<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT 1
Current Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 16, 1998
GLOBAL IMAGING SYSTEMS, INC.
----------------------------
(Exact name of registrant as specified in its charter)
Delaware 000-24373 59-3247752
- -------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File (I.R.S. Employer
incorporation or organization) Number) Identification Number)
13902 North Dale Mabry Hwy., Suite 300, Tampa, Florida 33618
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (813) 960-5508
Exhibit Index is on page 29.
1
<PAGE>
On September 29, 1998, Global Imaging Systems, Inc. ("Global") filed a report on
Form 8-K with respect to its acquisition of the stock of Carr Business Machines
of Great Neck, Inc. d/b/a Carr Business Systems ("Carr"). At that time, it was
impracticable to provide the financial statements and pro forma financial
information required to be filed therewith relative to the acquired stock, and
the Company stated in such Form 8-K that it intended to file the required
financial statements and pro forma financial information as soon as practicable,
but no later than 60 days from the due date of that filing. By this amendment
to such Form 8-K, Global is amending and restating Item 7 thereof to include the
required financial statements and pro forma financial information.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
Effective September 1, 1998, Global Imaging Systems, Inc. ("Global") purchased
all of the issued and outstanding stock of Carr Business Machines of Great Neck
Inc. d/b/a Carr Business Systems ("Carr") pursuant to a Stock Purchase
Agreement, dated as of September 16, 1998, by and among Global, Carr Acquisition
Corporation (a wholly owned subsidiary of Global) as Buyer, Carr and Paul
Schulman and Robert Smith as Sellers. Global paid $14,000,000 in cash and
332,344 in shares of Global's Common Stock, par value $.01 per share, for the
Carr stock. Under certain circumstances, the purchase price for Carr will be
adjusted. The Company borrowed funds under its $175 million line of credit from
First Union National Bank to pay the cash portion of the purchase price.
Carr is engaged in the distribution, sale and service of copiers, facsimile
machines and other office equipment in the State of New York.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Carr.
The following financial statements of Carr which were omitted from the Form 8-K
filed on September 29, 1998, are filed with this amendment:
Report of Independent Certified Public Accountants.
Balance Sheet as of December 31, 1997.
Statement of Operations for the Year Ended December 31, 1997.
Statement of Retained Earnings for the Year Ended December 31, 1997.
Statement of Cash Flows for the Year Ended December 31, 1997.
Notes to Financial Statements.
Unaudited Balance Sheet as of June 30, 1998.
Unaudited Statements of Operations for the Six Months Ended June 30, 1998 and
1997.
Unaudited Statements of Cash Flows for the Six Months Ended June 30, 1998 and
1997.
2
<PAGE>
[LETTERHEAD OF MARGOLIN, WINER & EVENS LLP APPEARS HERE]
Report of Independent Accountants
Board of Directors
Carr Business Machines of Great Neck Inc.
Farmingdale, New York
We have audited the accompanying balance sheet of Carr Business Machines of
Great Neck Inc. as of December 31, 1997 and the related statements of
operations, retained earnings, and cash flows for the year then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Carr Business Machines of Great
Neck Inc. as of December 31, 1997, and the results of its operations and its
cash flows for the year then ended, in conformity with generally accepted
accounting principles.
/s/ Margolin, Winer & Evens LLP
--------------------------------
November 13, 1998
3
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
BALANCE SHEET
December 31, 1997
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current Assets:
Cash and cash equivalents (Note 1) $ 554,878
Marketable securities (Notes 1, 2 and 4) 550,860
Accounts receivable, net of allowance for
doubtful accounts of $35,000 1,235,916
Merchandise inventory (Notes 1 and 4) 858,547
Prepaid expenses and other receivables 257,803
------------
Total Current Assets 3,458,004
------------
Equipment and Improvements (Notes 1, 3 and 4):
Real property under capital lease 980,000
Improvements 563,122
Office equipment and fixtures 1,117,703
Equipment leased to customers 180,255
Automobiles and trucks 63,005
------------
2,904,085
Less accumulated depreciation 1,458,699
------------
Equipment and Improvements net 1,445,386
------------
Other Assets:
Security deposits (Note 4) 96,277
Parts for long term contracts 234,924
------------
331,201
------------
Total Assets $ 5,234,591
============
</TABLE>
The accompanying notes are an integral part of this statement.
4
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
BALANCE SHEET
December 31, 1997
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
<S> <C>
Current portion of long-term debt (Note 3) $ 50,216
Accounts payable and accrued expenses 433,136
Payroll and sales tax payable 35,246
Corporate income taxes payable 2,629
Current portion of capital lease obligation (Note 4) 86,740
Deferred maintenance contract revenue (Note 1) 769,790
--------------
Total Current Liabilities 1,377,757
--------------
Noncurrent Liabilities:
Long-term debt (less current portion) (Note 3) 127,540
Long-term portion of capital lease obligation (Note 4) 641,494
Deferred maintenance contract revenue 198,822
--------------
Total Noncurrent Liabilities 967,856
--------------
Total Liabilities 2,345,613
--------------
Commitments and Contingencies (Note 4) -
Stockholders' Equity:
Common stock, no par value;
200 shares authorized,
110 shares issued and outstanding (Note 5) 315,000
Stock subscription receivable (Note 5) (211,394)
Retained earnings 2,634,522
Unrealized gains from securities available
for sale (Notes 1 and 2) 150,850
--------------
Total Stockholders' Equity 2,888,978
--------------
Total Liabilities and Stockholders' Equity $ 5,234,591
==============
</TABLE>
The accompanying notes are an integral part of this statement.
5
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENT OF OPERATIONS
Year Ended December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Net Sales and Service Revenue Earned (Note 1) $ 17,301,451
Cost of Sales 8,398,427
------------
Gross Profit 8,903,024
------------
Operating Expenses:
Selling expense 2,882,855
Service expense 1,994,298
General and administrative expense 1,782,900
Shipping and warehouse 246,513
Depreciation and amortization (Note 1) 255,423
------------
Total Operating Expenses 7,161,989
------------
Income from Operations 1,741,035
------------
Other Income and Expenses:
Interest and dividend income 60,473
Miscellaneous income 14,887
Realized gain from sale of
marketable securities (Note 2) 99,428
Gain on sale of automobiles 6,250
Interest expense (97,103)
------------
Total Other Income and Expenses 83,935
------------
Income Before Provision for Income Taxes 1,824,970
Provision for Income Taxes (Note 1) 61,859
------------
Net Income $ 1,763,111
============
</TABLE>
The accompanying notes are an integral part of this statement.
6
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENT OF RETAINED EARNINGS
Year Ended December 31, 1997
<TABLE>
<CAPTION>
<S> <C>
Retained Earnings January 1, 1997, as previously reported $ 2,747,634
Adjustments to Correct Inventory Pricing and
Stockholder Advance (Note 7) (23,807)
------------
Retained Earnings January 1, 1997, as restated 2,723,827
Net Income 1,763,111
Dividends to Stockholders (1,852,416)
------------
Retained Earnings December 31, 1997 $ 2,634,522
============
</TABLE>
The accompanying notes are an integral part of this statement.
7
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENT OF CASH FLOWS
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Cash Flows from Operating Activities:
<S> <C>
Net income $ 1,763,111
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 255,423
Realized gain on sale of marketable securities (99,428)
Gain on sale of vehicles (6,250)
(Increase) decrease in:
Accounts receivable 164,931
Merchandise inventory (89,632)
Prepaid expenses and other receivables 29,831
Security deposits (14,149)
Parts used in long term contracts (314)
Decrease in:
Accounts payable and accrued expenses (42,432)
Payroll, sales and corporate taxes payable (33,070)
Deferred maintenance contract revenue (175,952)
---------------
Total adjustments (11,042)
---------------
Net Cash Provided by Operating Activities 1,752,069
---------------
Cash Flows from Investing Activities:
Matured certificate of deposit 218,511
Purchase of marketable securities (336,863)
Sales proceeds from marketable securities 746,733
Acquisition of equipment and leasehold improvements (226,956)
Proceeds from sale of automobile 11,380
Advance to stockholder 34,028
---------------
Net Cash Provided by Investing Activities 446,833
---------------
Cash Flows from Financing Activities:
Note payable borrowings 36,400
Repayments of notes payable (257,696)
Principal payments on obligation under capital lease (78,969)
Proceeds from sale of common stock 22,684
Dividends to stockholders (1,852,416)
---------------
Net Cash Used in Financing Activities (2,129,997)
---------------
Net Increase in Cash and Cash Equivalents 68,905
Cash and Cash Equivalents beginning of year 485,973
---------------
Cash and Cash Equivalents end of year $ 554,878
===============
</TABLE>
The accompanying notes are an integral part of this statement.
8
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENT OF CASH FLOWS
Year Ended December 31, 1997
<TABLE>
<CAPTION>
Supplemental Disclosure of Cash Flow Information -
Cash paid during the year for:
<S> <C>
Interest $ 97,103
Income taxes 58,765
Supplemental Schedule of Noncash Investing Activities:
Transfer of inventory which was rented to a customer
to depreciable equipment $ 119,649
Transfer of depreciable equipment to inventory upon
lease expiration 13,448
</TABLE>
The accompanying notes are an integral part of this statement.
9
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
NOTES TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
1. SUMMARY OF SIGNIFICANT NATURE OF BUSINESS Carr Business Machines of Great Neck Inc., doing business as Carr Business
ACCOUNTING POLICIES Systems ("the Company"), sells, rents and services copiers, facsimile machines, typewriters and other
business machines, primarily to customers located in the New York Metropolitan area. The majority of
the Company's sales are equipment sales and servicing income. Rentals are only a small portion of
the Company's business.
INVESTMENT IN SECURITIES The Company's debt and equity securities have been classified as available
for sale securities and are reported at their fair values. Unrealized holding gains and losses are
included as a separate component of stockholders' equity.
CASH EQUIVALENTS The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
MERCHANDISE INVENTORY Merchandise inventory, consisting solely of finished goods, is stated at the
lower of cost (specific identification and moving average FIFO method) or market.
EQUIPMENT AND IMPROVEMENTS Real property under capital lease is recorded at the net present value of
the related lease obligation. Real property under capital lease together with the cost of related
improvements are amortized over the ten year term of the lease using the straight-line method. At
December 31, 1997, accumulated amortization attributable to real property under capital lease totaled
$363,417.
Equipment is recorded at cost and depreciated over the estimated useful lives of the assets using the
straight-line method as follows:
Office equipment and fixtures 5 - 7 years
Automobiles and trucks 5 years
Equipment leased to customers 5 years
INCOME TAXES The Company does not provide for Federal income taxes as the stockholders have elected
to have the income of the Company taxed directly to them in accordance with the S Corporation
provisions of the Internal Revenue Code and New York State. The Company has provided for New York
City Corporation taxes as New York City does not recognize S Corporation status. In addition, the
Company provides for New York State S Corporation taxes.
ESTIMATES The preparation of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
DEFERRED MAINTENANCE CONTRACT REVENUE Deferred maintenance contract revenue is recognized over the
contract period (which ranges from three months to five years) and represents billings in advance of
the maintenance period. Incremental direct costs resulting from the sale of such contracts are not
material and are expensed currently.
ADVERTISING COSTS Advertising costs are expensed currently as the benefits and placements of such
advertising do not extend beyond the current period. Advertising costs aggregated $163,743 during
1997.
</TABLE>
10
<PAGE>
2. MARKETABLE SECURITIES Marketable securities available for sale at
December 31, 1997 consist of the following:
<TABLE>
<CAPTION>
Gross Gross
Cost or Unrealized Unrealized
Amortized Holding Holding
Fair Value Cost Losses Gains Maturities
----------------- ----------------- ---------------- ------------------ -----------------
<S> <C> <C> <C> <C> <C>
Equity securities $ 330,606 $ 182,478 $ - $ 148,128
Debt securities:
State and local
obligations 52,414 49,692 - 2,722 6-7 years
U.S. obligations 167,840 167,840 - - within 1 year
---------- ---------- --------- -----------
$ 550,860 $ 400,010 $ - $ 150,850
========== ========== ========= ==========
</TABLE>
<TABLE>
<S> <C>
Realized gains and losses are determined on the basis of sales price less original
cost determined on a FIFO basis. During 1997, sales proceeds and gross realized
gains and losses on securities available for sale were as follows:
</TABLE>
<TABLE>
<CAPTION>
Realized Realized
Gains Losses Total
----------- --------- -----------
<S> <C> <C> <C> <C>
Sales proceeds $ 746,733 $ - $ 746,733
Cost 647,305 - 647,305
---------- -------- ----------
Realized Gain $ 99,428 $ - $ 99,428
========== ======== ==========
During 1997, unrealized holding gains aggregated $38,529 and are included as a
separate component of stockholders' equity.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
3. DEBT The Company is obligated to a bank on various notes and loans as follows:
OBLIGATIONS
SHORT-TERM DEBT - A $150,000 demand note at December 31, 1996 required monthly payments of interest only at 1%
over a one year certificate of deposit interest rate and was paid in December 1997. The loan was secured by a
one year certificate of deposit in the amount of $218,511 which matured in December 1997.
The Company had a $300,000 secured line of credit which was increased to $1,500,000 in June 1997. Borrowings
bear interest at the prime rate and are due in June 1998. The line of credit is secured by personal property and
fixtures and guaranteed by an affiliated company and the Company's majority stockholder. There was no
outstanding balance at December 31, 1997.
LONG-TERM DEBT - The Company is obligated on a note with an outstanding balance of $143,176 at December 31,
1997. The note requires monthly principal payments of $3,578 plus interest at prime and matures on November 12,
2001. The note is secured by personal property and fixtures now existing or acquired thereafter and is
guaranteed by an affiliated company and the Company's majority stockholder. This loan and the loan described
below contain cross default provisions with the obligations of an entity owned by the stockholders which owns
the Company's warehouse and office facility.
A secured note dated November 18, 1994 for $121,000, which was self liquidating, required monthly payments of
$3,492 and bore interest at 2.5% per annum, matured on November 18, 1997. The loan was secured by improvements
to the real property under capital lease now existing or acquired thereafter and was guaranteed by an affiliated
company and the Company's majority stockholder.
In October of 1997, the Company became obligated on a secured note in the amount of $36,400 for the purchase of
a truck. The note requires monthly principal payments of $606 plus interest at prime plus 3% and matures on
September 30, 2002. The amount outstanding at December 31, 1997 is $34,580.
Principal repayments of long-term debt are as follows:
Years ending December 31,
1998 $ 50,216
1999 50,216
2000 50,216
2001 21,648
2002 5,460
--------
$177,756
========
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
4. COMMITMENTS The Company's office and warehouse facilities are leased from an entity owned by the stockholders and
AND RELATED require a $60,000 security deposit. The lease, which is for ten years expiring in 2004, is
PARTY classified as a capital lease.
TRANSACTIONS
Future minimum lease payments under the capital lease together with the present value of the net
minimum lease payments as of December 31, 1997 are as follows:
Years ending December 31,
1998 $209,688
1999 212,009
2000 214,423
2001 216,934
2002 219,545
Thereafter $307,477
----------
Total minimum payments $1,380,076
Less amounts representing estimated executory
costs (such as real estate taxes and insurance)
which are included in minimum lease payments 406,943
----------
Net minimum lease payments 973,133
Less amounts representing interest 244,899
----------
Present value of net minimum lease payments 728,234
Less current portion of obligation under capital
lease 86,740
----------
Long-term portion of obligation under capital
lease $ 641,494
==========
The Company guaranteed obligations of the entity owned by the stockholders aggregating $694,000 at December 31,
1997, incurred in connection with financing the facility, and assigned $100,000 of its marketable securities as
additional collateral. As of September 1, 1998, the Company is no longer a guarantor. (See Note 5.)
In December 1995 the Company entered into a five year, seven month operating lease beginning February 1, 1996
for office space in New York City. Rent expense, including escalations, during 1997 was approximately $81,650.
The future minimum payments under the lease are as follows:
Years ending December 31,
1998 $ 50,864
1999 54,520
2000 54,520
2001 36,347
--------
$196,251
========
A major supplier of the Company has a lien on certain inventory as collateral for amounts outstanding to them
aggregating $62,807 at December 31, 1997.
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
5. COMMON STOCK On July 1, 1994, the Company admitted a new stockholder and issued 10 shares of no par value common stock
in exchange for $30,000 and a $275,000 note. The note is payable in annual installments of $39,444
including interest at 7.16% per annum and will self-liquidate on December 22, 2004. Interest income from
the note receivable for the year ended December 31, 1997 is $16,760. On September 16, 1998, effective
September 1, 1998, the stockholders sold all the issued and outstanding shares of common stock to a public
company for $17,500,000. In connection with the purchase agreement, the $177,756 of long-term debt was
repaid and the $211,394 stock subscription receivable was collected.
6. PROFIT SHARING The Company has a defined contribution profit sharing plan for the benefit of its employees. Contributions
PLAN are at the discretion of the Company. Contributions for the year ended December 31, 1997 totaled $103,406.
7. RESTATEMENTS The Company's previously issued 1997 financial statements have been restated to correct overstatements in
inventory pricing of $58,000 at January 1, 1997 and $223,000 at December 31, 1997, and an overstatement of
previously reported net income aggregating $165,000. The effect of these errors on previously reported 1996
net income is not significant.
Retained earnings at January 1, 1997 has also been restated from the amount previously reported to record
$34,193 paid to a stockholder in 1996 as an advance rather than as a dividend. The restatement does not
effect previously reported net income for 1996.
In addition, $104,616 of equipment leased to customers has been reclassified from merchandise inventory to
equipment and improvements.
</TABLE>
14
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
UNAUDITED INTERIM FINANCIAL STATEMENTS
The unaudited interim financial statements of Carr Business Machines of Great
Neck, Inc. d/b/a Carr Business Systems ("Carr") as of June 30, 1998 and for the
six month periods ended June 30, 1998 and 1997 do not provide all disclosures
included in the annual financial statements. These interim financial statements
should be read in conjunction with the annual audited financial statements and
the footnotes thereto. Results for the interim periods are not necessarily
indicative of the results for the year ended December 31, 1998. In the opinion
of management, the accompanying interim financial statements reflect all
adjustments (consisting only of normal recurring accruals) necessary for a fair
presentation of the financial position and results of operations of Carr.
15
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
BALANCE SHEET
June 30, 1998
<TABLE>
<CAPTION>
ASSETS
Current Assets:
<S> <C>
Cash and cash equivalents $ 320,780
Marketable securities 588,656
Accounts receivable, net of allowance for doubtful accounts of
$35,000 1,434,458
Merchandise inventory 1,377,611
Prepaid expenses and other receivables 488,126
-----------
Total Current Assets 4,209,631
-----------
Equipment and Improvements:
Real property under capital lease 980,000
Improvements 564,811
Office equipment and fixtures 1,146,786
Equipment leased to customers 198,694
Automobiles and trucks 63,005
-----------
2,953,296
Less accumulated depreciation 1,586,411
-----------
Equipment and Improvements net 1,366,885
-----------
Other Assets:
Security deposits 96,278
Parts for long term contracts 333,976
430,254
-----------
Total Assets $ 6,006,770
===========
</TABLE>
16
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
BALANCE SHEET
June 30, 1998
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
<S> <C>
Current portion of long-term debt $ 73,876
Accounts payable and accrued expenses 314,953
Payroll and sales tax payable 35,543
Corporate income taxes payable 19,360
Current portion of capital lease obligation 91,005
Deferred maintenance contract revenue 722,930
----------
Total Current Liabilities 1,257,667
----------
Noncurrent Liabilities:
Long-term debt (less current portion) 78,771
Long-term portion of capital lease obligation 604,498
Deferred maintenance contract revenue 200,000
Total Noncurrent Liabilities 883,269
----------
Total Liabilities 2,140,936
Commitments and Contingencies
Stockholders' Equity:
Common stock, no par value;
200 shares authorized,
110 shares issued and outstanding 315,000
Stock subscription receivable (211,394)
Retained earnings 3,592,577
Unrealized gains from securities available
for sale 169,652
----------
Total Stockholders' Equity 3,865,834
----------
Total Liabilities and Stockholders' Equity $6,006,770
==========
</TABLE>
17
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENTS OF OPERATIONS
Six Months Ended June 30,
<TABLE>
<CAPTION>
1998 1997
------------ ---------------
<S> <C> <C>
Net Sales and Service Revenue Earned $ 9,978,048 $ 8,140,323
Cost of Sales 4,617,562 3,848,591
------------ -------------
Gross Profit 5,360,486 4,291,732
------------ -------------
Operating Expenses:
Selling expense 1,403,555 1,337,493
Service expense 1,034,298 922,235
General and administrative 910,183 822,132
Shipping and warehouse 136,335 113,731
Depreciation and amortization 127,712 111,278
------------ -------------
Total Operating Expenses 3,612,083 3,306,869
------------ -------------
Income from Operations 1,748,403 984,863
------------ -------------
Other Income and Expenses:
Interest and dividend income 6,417 19,809
Realized gain from sale of
marketable securities 18,996 40,332
Interest expense (52,227) (55,437)
------------ -------------
Total Other Income and Expenses (26,814) 4,704
------------ -------------
Income Before Provision for Income Taxes 1,721,589 989,567
Provision for Income Taxes 64,021 27,473
------------ -------------
Net Income $ 1,657,568 $ 962,094
============ =============
</TABLE>
18
<PAGE>
CARR BUSINESS MACHINES OF GREAT NECK, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended June 30,
<TABLE>
<CAPTION>
1998 1997
---------------------- ----------------------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $1,657,568 $ 962,094
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 127,712 111,278
Realized gain on sale of marketable securities (18,996) (40,332)
(Increase) decrease in:
Accounts receivable (198,542) 341,830
Merchandise inventory (386,195) (324,770)
Prepaid expenses and other receivables (8,714) 60,162
Security deposits - (15,674)
Parts used in long term contracts (27,362) (49,506)
Increase (decrease) in:
Accounts payable and accrued expenses (339,790) 44,358
Payroll, sales and corporate taxes payable 17,027 (33,421)
Deferred maintenance contract revenue (45,682) (100,279)
---------- ----------
Total adjustments (880,542) (6,354)
---------- ----------
Net Cash Provided by Operating Activities 777,026 955,740
---------- ----------
Cash Flows from Investing Activities:
Matured certificate of deposit - 218,511
Purchase of marketable securities (94,454) (285,629)
Sales proceeds from marketable securities 94,454 267,367
Acquisition of equipment and leasehold improvements (30,771) (158,717)
---------- ----------
Net Cash (Used in) Provided by Investing Activities (30,771) 41,532
---------- ----------
Cash Flows from Financing Activities:
Repayments of notes payable (25,109) (66,946)
Principal payments on obligation under capital lease (32,731) (32,730)
Dividends to stockholders (922,513) (851,934)
---------- ----------
Net Cash Used in Financing Activities (980,353) (951,610)
---------- ----------
Net Increase in Cash and Cash Equivalents (234,098) 45,662
Cash and Cash Equivalents beginning of year 554,878 485,973
---------- ----------
Cash and Cash Equivalents end of year $ 320,780 $ 531,635
========== ==========
Supplemental Disclosure of Cash Flow Information -
Cash paid during the year for:
Interest $ 52,227 $ 55,437
Income taxes 45,010 54,099
</TABLE>
19
<PAGE>
(b) Pro Forma Financial Information.
The following pro forma financial information required pursuant to Article 11 of
Regulation S-X previously omitted from the Company's Form 8-K filed on September
29, 1998 is filed with this amendment:
Introduction to Unaudited Pro Forma Consolidated Financial Data.
Unaudited Pro Forma Consolidated Statement of Operations for the fiscal year
ended March 31, 1998.
Notes to Unaudited Pro Forma Consolidated Statement of Operations for the
fiscal year ended March 31, 1998.
Unaudited Pro Forma Consolidated Statement of Operations for the three months
ended June 30,1998.
Notes to Pro Forma Consolidated Statement of Operations for the three months
ended June 30, 1998.
Unaudited Pro forma Consolidated Balance Sheet as of June 30, 1998.
Notes to Unaudited Pro Forma Consolidated Balance Sheet as of June 30, 1998.
20
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL DATA
(All share amounts and dollars in thousands)
Effective September 1, 1998, Global purchased all of the issued and outstanding
stock of Carr pursuant to a Stock Purchase Agreement, dated as of September 16,
1998, by and among Global, Carr Acquisition Corporation (a wholly owned
subsidiary of Global) as Buyer, Carr and Paul Schulman and Robert Smith as
Sellers. Aggregate consideration for the acquisition was approximately $17,500,
including $14,000 in cash, plus 332 shares of Global Common Stock valued at
$3,500.
The accompanying unaudited pro forma consolidated statement of operations for
the fiscal year ended March 31, 1998 gives effect to the acquisition by the
Company of Carr ("the acquisition") as if it had occurred on April 1, 1997. The
unaudited pro forma consolidated statement of operations for the three months
ended June 30, 1998 gives effect to the acquisition as if it had occurred on
April 1, 1998. The unaudited pro forma consolidated balance sheet at June 30,
1998 gives effect to the acquisition as if it had occurred on June 30, 1998.
The pro forma effects are based on the historical financial statements of the
acquired business giving effect to the transaction under the purchase method of
accounting. As such, the total cost of the acquisition has been allocated to
the net tangible and intangible assets acquired and liabilities assumed based
upon their respective fair values at the effective date of the acquisition.
The unaudited pro forma consolidated financial statements are not intended to
purport to be indicative of the actual results of operations or financial
position that would have been achieved had the acquisition in fact been
consummated at the beginning of the periods referenced above. The unaudited pro
forma financial data should be read in conjunction with the consolidated
financial statements of Global and the historical financial statements of Carr,
and related notes set forth herein.
21
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FISCAL YEAR ENDED MARCH 31, 1998
(in thousands except per share data)
<TABLE>
<CAPTION>
Historical Acquired Pro Forma Pro Forma
Company (a) Business (b) Adjustments Consolidated
---------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C>
Revenues:
Equipment and supplies sales $ 121,316 $ 13,630 - $ 134,946
Service and rentals 43,059 3,671 - 46,730
----------- --------- ----------- ----------
Total Revenues 164,375 17,301 - 181,676
Costs and operating expenses :
Costs of equipment and supplies sales
85,972 7,459 - 93,431
Service and rental costs 21,594 2,933 - 24,527
Selling, general and administrative
expenses 38,619 5,047 - 43,666
Intangible asset amortization 3,076 424 (c) 3,500
Total costs and operating expenses
149,261 15,439 424 165,124
----------- --------- ----------- ----------
Income from operations 15,114 1,862 (424) 16,552
Interest expense 6,713 37 1,149 (d) 7,899
----------- --------- ----------- ----------
Income before income taxes 8,401 1,825 (1,573) 8,653
Income taxes 3,949 62 76 (e) 4,087
----------- --------- ----------- ----------
Net income 4,452 $ 1,763 $ (1,649) 4,566
========= ===========
Yield adjustment on Class A common stock (2,442) (2,442)
----------- ----------
Net income available to common stockholders $ 2,010 $ 2,124
=========== ==========
Earnings per share, basic and diluted $ 0.21 $ 0.21
=========== ==========
Weighted average number of shares
outstanding, basic and diluted 9,804 10,136
=========== ==========
</TABLE>
See accompanying notes.
22
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF INCOME
FISCAL YEAR ENDED MARCH 31, 1998
(in thousands)
(a) This column represents the historical consolidated results of operations of
the Company for the fiscal year ended March 31, 1998.
(b) This column represents the operating results of Carr for the fiscal year
ended December 31, 1997. This information was used in lieu of the twelve
months ended March 31, 1998 because it was within 93 days of Global's
fiscal year end. Certain reclassifications have been made to be consistent
with Global's presentation.
(c) Reflects additional goodwill amortization expense of $374 and non-compete
covenant amortization expense of $50. The goodwill amortization period is
40 years; goodwill is amortized using the straight-line method. The non-
compete covenant amortization period is 3 years; the non-compete covenant
is amortized using the straight-line method.
(d) Reflects additional interest expense related to borrowings that would have
been incurred by Global to finance the acquisition, including the repayment
of existing Carr debt, had the acquisition been consummated at April 1,
1997. An average interest rate of 8.9% was used for this calculation which
approximates Global's average borrowing rate during such period.
(e) Represents the income tax benefit on purchase accounting adjustments and
other pro forma adjustments of ($592) based on an effective rate of
approximately 37.6%, and the income tax expense of $668 on historical S-
Corporation earnings based on an effective rate of approximately 40%.
23
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998
(in thousands except per share data)
<TABLE>
<CAPTION>
Historical Acquired Pro Forma Pro Forma
Company (a) Business (b) Adjustments Consolidated
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Revenues:
Equipment and supplies sales $ 43,334 $ 4,248 - $ 47,582
Service and rentals 14,868 1,096 - 15,964
--------- -------- -------- ---------
Total Revenues 58,202 5,344 - 63,546
Costs and operating expenses:
Costs of equipment and supplies
sales 30,887 2,308 - 33,195
Service and rental costs 7,006 685 - 7,691
Selling, general and
administrative expenses 13,289 1,520 - 14,809
Intangible asset amortization 901 - 106 (c) 1,007
--------- -------- -------- ---------
Total costs and operating
expenses 52,083 4,513 106 56,702
--------- -------- -------- ---------
Income from operations 6,119 831 (106) 6,844
Interest expense 2,230 26 285 (d) 2,541
--------- --------- -------- ---------
Income before income taxes 3,889 805 (391) 4,303
Income taxes 1,801 - 175 (e) 1,976
--------- --------- -------- ---------
Income before extraordinary item 2,088 $ 805 $ (566) 2,327
========= ========
Yield adjustment on Class A common
stock (901) (901)
--------- ---------
Net income available to common
stockholders $ 1,187 $ 1,426
========= =========
Basic earnings per share: $ 0.10 $ 0.12
========= =========
Diluted earnings per share: $ 0.09 $ 0.11
========= =========
Weighted average number of shares
outstanding:
Basic 11,527 11,859
========= =========
Diluted 12,511 12,843
========= =========
</TABLE>
See accompanying notes.
24
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998
(in thousands)
(a) This column represents the historical consolidated results of operations,
before extraordinary item, of Global for the three months ended June 30,
1998.
(b) This column represents the operating results of Carr for the three months
ended June 30, 1998.
(c) Reflects additional goodwill amortization expense of $93 and non-compete
covenant amortization expense of $13. The goodwill amortization period is
40 years; goodwill is amortized using the straight-line method. The non-
compete covenant amortization period is 3 years; the non-compete covenant
is amortized using the straight-line method.
(d) Reflects additional interest expense related to borrowings that would have
been incurred by the Company to finance the acquisition, including the
repayment of existing Carr debt, had the acquisition been consummated at
April 1, 1998. An average interest rate of 8.9% was used for this
calculation which approximates Global's average borrowing rate during such
period.
(e) Represents the income tax benefit on purchase accounting adjustments and
other pro forma adjustments of ($147) based on an effective rate of
approximately 37.6%, and the income tax expense of $322 on historical S-
Corporation earnings based on an effective rate of approximately 40%.
25
<PAGE>
GLOBAL IMAGING SYSTEMS, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(in thousands)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Historical Acquired Pro Forma Pro Forma
Company (a) Business (b) Adjustments Consolidated
-------- ------- ------------ --------
Current assets:
Cash and cash equivalents.................................... $ 3,115 $ 909 $ (589) (m) $ 3,435
Accounts receivable, net of allowance for
doubtful accounts........................................... 32,736 1,435 (40) (l) 34,131
Inventories ................................................. 20,473 1,378 (273) (l) 21,578
Deferred income taxes........................................ 1,519 - - 1,519
Prepaid expenses and other current assets 762 488 - 1,250
-------- ------- ------------ --------
Total current assets....................................... 58,605 4,210 (902) 61,913
Rental equipment, net......................................... 4,731 156 - 4,887
Property and equipment, net................................... 4,695 1,211 (895) (k) 5,011
Other assets ................................................. 459 430 889
Deferred income taxes......................................... 561 - - 561
Related party notes receivable................................ 547 - - 547
Intangible assets, net: - -
Goodwill.................................................. 94,221 - 14,644 (c) 108,865
Non-compete agreements.................................... 1,153 - 150 (d) 1,303
Financing fees............................................ 1,882 - - 1,882
-------- ------- ------------ --------
Total assets.......................................... $166,854 $ 6,007 $ 12,997 $ 185,858
======== ======= ============ ========
Current liabilities:
Accounts payable......................................... $ 12,858 $ 315 - $ 13,173
Accrued liabilities...................................... 4,425 36 211 (l) 4,672
Accrued compensation and benefits........................ 2,924 - - 2,924
Current maturities of long-term debt..................... 175 165 (165)(e) 175
Deferred revenue......................................... 11,341 723 - 12,064
Income taxes payable..................................... 736 19 - 755
-------- ------- ------------ --------
Total current liabilities............................. 32,459 1,258 46 33,763
Long-term debt, less current maturities....................... 65,752 883 13,317 (f) 79,952
-------- ------- ------------ --------
Total liabilities..................................... 98,211 2,141 13,363 113,715
Stockholders' equity:
Common stock............................................. 176 315 (312)(g) 179
Additional paid-in capital............................... 67,662 - 3,497 (h) 71,159
Retained earnings........................................ 1,050 3,762 (3,762)(i) 1,050
-------- ------- ------------ --------
68,888 4,077 (577) 72,388
Less stockholder receivables.................................. (245) (211) 211 (j) (245)
-------- ------- ------------ --------
Total stockholders' equity............................... 68,643 3,866 (366) 72,143
-------- ------- ------------ --------
Total liabilities and stockholders' equity.............. $ 166,854 $ 6,007 $ 12,997 185,858
======== ======= ============ ========
</TABLE>
See accompanying notes.
26
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(in thousands)
(a) This column represents the historical consolidated balance sheet of the
Company as of June 30, 1998.
(b) This column represents the historical balance sheet of Carr as of June 30,
1998.
(c) Represents the portion of the purchase price allocated to goodwill as a
result of the acquisition of Carr.
(d) Represents the portion of the purchase price allocated to the non-compete
covenant as a result of the acquisition of Carr.
(e) Represents repayment of the short-term portion of Carr's existing debt.
(f) Represents cash borrowed to fund the acquisition of $14,000, offset
partially by the repayment of the long-term portion of Carr's existing debt
of $683.
(g) Represents the par value of 332 shares of Global common stock issued to the
sellers of Carr in the amount of $3 in connection with the acquisition,
offset by the elimination of Carr common stock of $315.
(h) Represents additional paid-in capital on Global common stock issued to the
sellers of Carr in connection with the acquisition.
(i) Represents elimination of Carr's pre-acquisition retained earnings.
(j) Represents the elimination of the existing shareholder receivable.
(k) Represents elimination of building lease recorded as a capital lease, and
leasehold improvements to such building, in accordance with the terms of the
purchase agreement.
(l) Represents establishment of certain reserves in connection with the
acquisition.
(m) Represents elimination of marketable securities, not purchased by Global.
27
<PAGE>
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit Number Description
- --------------- -----------
<C> <S>
10.1 Stock Purchase Agreement, dated as of September 16, 1998, by and
among Global, Carr Acquisition Corporation as Buyer, Carr Business
Machines of Great Neck Inc. and Paul Schulman and Robert Smith as
Sellers.
23.1 Consent of Margolin, Winer & Evens LLP
</TABLE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amended report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 30, 1998
GLOBAL IMAGING SYSTEMS, INC.
By: /s/ Raymond Schilling
-----------------------
Raymond Schilling
Chief Financial Officer, Secretary
and Treasurer
28
<PAGE>
<TABLE>
<CAPTION>
Exhibit Number Description Page
- --------------- ----------- ----
<C> <S> <C>
10.1 Stock Purchase Agreement, dated as of September 16, 1998, by and *
among Global, Carr Acquisition Corporation as Buyer, Carr Business
Machines of Great Neck Inc. and Paul Schulman and Robert Smith as
Sellers.
23.1 Consent of Margolin, Winer & Evens LLP 30
</TABLE>
*Previously filed
29
<PAGE>
Exhibit 23.1
CONSENT OF MARGOLIN, WINER & EVENS LLP
We consent to the incorporation by reference in the Registration Statement on
Form S-8 (No. 333-62765) of Global Imaging Systems, Inc. pertaining to the
Global Imaging Systems 401(k) Retirement Plan and in the related prospectus of
our report dated November 13, 1998 included in this Current Report.
/s/ Margolin, Winer & Evans LLP
- -------------------------------
MARGOLIN, WINER & EVANS LLP
Garden City, New York
November 13, 1998
30
