock 2,055,000 2,055,000
Conversion of all outstanding shares of Series A Preferred stock
and Series B Preferred stock into shares of common stock 1,541,250 1,541,250
Exercise of warrants 534,505 534,505
Effect of exercise of warrants computed in accordance with the
treasury stock method (99,441) (99,441)
----------- -----------
Total weighted average common stock outstanding during the period 7,220,901 6,620,003
=========== ===========
Income before taxes $ 803,120 $ 107,966
Plus: reduction in interest expense from the conversion of the
Convertible Note 427,539 458,055
----------- -----------
Pro forma income before taxes 1,230,659 566,021
Pro forma income tax expense (418,214) (47,984)
----------- -----------
Pro forma net income $ 812,214 $ 518,037
=========== ===========
Pro forma net income per common share $ 0.11 $ 0.08
=========== ===========
</TABLE>
(1) Pursuant to the Securities and Exchange Commission Staff Accounting Bulletin
No. 83, common stock and common stock equivalents issued at prices below the
assumed initial public offering price per share during the twelve month period
immediately preceding the initial filing date of the Company's Registration
Statement for its public offering have been included as outstanding for all
periods presented prior to the initial public offering.
-24-
EXHIBIT 11.3
<TABLE>
<CAPTION>
Caribiner International, Inc.
Computation of Supplementary Pro Forma Net Income (loss) Per Common Share
For the Six Months Ended March 31
1996 1995
----------- -----------
<S> <C> <C>
Weighted average common stock outstanding during the
period (1) 2,588,689 2,588,689
Common stock issued to repay current & long-term
indebtedness (2) 1,617,267 1,617,267
Conversion of Convertible Note into shares of Series A
Preferred stock and the subsequent conversion of such
shares into shares of common stock 2,055,000 2,055,000
Conversion of all outstanding shares of Series A Preferred
stock and Series B Preferred stock into shares of
common stock 1,541,250 1,541,250
Exercise of warrants 534,505 534,505
Effect of exercise of warrants computed in accordance with
the treasury stock method (99,441) (99,441)
----------- -----------
Total weighted average common stock outstanding during
the period 8,237,270 8,237,270
=========== ===========
(Loss) before taxes ($ 377,296) ($1,781,519)
Plus: reduction in interest expense from the conversion of
the Convertible Note and repayment of all other
indebtedness from proceeds of the initial public
offering 1,915,871 1,576,637
----------- -----------
Pro forma income (loss) before taxes 1,538,575 (204,882)
Pro forma income tax (expense) benefit (507,730) 15,066
----------- -----------
Pro forma net income (loss) $ 1,030,845 ($ 189,816)
=========== ===========
Supplementary pro forma net income (loss) per common share $ 0.13 ($ 0.02)
=========== ===========
</TABLE>
(1) Pursuant to the Securities and Exchange Commission Staff Accounting Bulletin
No. 83, common stock and common stock equivalents issued at prices below the
assumed initial public offering price per share during the twelve month period
immediately preceding the initial filing date of the Company's Registration
Statement for its public offering have been included as outstanding for all
periods presented prior to the initial public offering.
(2) Supplementary earnings per share reflects the number of shares of common
stock upon consummation of the initial public offering used to repay current and
long-term indebtedness as if such issuance had occurred at the beginning of each
period presented.
-25-
EXHIBIT 11.4
<TABLE>
<CAPTION>
Caribiner International, Inc.
Computation of Supplementary Pro Forma Net Income Per Share
For the Three Months Ended March 31
1996 1995
----------- -----------
<S> <C> <C>
Weighted average common stock outstanding during the
period (1) 2,588,689 2,588,689
Common stock issued in connection with initial public
offering (2) 1,617,267 1,617,267
Conversion of Convertible Note into shares of Series A
Preferred stock and the subsequent conversion of such
shares into shares of common stock 2,055,000 2,055,000
Conversion of all outstanding shares of Series A Preferred
stock and Series B Preferred stock into shares of
common stock 1,541,250 1,541,250
Exercise of warrants 534,505 534,505
Effect of exercise of warrants computed in accordance with
the treasury stock method (99,441) (99,441)
----------- -----------
Total weighted average common stock outstanding during
the period 8,237,270 8,237,270
=========== ===========
Income before taxes $ 803,120 $ 107,966
Plus: reduction in interest expense from the conversion of
the Convertible Note and repayment of all other
indebtedness from proceeds of the initial public offering 821,797 829,915
----------- -----------
Pro forma income before taxes 1,624,917 937,881
Pro forma income tax expense (551,800) (68,956)
----------- -----------
Pro forma net income $ 1,073,117 $ 868,925
=========== ===========
Supplementary pro forma net income per common share $ 0.13 $ 0.11
=========== ===========
</TABLE>
(1) Pursuant to the Securities and Exchange Commission Staff Accounting Bulletin
No. 83, common stock and common stock equivalents issued at prices below the
assumed initial public offering price per share during the twelve month period
immediately preceding the initial filing date of the Company's Registration
Statement for its public offering have been included as outstanding for all
periods presented prior to the initial public offering.
(2) Supplementary earnings per share reflects the number of shares of common
stock upon consummation of the initial public offering used to repay current and
long-term indebtedness as if such issuance had occurred at the beginning of each
period presented.
-26-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET AS OF MARCH 31, 1996 AND THE UNAUDITED
CONSOLIDATED STATEMENT OF INCOME FOR THE SIX MONTHS ENDED MARCH 31, 1996
OF CARIBINER INTERNATIONAL, INC. AS SET FORTH IN THIS FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 20,395
<SECURITIES> 0
<RECEIVABLES> 31,639
<ALLOWANCES> 82
<INVENTORY> 0
<CURRENT-ASSETS> 65,077
<PP&E> 12,543
<DEPRECIATION> 4,977
<TOTAL-ASSETS> 89,152
<CURRENT-LIABILITIES> 34,808
<BONDS> 0
0
0
<COMMON> 96
<OTHER-SE> 44,594
<TOTAL-LIABILITY-AND-EQUITY> 89,152
<SALES> 51,627
<TOTAL-REVENUES> 51,627
<CGS> 34,371
<TOTAL-COSTS> 34,371
<OTHER-EXPENSES> 15,766
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,867
<INCOME-PRETAX> (377)
<INCOME-TAX> 125
<INCOME-CONTINUING> (377)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (253)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
EXHIBIT 99.1
Stockholders and Board of Directors
Caribiner International, Inc.
We have reviewed the accompanying consolidated balance sheet of Caribiner
International, Inc. as of March 31, 1996, and the related consolidated
statements of operations for the three-month and six-month periods ended March
31, 1996 and 1995, the consolidated statements of changes in stockholders'
equity (deficit) for the six-month period ended March 31, 1996 and the
consolidated statements of cash flows for the six-month periods ended March 31,
1996 and 1995. These financial statements are the responsibility of the
Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, which will be performed
for the full year with the objective of expressing an opinion regarding the
financial statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the accompanying consolidated financial statements referred to above
for them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Caribiner International, Inc. as of
September 30, 1995, and the related consolidated statements of operations,
stockholders' equity (deficit), and cash flows for the year then ended, not
presented herein, and in our report dated November 22, 1995, except for Note 14
as to which the date is March 4, 1996, we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying consolidated balance sheet as of September 30, 1995,
is fairly stated, in all material respects, in relation to the consolidated
balance sheet from which it has been derived.
Ernst & Young LLP
New York, New York
May 10, 1996
