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 JUNE 30, 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 [X] No [ ]
The registrant had 9,598,159 shares of Common Stock (par value $0.01 per share)
outstanding as of August 12, 1996.
<PAGE>
INDEX
PART I. Financial Information
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets as of
June 30, 1996 and September 30, 1995......................2
Consolidated Statements of Operations for
the nine months ended June 30, 1996 and 1995..............3
Consolidated Statements of Operations for
the three months ended June 30, 1996 and 1995.............4
Consolidated Statements of Cash Flows for
the nine months ended June 30, 1996 and 1995..............5
Consolidated Statement of Changes in Stockholders'
Equity for the nine months ended June 30, 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 6. Exhibits and Reports on Form 8-K.........................14
SIGNATURES..................................................................15
1
<PAGE>
Stockholders and Board of Directors
Caribiner International, Inc.
We have reviewed the accompanying consolidated balance sheet of Caribiner
International, Inc. as of June 30, 1996, and the related consolidated
statements of operations for the three months and nine months ended June 30,
1996 and 1995, the consolidated statements of changes in stockholders' equity
(deficit) for the nine months ended June 30, 1996 and the consolidated
statements of cash flows for the nine months ended June 30, 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
August 7, 1996
Caribiner International, Inc.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, September 30,
ASSETS 1996 1995
(unaudited) (Note 1)
------------- -------------
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 6,956,389 $ 212,612
Trade accounts receivable - net of allowance
for doubtful accounts of $304,860 in 1996
and $81,600 in 1995 40,214,913 22,920,679
Deferred charges 8,613,294 3,804,858
Prepaid expenses and other current assets 2,061,975 607,494
----------- -----------
Total Current Assets 57,846,571 27,545,643
Property and equipment - net 9,406,451 6,383,975
Intangible assets - net 31,256,380 10,628,754
Other assets 593,764 740,040
----------- -----------
TOTAL ASSETS $99,103,166 $45,298,412
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Bank line of credit $ -- $ 4,220,000
Current portion of long-term debt 691,324 4,677,054
Trade accounts payable 10,340,356 4,581,165
Accrued expenses and other current liabilities 15,113,174 6,954,317
Deferred income 15,965,298 6,761,589
----------- -----------
Total Current Liabilities 42,110,152 27,194,125
Long-term debt 1,183,862 7,147,675
Convertible Note including accrued interest __ 17,346,397
Deferred income 5,605,230 3,275,023
Accrued preferred stock dividends __ 1,874,135
Other liabilities 106,244 895,288
----------- -----------
TOTAL LIABILITIES 49,005,488 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, 9,598,159
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 95,982 25,015
Additional paid-in capital 60,582,494 1,945,272
Accumulated deficit (10,580,798) (14,409,018)
------------ -----------
TOTAL STOCKHOLDERS' EQUITY (DEFICIT) 50,097,678 (12,434,231)
------------ -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 99,103,166 $45,298,412
============ ===========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
2
<PAGE>
Caribiner International, Inc.
Consolidated Statements of Operations
For the Nine Months Ended
(unaudited)
<TABLE>
<CAPTION>
June 30,
1996 1995
------------ -------------
<S> <C> <C>
Revenue $ 99,776,939 $ 52,085,407
Production costs 66,945,123 34,785,967
------------ ------------
Gross profit 32,831,816 17,299,440
Operating expenses:
Selling, general and administrative expenses 21,574,964 13,588,141
Non-cash compensation expense 1,072,000 --
Depreciation and amortization 2,138,746 1,674,482
----------- -----------
Total operating expenses 24,785,710 15,262,623
----------- -----------
Operating income 8,046,106 2,036,817
Interest expense with related parties 1,199,281 1,670,007
Other interest expense, net 453,436 812,378
----------- -----------
Income (loss) before taxes 6,393,389 (445,568)
Income tax (expense) benefit (2,237,686) 69,719
----------- ----------
Net income (loss) $ 4,155,703 $(375,849)
=========== ==========
Pro forma net income per common share $ 0.61 $ 0.13
=========== ==========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
3
<PAGE>
Caribiner International, Inc.
Consolidated Statement of Operations
For the Three Months Ended
(unaudited)
<TABLE>
<CAPTION>
June 30,
1996 1995
------------ -------------
<S> <C> <C>
Revenue $ 48,149,767 $ 21,641,622
Production costs 32,574,255 14,114,663
------------ ------------
Gross profit 15,575,512 7,526,959
Operating expenses:
Selling, general and administrative expenses 8,203,354 4,748,796
Depreciation and amortization 816,204 536,464
------------ ------------
Total operating expenses 9,019,558 5,285,260
------------ ------------
Operating income 6,555,954 2,241,699
Interest expense with related parties -- 569,875
Other interest (income) expense, net (214,731) 335,873
------------ ------------
Income before taxes 6,770,685 1,335,951
Income tax expense 2,362,686 209,037
------------ ------------
Net income $ 4,407,999 $ 1,126,914
============ ============
Pro forma net income per common share $ 0.46 $ 0.25
============ ============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
4
<PAGE>
Caribiner International, Inc.
Consolidated Statement of Cash Flows
For the Nine Months Ended
(unaudited)
<TABLE>
<CAPTION>
June 30,
1996 1995
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 4,155,703 $ (375,849)
Adjustments to reconcile net income (loss)
to net cash used in operating activities:
Depreciation and amortization 2,138,746 1,674,482
Non-cash compensation 1,072,000 --
Change in assets and liabilities:
(Increase) in trade accounts receivable (8,533,261) (6,117,807)
(Increase) in deferred charges (315,872) (3,914,041)
(Increase) in prepaid expenses and
other current assets (812,461) (407,895)
Decrease (increase) in other assets 83,145 (54,209)
Increase (decrease) in trade accounts
payable 807,027 (173,960)
Increase in deferred income 3,163,580 8,116,251
Increase (decrease) in accrued expenses
and other liabilities 1,016,854 (351,384)
(Decrease) increase in accrued interest
payable (7,250,375) 1,660,200
------------ ------------
Net cash (used in) provided by operating
activities (4,474,914) 55,788
------------ ------------
Cash flow used in investing activities:
Purchase of property and equipment (1,706,964) (1,362,115)
Acquisition of intangibles and
businesses, net of cash acquired (13,719,507) (2,424,958)
------------ ------------
Net cash used in investing activities (15,426,471) (3,787,073)
------------ ------------
Cash flow provided by financing activities:
Net proceeds from issuance of common
stock 43,029,987 --
Proceeds from exercise of warrants 1,690,500 --
Repayments of long-term debt (14,650,970) (883,502)
Net (repayments) proceeds of bank
line of credit (4,220,000) 2,400,000
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 174,167 728
Repurchase of common stock (176,904) (1,880)
------------ -----------
Net cash provided by financing activities 26,645,162 3,515,346
------------ -----------
Net increase (decrease) in cash 6,743,777 (215,939)
Cash, beginning of period 212,612 272,070
Cash, end of period $ 6,956,389 $ 56,131
=========== ===========
Supplemental disclosure of cash flow information:
Interest paid $ 7,862,260 $ 626,322
=========== ===========
Income taxes paid $ 1,868,446 $ 227,647
=========== ===========
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
5
<PAGE>
Caribiner International, Inc.
Consolidated Statement of Changes in Stockholders' Equity
For the Nine Months Ended June 30, 1996
(unaudited)
<TABLE>
<CAPTION>
Total
Common Stock Preferred Stock Additional Stockholders'
-------------------- -------------------- Paid In Deferred Accumulated Equity
Shares Amount Shares Amount Capital Compensation Deficit (Deficit)
---------- -------- -------- --------- ----------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September
30, 1995 2,501,479 $25,015 450,000 $ 4,500 $1,945,272 $ -- ($14,409,018) ($12,434,231)
Issuance of common
stock under the
Management Stock
Plan 87,210 872 -- -- 1,245,295 (1,072,000) -- 174,167
Issuance of warrants
to purchase 75,593
shares of common
stock -- -- -- -- 79,456 -- -- 79,456
Repurchase of common
stock (31,091) (311) -- -- (176,593) -- -- (176,904)
Accrued preferred
stock dividends -- -- -- -- -- -- (327,483) (327,483)
Conversion of
Convertible Note
into preferred stock -- -- 600,000 6,000 11,979,450 -- -- 11,985,450
Conversion of preferred
stock into common
stock 3,596,250 35,963 (1,050,000) (10,500) (10,913) -- -- 14,550
Exercise of warrants 534,505 5,345 -- -- 1,685,155 -- -- 1,690,500
Issuance of common
stock upon
consummation of
initial public
offering 2,877,985 28,780 -- -- 42,835,690 -- -- 42,864,470
Issuance of common
stock upon
acquisition of
Lighthouse, Ltd. 31,821 318 -- -- 999,682 -- -- 1,000,000
Non-cash compensation
charge -- -- -- -- -- 1,072,000 -- 1,072,000
Net income -- -- -- -- -- -- 4,155,703 4,155,703
- ---------- ------- --------- ------ ----------- ----------- ------------- -----------
9,598,159 $95,982 -- $ -- $60,582,494 $ -- ($10,580,798) $50,097,678
========== ======= ========= ====== =========== =========== ============= ===========
</TABLE>
6
<PAGE>
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 nine-month period ended
June 30, 1996 are not necessarily indicative of the results of operations
that may be expected for any other interim period or 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 $43.0
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;
7
<PAGE>
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 Acquisitions
During the nine months ended June 30, 1996, the Company acquired certain
assets and assumed certain liabilities of three companies engaged in
providing business communications services.
In January, 1996, the Company acquired substantially all of the assets of
Koors, Perry & Associates, Inc. ("Koors, Perry"), a regional business
communications services provider based in Atlanta, Georgia. The
initial 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 and the assumption of certain liabilities.
In June, 1996, the Company acquired substantially all of the assets and
assumed certain of the liabilities of Lighthouse, Ltd. ("Lighthouse"), a
business communications services company headquartered in Rolling Meadows,
Illinois, for an aggregate consideration of approximately $5.3 million in
cash and approximately $1.0 million in common stock of the Company (31,821
shares).
Additionally, in June, 1996, the Company acquired all of the stock of SCH
International Limited (formerly known as Spectrum Communications Holdings
International Limited) ("Spectrum"), a London-based business
communications services company.
8
<PAGE>
The initial purchase price was approximately $5.0 million, which was
financed from the Company's working capital.
The acquisition of each of Koors, Perry and Spectrum provides for
contingent payments for three years following the purchase dates based
upon the achievement of certain performance goals. Contingent payments are
accounted for as additional purchase price as they become known.
The accounting for these acquisitions is in accordance with the purchase
method and accordingly, operations of the acquired businesses are included
in the accompanying unaudited consolidated statements of operations from
their effective dates of acquisition.
The unaudited consolidated pro forma revenue of the Company for the nine
months ended June 30, 1996, assuming these acquisitions took place as of
October 1, 1995, would have been approximately $118.8 million. The pro
forma effect of the acquisitions on the Company's net income for the nine
month period ended June 30, 1996 was immaterial.
5. Pro Forma Net Income Per Common Share
Pro forma net income 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, 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 nine months ended June 30, 1996 is 9,506,730 and
7,778,301, respectively. The weighted average number of shares of common
stock outstanding during each of the three months and nine months ended
June 30, 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 $0.62 and $0.23 for the
nine months ended June 30, 1996 and 1995, respectively. For purposes of
this computation, the weighted average number of shares of common stock
outstanding during the nine months ended June 30, 1996 and 1995 is
8,746,300 and 8,237,270, respectively.
9
<PAGE>
Caribiner International, Inc.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Nine Months Ended June 30, 1996 Compared to
Nine Months Ended June 30, 1995
Revenue. Revenue increased $47.7 million, or 92%, to $99.8 million in the nine
months ended June 30, 1996 from $52.1 million in the nine months ended June 30,
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,
sales meetings in connection with a triennial event held by a financial
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 90% to $32.8 million in the nine months
ended June 30, 1996 from $17.3 million in the same period of 1995, primarily as
a result of the revenue growth described above. As a percentage of revenue,
gross profit decreased to 32.9% in the nine-month period ended June 30, 1996
from 33.2% in the prior comparable period as a result of changes in project
mix.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $8.0 million, or 59%, to $21.6 million in the
nine-month period ended June 30, 1996 from $13.6 million in the nine-month
period ended June 30, 1995. The increase is attributable primarily 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 $0.70 for the nine months ended June 30, 1996.
Depreciation and amortization. Depreciation and amortization expense for the
nine months ended June 30, 1996 was $2.1 million, an increase of $0.4 million,
or 28%, as compared to $1.7 million for the corresponding period in the prior
year. This increase was primarily due to the purchase of computer equipment and
goodwill from acquisitions.
10
<PAGE>
Interest expense. Interest expense with related parties decreased $0.5 million
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 due to
a lower average borrowing level, the repayment of outstanding balances as of
March 15, 1996 in connection with the initial public offering, and interest
income earned on the proceeds from the offering.
Income (loss) Before Taxes. Income (loss) before taxes increased to $6.4 million
in the nine months ended June 30, 1996 from a loss of $0.4 million in the nine
months ended June 30, 1995.
Taxes. Taxes reflect an allocation based on the full year anticipated effective
tax rate. For the nine months ended June 30, 1995, there were losses before
taxes and, accordingly, an assumed benefit has been reflected.
Three Months Ended June 30, 1996 Compared to
Three Months Ended June 30, 1995
Revenue. Revenue increased $26.5 million, or 122%, to $48.1 million in the
three months ended June 30, 1996 from $21.6 million in the three months ended
June 30, 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
global marketing meeting for a new food services client, sales meetings in
connection with a triennial event held by a financial services client and
increased business from both existing clients and clients developed through
acquisitions.
Gross profit. Gross profit increased 107% to $15.6 million in the three months
ended June 30, 1996 from $7.5 million in the same period of 1995, primarily as
a result of the revenue growth described above. As a percentage of revenue,
gross profit decreased to 32.3% in the three months ended June 30, 1996 from
34.8% in the three months ended June 30, 1995 as a result of changes in project
mix.
Selling, general and administrative expenses. Selling, general and
administrative expenses increased $3.5 million, or 73%, to $8.2 million in the
three-month period ended June 30, 1996 from $4.7 million in the three-month
period ended June 30, 1995. The increase is attributable primarily to the
addition of new offices and personnel resulting from acquisitions and in
support of other revenue growth, as well as normal inflationary increases.
Depreciation and amortization. Depreciation and amortization expense for the
three months ended June 30, 1996 was $0.8 million, representing an increase of
$0.3 million, or 52%, as compared to $0.5 million for the corresponding period
in the prior year. This increase was primarily due to the purchase of computer
equipment and goodwill from acquisitions.
11
<PAGE>
Interest expense. Interest expense with related parties decreased due to the
repayment and conversion of debt as of March 15, 1996 in connection with the
initial public offering. Other interest (income) expense, net decreased due to
a lower average borrowing level, the repayment of outstanding balances as of
March 15, 1996 in connection with the initial public offering, and interest
income earned on the proceeds from the offering.
Income Before Taxes. Income before taxes increased to $6.8 million in the
three months ended June 30, 1996 from $1.3 million in the three months ended
June 30, 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 June 30, 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 nine-month periods ended June 30,
1996 and 1995:
Nine Months Ended June 30,
1996 1995
------------ ------------
Net cash provided by (used in):
Operating activities $ (4,474,914) $ 55,788
Investing activities (15,426,471) (3,787,073)
Financing activities 26,645,162 3,515,346
For the nine months ended June 30, 1996, $4.5 million was used in operating
activities. The net loss adjusted for depreciation and amortization and the
non-cash compensation charge of $1.1 million provided $7.4 million. The net
change in working capital used $11.8 million, with increases in deferred
income, accrued expenses and accounts payable, more than offset by increases in
accounts receivable, prepaid expenses and other current assets, and a decrease
in accrued interest. Investing activities required $15.4 million due to
acquisition-related expenditures and property and equipment additions.
Financing activities provided $26.6 million in the nine-month period ended June
30, 1996, of which
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<PAGE>
an aggregate of $44.9 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 $21.1 million used to repay all outstanding bank borrowings
and substantially all other long-term indebtedness, and pay all accrued
preferred stock dividends. In addition, $0.2 million was used to repurchase
common stock during the period.
For the nine months ended June 30, 1995, operating activities provided
approximately $0.1 million. The net loss adjusted for depreciation and
amortization used $1.3 million. The net change in working capital used $1.2
million with increases in trade accounts receivable, deferred charges, prepaid
expenses and other assets and accrued expenses and other liabilities, partially
offset by increases in deferred income and accrued interest payable. Investing
activities required $3.8 million due to acquisition-related expenditures and
property and equipment additions. Financing activities provided $3.5 million in
the nine-month period ended June 30, 1995 from the Line of Credit and the Term
Facility to fund working capital requirements and acquisitions.
Capital expenditures were $1.7 million and $1.4 million during the nine-month
periods ended June 30, 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 resulting 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 35%. 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.
13
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits Required by Item 601 of Regulation S-K:
2.1 Agreement of Purchase and Sale of Assets, dated June 6,
1996, by and among the Company, Lighthouse, Ltd., Mark P.
Fitzgerald, Warren F. Moore II and Richard C. Hunt
(schedules omitted -- the Company agrees to furnish a copy
of any schedule to the Commission upon request)(filed as
Exhibit 2.1 to the Company's Current Report on Form 8-K
filed with the Commission on June 21, 1996 and incorporated
herein by reference)
2.2 Share Sale Agreement, dated June 13, 1996, by and among
Peter Devonald Berners-Price ("Berners-Price") and others,
Caribiner Holdings (UK) Limited ("Caribiner UK") and the
Company (disclosure letter omitted -- the Company agrees to
furnish a copy of such letter to the Commission upon
request)(filed as Exhibit 2.1 to the Company's Current
Report on Form 8-K filed with the Commission on June 28,
1996 and incorporated herein by reference)
2.3 Share Purchase Agreement, dated June 13, 1996, by and among
Caribiner UK, Berners-Price, Mark Wallace, the Company and
others (filed as Exhibit 2.2 to the Company's Current Report
on Form 8-K filed with the Commission on June 28, 1996 and
incorporated herein by reference)
3.1 Restated Certificate of Incorporation (filed as Exhibit 3.1
to the Company's Quarterly Report on Form 10-Q for the three
months ended March 31, 1996 and incorporated herein by
reference)
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 Per Share for
the nine months ended June 30, 1996 and 1995
11.2 Computation of Pro Forma Net Income Per Share for the
three months ended June 30, 1996 and 1995
11.3 Computation of Supplementary Pro Forma Net Income Per
Share for the nine months ended June 30, 1996 and 1995
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
The Company filed the following reports on Form 8-K during the
three months ended June 30, 1996:
Date of Filing Items Reported Subject of Report
-------------- -------------- -----------------
June 21, 1996 2, 7 Announcing the acquisition
of substantially all of
the assets of Lighthouse,
Ltd.
June 28, 1996 2, 7 Announcing the acquisition
of all of the outstanding
ordinary shares of SCH
International Limited
14
<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: August 14, 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)
15
<PAGE>
EXHIBIT INDEX
Page Number
2.1 Agreement of Purchase and Sale of Assets, dated June 6,
1996, by and among Caribiner International, Inc. (the
"Company"), Lighthouse, Ltd., Mark P. Fitzgerald, Warren F.
Moore II and Richard C. Hunt (schedules omitted -- the
Company agrees to furnish a copy of any schedule to the
Commission upon request)(filed as Exhibit 2.1 to the
Company's Current Report on Form 8-K filed with the
Commission on June 21, 1996 and incoporated herein by
reference) ........................................................
2.2 Share Sale Agreement, dated June 13, 1996, by and among
Peter Devonald Berners-Price ("Berners-Price") and others,
Caribiner Holdings (UK) Limited ("Caribiner UK") and the
Company (disclosure letter omitted -- the Company agrees to
furnish a copy of such letter to the Commission upon
request) (filed as Exhibit 2.1 to the Company's Current
Report on Form 8-K filed with the Commission on June 28,
1996 and incorporated herein by reference) ........................
2.3 Share Purchase Agreement, dated June 13, 1996, by and among
Caribiner UK, Berners-Price, Mark Wallace, the Company and
others (filed as Exhibit 2.2 to the Company's Current Report
on Form 8-K filed with the Commission on June 28, 1996 and
incorporated herein by reference) .................................
3.1 Restated Certificate of Incorporation (filed as Exhibit 3.1
to the Company's Quarterly Report on Form 10-Q for the three
months ended March 31, 1996 and incorporated herein by
reference) ........................................................
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 Per Common Share
for the nine months ended June 30, 1996 and 1995...................
11.2 Computation of Pro Forma Net Income Per Common Share for
the three months ended June 30, 1996 and 1995......................
11.3 Computation of Supplementary Pro Forma Net Income Per
Common Share for the nine months ended June 30, 1996
and 1995...........................................................
27.1 Financial Data Schedule............................................
16
<PAGE>
EXHIBIT 11.1
Caribiner International, Inc.
Computation of Pro Forma Net Income Per Common Share
For the Nine Months Ended June 30
<TABLE>
<CAPTION>
1996 1995
--------- ----------
<S> <C> <C>
Weighted average common stock outstanding
during the period (1) 3,746,987 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 7,778,301 6,620,003
========== ==========
Income (loss) before taxes $6,393,389 ($445,568)
Plus: reduction in interest expense from
the conversion of the Convertible Note 926,248 1,374,533
---------- ----------
Pro forma income before taxes 7,319,637 928,965
Pro forma income tax expense (2,561,873) (79,090)
---------- ----------
Pro forma net income $4,757,764 $849,875
========== ==========
Pro forma net income per common share $ 0.61 $ 0.13
========== ==========
(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.
17
</TABLE>
<PAGE>
EXHIBIT 11.2
Caribiner International, Inc.
Computation of Pro Forma Net Income Per Common Share
For the Three Months Ended June 30
<TABLE>
<CAPTION>
1996 1995
--------- -----------
<S> <C> <C>
Weighted average common stock outstanding
during the period (1) 5,475,416 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 9,506,730 6,620,003
========== ==========
Income before taxes $6,770,685 $1,335,951
Plus: reduction in interest expense from the
conversion of the Convertible Note -- 471,224
---------- ----------
Pro forma income before taxes 6,770,685 1,807,175
Pro forma income tax expense (2,382,256) (153,738)
---------- ----------
Pro forma net income $4,388,429 $1,653,437
========== ==========
Pro forma net income per common share $ 0.46 $ 0.25
========== ==========
</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.
18
<PAGE>
EXHIBIT 11.3
Caribiner International, Inc.
Computation of Supplementary Pro Forma Net Income Per Common Share
For the Nine Months Ended June 30
<TABLE>
<CAPTION>
1996 1995
------------ ------------
<S> <C> <C>
Weighted average common stock outstanding
during the period (1) 3,746,987 2,588,689
Common stock issued to repay current &
long-term indebtedness (2) 967,999 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 8,746,300 8,237,270
============ ============
Income (loss) before taxes $6,393,389 ($445,568)
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 2,480,885
------------ ------------
Pro forma income before taxes 8,309,260 2,035,317
Pro forma income tax expense (2,908,241) (150,724)
------------ ------------
Pro forma net income $5,401,019 $1,884,593
============ ============
Supplementary pro forma net income
per common share $0.62 $0.23
============ ============
</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.
19
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
UNAUDITED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1996 AND THE CONSOLIDATED
STATEMENT OF INCOME FOR THE NINE MONTHS ENDED JUNE 30, 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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 6,956
<SECURITIES> 0
<RECEIVABLES> 40,215
<ALLOWANCES> 305
<INVENTORY> 0
<CURRENT-ASSETS> 57,847
<PP&E> 14,508
<DEPRECIATION> 5,102
<TOTAL-ASSETS> 99,103
<CURRENT-LIABILITIES> 42,210
<BONDS> 0
0
0
<COMMON> 96
<OTHER-SE> 50,002
<TOTAL-LIABILITY-AND-EQUITY> 99,103
<SALES> 99,777
<TOTAL-REVENUES> 99,777
<CGS> 66,945
<TOTAL-COSTS> 66,945
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 24,786
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,653
<INCOME-TAX> 6,393
<INCOME-CONTINUING> 2,238
<DISCONTINUED> 6,393
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 4,156
<EPS-DILUTED> 0
</TABLE>
