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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) FEBRUARY 24, 1999
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LIGHTBRIDGE, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 000-21319 04-3065140
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(State or other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
67 SOUTH BEDFORD STREET, BURLINGTON, MASSACHUSETTS 01803
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(address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE (781) 359-4000
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NOT APPLICABLE
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS
On February 24, 1999, Lightbridge, Inc. issued a press release announcing
changes in the accounting it used in connection with its acquisition of Coral
Systems, Inc. in November 1997. These changes resulted in a restatement of its
previously reported financial results for the quarter and year ended December
31, 1997 and for each quarter of 1998. A copy of the press release is filed as
Exhibit 20.1 to this Current Report and is incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired. Not applicable.
(b) Pro Forma Financial Information. Not applicable.
(c) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
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<S> <C>
20.1 Press release issued by Lightbridge, Inc. on February 24, 1999.
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2
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized as of this twenty-fifth day of February,
1999.
LIGHTBRIDGE, INC.
BY: /s/ Joseph S. Tibbetts, Jr.
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Joseph S. Tibbetts, Jr.
Chief Financial Officer, Senior Vice
President of Finance and
Administration, and Treasurer
3
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Exhibit 20.1
FOR IMMEDIATE RELEASE:
Contact: MEDIA RELATIONS INVESTOR RELATIONS
Karen Gobler Terry May/Kristen Fahey Lightbridge, Inc.
Lightbridge, Inc. The Weber Group (781) 359-4790
(781) 359-4705 (617) 441-4000 x230/241 www.lightbridge.com
[email protected] [email protected]
[email protected]
LIGHTBRIDGE, INC. REPORTS CHANGES IN ACCOUNTING FOR CORAL SYSTEMS ACQUISITION
BURLINGTON, MASS. -- FEBRUARY 24, 1999 -- Lightbridge, Inc. (Nasdaq: LTBG),
today announced that it has changed the accounting for its acquisition of Coral
Systems, Inc. (Coral) in November 1997. The restatement results in an increase
in net income for the fourth quarter 1997 of approximately $11.6 million, or
$0.76 per share. In the first through fourth quarter of 1998 the restatement
results in a net income decrease of approximately $0.8 million, $0.4 million,
$0.4 million and $7.8 million, respectively (or earnings per share decreases of
approximately $0.06, $0.03, $0.02 and $0.48 per share, respectively).
Lightbridge anticipates that the revised accounting will result in amortization
expense of approximately $2.0 million in 1999 and $1.9 million in 2000,
approximately equivalent to the effect its original accounting would have had.
The restatement is expected to result in increased amortization expense of
approximately $1.2 million and $1.0 million in 2001 and 2002, respectively.
Under the revised accounting, the value ascribed to the in-process research and
development (IPR&D) acquired from Coral was reduced from $16.0 million to $4.0
million. The difference of $12.0 million was allocated to $5.4 million of
existing technology and $4.1 million of goodwill, both of which will be
amortized principally over a five-year period, as well as $2.5 million to the
Coral workforce, which will be amortized over a three-year period. Total
goodwill recorded at the acquisition was $10.7 million.
-more-
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LIGHTBRIDGE REPORTS CHANGES IN ACCOUNTING FOR CORAL ACQUISITION/ PAGE 2
Also, as part of the restatement, the Company as of December 31, 1998 wrote
off approximately $7.4 million of intangible assets recorded in the revised
acquisition accounting. The write off included approximately $2.6 million,
based on the abandonment of its ChurnAlert-Registered Trademark- product, and
an additional $4.8 million of goodwill, based on a determination that the
restated net book value of this asset was impaired as of December 31, 1998.
Under the Company's original accounting for the Coral acquisition, no
impairment occurred because the intangible assets acquired from Coral had a
significantly lower net book value as of December 31, 1998. The Company
decided in December 1998 to cease development of ChurnAlert based on a lack
of market receptiveness to the product and the Company's determination that
its Churn Prophet-Registered Trademark- and Channel Wizard-Registered
Trademark-products provide more marketable solutions to telecommunications
carriers.
The change in accounting is the result of discussions between Lightbridge and
the Securities and Exchange Commission (SEC) regarding the accounting for the
Coral acquisition. Although the original accounting was done in accordance with
established practices under generally accepted accounting principles and with
the assistance of independent valuation experts (using valuation techniques
widely accepted in practice), Lightbridge decided to restate its previously
issued historical financial statements in light of the discussions with the SEC
and the guidance the SEC issued in October 1998 as to acceptable methodologies
for the allocation of purchase price related to acquisitions accounted for under
the purchase method of accounting.
The matters discussed in the first paragraph of this press release include
forward-looking statements that may involve a number of risks and uncertainties.
Actual results may vary significantly based on a number of factors, including
(i) continuing rapid change in the telecommunications industry that may affect
both Lightbridge and its clients, (ii) uncertainties associated with
Lightbridge's ability to develop new products and technologies, (iii) market
acceptance of Lightbridge's new products and continuing demand for Lightbridge's
products by telecommunications companies, (iv) the impact of competitive
products and pricing on both Lightbridge and its clients and (v) changing
economic conditions.
-more-
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LIGHTBRIDGE REPORTS CHANGES IN ACCOUNTING FOR CORAL ACQUISITION/ PAGE 3
ABOUT LIGHTBRIDGE
Lightbridge, Inc. (Nasdaq: LTBG), based in Burlington, Mass., is a leading
provider of software-based services that help global telecommunications carriers
quickly acquire customers and retain them over time. Lightbridge has leveraged
its credit processing expertise into solutions that help carriers quickly and
cost-effectively provide bundled services through new channels. Telesto-TM-,
Lightbridge's network of integrated customer acquisition and retention
solutions, provides best-in-class credit, fraud, churn, channel and market
performance solutions to such clients as ALLTEL Communications, AT&T Wireless,
BellSouth Mobility DCS, Omnipoint Communications and Sprint PCS. It is the only
complete, workflow-enhanced system for customer interaction in the converged
telecommunications marketplace. Additional information on the Company can be
found on the Web at http://www.lightbridge.com.
# # #
Churn Prophet, Channel Wizard and ChurnAlert are registered trademarks and
Telesto, Lightbridge and the Lightbridge logo are trademarks of Lightbridge,
Inc. All other trademarks are the properties of their respective owners.
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Lightbridge, Inc.
Restated Unaudited Condensed Consolidated Statements of Operations
(In thousands)
<TABLE>
<CAPTION>
Quarter Year Quarter Quarter Quarter Quarter Year
Ended Ended Ended Ended Ended Ended Ended
12/31/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 12/31/98
-------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Transaction services $ 8,130 $ 26,881 $ 7,860 $ 9,125 $ 10,682 $ 14,016 $ 41,684
Software licensing and maintenance 3,724 6,332 4,111 3,410 2,499 1,907 11,927
Consulting services 1,408 7,336 1,332 2,610 2,423 3,376 9,741
-------- -------- -------- -------- -------- -------- --------
Total revenues 13,262 40,549 13,303 15,145 15,604 19,299 63,352
-------- -------- -------- -------- -------- -------- --------
Cost of revenues:
Transaction services 4,859 15,535 4,997 5,123 5,804 7,377 23,301
Software licensing and maintenance 1,377 2,035 1,361 1,143 1,160 919 4,584
Consulting services 487 1,858 766 1,684 1,293 1,480 5,223
-------- -------- -------- -------- -------- -------- --------
Total cost of revenues 6,723 19,428 7,124 7,950 8,257 9,776 33,108
-------- -------- -------- -------- -------- -------- --------
Gross profit 6,539 21,121 6,179 7,195 7,347 9,523 30,244
-------- -------- -------- -------- -------- -------- --------
Operating expenses:
Development expenses 1,858 6,072 2,292 2,429 2,328 2,547 9,596
Sales and marketing expenses 2,187 6,041 1,956 1,715 1,610 1,575 6,857
General and administrative expenses 2,009 5,228 2,798 3,159 2,640 2,875 11,472
Intangible asset impairment -- -- -- -- -- 7,385 7,385
Purchased in-process research and
development expense 4,000 4,000 -- -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total operating expenses 10,054 21,341 7,046 7,303 6,578 14,382 35,310
-------- -------- -------- -------- -------- -------- --------
Income from operations (3,515) (220) (867) (108) 769 (4,859) (5,066)
Other income 176 949 202 221 118 141 682
-------- -------- -------- -------- -------- -------- --------
Income (loss) before provision for taxes (3,339) 729 (665) 113 887 (4,718) (4,384)
Provision for income taxes 417 892 57 272 623 1,561 2,513
-------- -------- -------- -------- -------- -------- --------
Net income (loss) $ (3,756) $ (163) $ (722) $ (159) $ 264 $ (6,279) $ (6,897)
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Basic earnings (loss) per share $ (0.25) $ (0.01) $ (0.05) $ (0.01) $ 0.02 $ (0.39) $ (0.44)
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Basic shares 15,268 14,802 15,707 15,798 15,861 15,965 15,834
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-------- -------- -------- -------- -------- -------- --------
Diluted earnings (loss) per share $ (0.25) $ (0.01) $ (0.05) $ (0.01) $ 0.02 $ (0.39) $ (0.44)
-------- -------- -------- -------- -------- -------- --------
Diluted shares 15,268 14,802 15,707 15,798 17,309 15,965 15,834
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-------- -------- -------- -------- -------- -------- --------
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Lightbridge, Inc.
Restated Unaudited Condensed Consolidated Balance Sheets
(In thousands)
<TABLE>
<CAPTION>
12/31/97 3/31/98 6/30/98 9/30/98 12/31/98
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<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $15,716 $12,762 $13,382 $12,582 $16,437
Accounts receivable, net 13,213 14,700 14,734 17,029 18,832
Other current assets 2,885 2,917 2,950 2,198 1,642
------- ------- ------- ------- -------
Total current assets 31,814 30,379 31,066 31,809 36,911
Property and equipment, net 11,763 11,792 11,459 13,476 13,454
Goodwill, net 10,383 9,849 9,312 8,775 2,146
Acquired intangible assets, net 7,717 6,684 6,228 5,773 4,025
Other assets, net 1,888 1,866 2,529 1,500 1,285
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Total assets $63,565 $60,570 $60,594 $61,333 $57,821
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------- ------- ------- ------- -------
Accounts payable and accrued liabilities $ 8,165 $ 5,230 $ 5,744 $ 5,591 $10,062
Short-term borrowing and current portion of notes payable 805 805 805 729 653
Deferred revenue 1,658 2,140 1,949 2,010 1,460
------- ------- ------- ------- -------
Total current liabilities 10,628 8,175 8,498 8,330 12,175
Long-term liabilities 2,221 2,209 1,946 2,468 1,198
------- ------- ------- ------- -------
Total liabilities 12,849 10,384 10,444 10,798 13,373
Stockholders' equity 50,716 50,186 50,150 50,535 44,448
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Total liabilities and stockholders' equity $63,565 $60,570 $60,594 $61,333 $57,821
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