SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
AMENDMENT NO. 1 TO 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 30, 1998
ANSWERTHINK CONSULTING GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
FLORIDA
(STATE OR OTHER JURISDICTION OF INCORPORATION)
0-24343 65-0750100
(COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
1001 BRICKELL BAY DRIVE, SUITE 3000
MIAMI, FLORIDA 33131
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(305) 375-8005
(COMPANY'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
================================================================================
<PAGE>
Item 7 of the Current Report on Form 8-K, as originally filed on
October 14, 1998, is hereby amended and restated in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
The financial statements of Infinity Consulting Group, Inc. required by
this item are included as Exhibit 99.1 to this Current Report on Form 8-K/A and
incorporated herein by reference.
(b) PRO FORMA FINANCIAL INFORMATION
The pro forma financial information required by this item is included
as Exhibit 99.2 to this Current Report on Form 8-K/A and incorporated herein by
reference.
(c) EXHIBITS
See Exhibit Index attached hereto.
2
<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.
ANSWERTHINK CONSULTING GROUP, INC.
Date: December 14, 1998 By: /s/ LUIS E. SAN MIGUEL
---------------------------------------
Luis E. San Miguel
Executive Vice President, Finance and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
*2.1 Stock Purchase Agreement by and among AnswerThink Consulting Group,
Inc., Infinity Consulting Group, Inc., and the Shareholders of
Infinity Consulting Group, Inc. dated as of September 30, 1998
99.1 Financial Statements of Infinity Consulting Group, Inc.
99.2 Pro Forma Financial Information
* Previously Filed
EXHIBIT 99.1
INDEX TO FINANCIAL STATEMENTS
INFINITY CONSULTING GROUP, INC.
PAGES
Report of Independent Accountants 1
Balance Sheets as of December 31, 1997 and September 30, 1998 2
Statements of Operations for the year ended December 31, 1997 and the
Nine Months ended September 30, 1997 and 1998 3
Statements of Stockholders' Equity for the year ended December 31, 1997
and the Nine Months ended September 30, 1998 4
Statements of Cash Flows for the year ended December 31, 1997 and the
Nine Months ended September 30, 1997 and 1998 5
Notes to Financial Statements 6-8
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
November 24, 1998
To the Board of Directors and
Stockholders of Infinity Consulting Group, Inc.
Indianapolis, Indiana
In our opinion, the accompanying balance sheet and the related statements of
operations, stockholders' equity, and cash flows present fairly, in all material
respects, the financial position of Infinity Consulting Group, Inc. (the
"Company") as of December 31, 1997, and the results of its operations and its
cash flows for the year ended December 31, 1997, in conformity with generally
accepted accounting principles. 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
of these statements in accordance with generally accepted auditing standards
which 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, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for the opinion expressed above.
/s/ PricewaterhouseCoopers LLP
1
<PAGE>
<TABLE>
<CAPTION>
INFINITY CONSULTING GROUP, INC.
BALANCE SHEETS
DECEMBER 31, SEPTEMBER 30,
ASSETS 1997 1998
------------ -------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 18,821 $ 1,475,719
Accounts receivable 1,403,356 1,875,880
Other current assets 22,184 14,335
----------- -----------
Total current assets 1,444,361 3,365,934
Total assets $ 1,444,361 $ 3,365,934
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 141,540 $ 106,809
Accrued payroll and payroll related expenses 519,394 803,237
Notes payable to stockholders 75,000 -
Accrued pension liability 80,008 3,036
----------- -----------
Total liabilities 815,942 913,082
Stockholders' equity:
Common stock, $0.01 par value; 10,000 shares authorized;
300 shares issued and outstanding 3 3
Additional paid-in capital 8,997 8,997
Retained earnings 619,419 2,443,852
----------- -----------
Total stockholders' equity 628,419 2,452,852
----------- -----------
Total liabilities and stockholders' equity $ 1,444,361 $ 3,365,934
=========== ===========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
2
<PAGE>
<TABLE>
<CAPTION>
INFINITY CONSULTING GROUP, INC.
STATEMENTS OF OPERATIONS
FOR THE FOR THE NINE MONTHS ENDED
YEAR ENDED ----------------------------
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1997 1998
------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Net revenues $4,993,495 $2,816,334 $6,624,631
Costs and expenses:
Project personnel and expenses 4,278,070 2,334,575 4,573,637
Selling, general and administrative 162,508 89,641 245,599
---------- ---------- ----------
Total costs and operating expenses 4,440,578 2,424,216 4,819,236
---------- ---------- ----------
Income from operations 552,917 392,118 1,805,395
Other income:
Interest income 12,855 8,768 19,038
---------- ---------- ----------
Net income $ 565,772 $ 400,886 $1,824,433
========== ========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
3
<PAGE>
<TABLE>
<CAPTION>
INFINITY CONSULTING GROUP, INC.
STATEMENTS OF STOCKHOLDERS' EQUITY
COMMON ADDITIONAL
STOCK COMMON PAID-IN RETAINED
SHARES STOCK CAPITAL EARNINGS TOTAL
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance as of December 31, 1996 300 $ 3 $ 8,997 $ 53,647 $ 62,647
Net income -- -- -- 565,772 565,772
---------- ---------- ---------- ---------- ----------
Balance as of December 31, 1997 300 3 8,997 619,419 628,419
Net income (unaudited) -- -- -- 1,824,433 1,824,433
---------- ---------- ---------- ---------- ----------
Balance as of September 30, 1998
(unaudited) 300 $ 3 $ 8,997 $2,443,852 $2,452,852
========== ========== ========== ========== ==========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
4
<PAGE>
<TABLE>
<CAPTION>
INFINITY CONSULTING GROUP, INC.
STATEMENTS OF CASH FLOWS
FOR THE FOR THE NINE MONTHS ENDED
YEAR ENDED ------------------------------------------
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1997 1997 1998
--------------------- --------------------- -------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 565,772 $ 400,886 $ 1,824,433
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation expense 13,317 1,719 -
Changes in assets and liabilities:
Increase in accounts receivable (1,323,513) (548,882) (472,524)
(Increase) decrease in other current assets (21,098) (6,800) 7,849
Increase (decrease) in accounts payable 113,096 126,567 (34,731)
Increase in accrued payroll and payroll related
expenses 519,394 483,935 283,843
Increase (decrease) in accrued pension liability 80,008 - (76,972)
--------------------- --------------------- -------------------
Net cash (used in) provided by operating activities (53,024) 457,425 1,531,898
--------------------- --------------------- -------------------
Cash flows from investing activities:
Purchase of property and equipment (13,317) (1,719) -
--------------------- --------------------- -------------------
Net cash used in investing activities (13,317) (1,719) -
--------------------- --------------------- -------------------
Cash flows from financing activities:
Stockholders' advances 75,000 - -
Repayment of stockholder advances - - (75,000)
--------------------- --------------------- -------------------
Net cash provided by (used in) financing activities 75,000 - (75,000)
--------------------- --------------------- -------------------
Net increase in cash and cash equivalents 8,659 455,706 1,456,898
Cash and cash equivalents at beginning of period 10,162 10,162 18,821
--------------------- --------------------- -------------------
Cash and cash equivalents at end of period $ 18,821 $ 465,868 $ 1,475,719
===================== ===================== ===================
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
5
<PAGE>
INFINITY CONSULTING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES:
NATURE OF BUSINESS
Infinity Consulting Group, Inc. ("the Company") is an Indiana-based
corporation engaged in the business of delivering PeopleSoft application
solutions.
MANAGEMENT'S 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 revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
INTERIM FINANCIAL STATEMENTS
The financial statements and all related footnote information for the
nine month periods ended September 30, 1997 and 1998 are unaudited and
reflect all normal and recurring adjustments which are in the opinion of
management, necessary for a fair presentation of the financial position,
operating results and cash flows for the interim period. The results of
operation for the nine month period ended September 30, 1998 are not
necessarily indicative of the results to be achieved for the 1998 fiscal
year.
REVENUE RECOGNITION
The Company derives substantially all of its revenues from information
technology and management consulting, and package software evaluation and
implementation services. Revenues from management consulting and package
software evaluation and implementation services are recognized as the
service is provided, principally on a time and material basis. Losses on
projects in progress are recognized when known. Net revenues exclude
reimbursable expenses charged to clients.
CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with maturities of three
months or less when purchased to be cash equivalents. The Company places
its temporary cash investments with high credit quality financial
institutions. At times, such investments may be in excess of the F.D.I.C.
insurance limits. The Company has not experienced any loss to date on
these investments.
6
<PAGE>
INFINITY CONSULTING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
INCOME TAXES
The Company is a Subchapter S Corporation as defined by the Internal
Revenue Code. Under Subchapter S provisions, the Company generally does
not pay federal or state income taxes on its taxable income. Under these
provisions, taxable income of the Company is reflected by the stockholders
on their personal tax returns. Accordingly, the accompanying financial
statements do not reflect a provision for income taxes.
CONCENTRATION OF CREDIT RISK
The Company provides its services primarily to Fortune 1000 companies and
other large consulting organizations. The Company performs ongoing credit
evaluations of its major customers and maintains reserves for potential
credit losses to the extent that they are identified. Such losses have
been insignificant. During the year ended December 31, 1997, six customers
accounted for approximately 86% of net revenues.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive
Income" which establishes standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and
losses) in a full set of general-purpose financial statements. This
statement is effective for fiscal years beginning after December 15, 1997.
In June 1997, the FASB issued SFAS No. 131 "Disclosure about Segments of
an Enterprise and Related Information" which establishes standards for
public business enterprises to report information about operating segments
in annual financial statements and requires those enterprises to report
selected information about operating segments in interim financial reports
issued to shareholders. This statement is effective for financial
statements for periods beginning after December 15, 1997.
Management is currently evaluating the requirements of SFAS No. 130 and
No. 131 and their applicability to the Company.
2. NOTES PAYABLE TO STOCKHOLDERS:
The Company has three notes amounting to $75,000 payable to its
stockholders who are also employees at December 31, 1997. The notes bear
interest at 12% per annum with principal and accrued interest due on
August 6, 1998.
7
<PAGE>
INFINITY CONSULTING GROUP, INC.
NOTES TO FINANCIAL STATEMENTS - (CONTINUED)
3. PROFIT SHARING PLAN:
The Company maintains a 401(k) and profit sharing plan (the "Plan") which
covers substantially all of its employees. Under the Plan, employees may
contribute up to 15% of their compensation through salary deferrals. The
Company matches such contributions on a discretionary basis. The Company
recorded an expense in the amount of approximately $268,000, $60,000 and
$171,000 for the year ended December 31, 1997 and for the nine-month
periods ended September 30, 1997 and 1998, respectively.
4. SUBSEQUENT EVENT:
On September 30, 1998, the Company was acquired by AnswerThink Consulting
Group, Inc. ("AnswerThink"). Under the terms of the transaction,
AnswerThink acquired all of the outstanding stock of the Company in
exchange for cash and AnswerThink stock.
8
EXHIBIT 99.2
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The following Unaudited Pro Forma Consolidated Statement of Operations of the
Company for the period April 23, 1997 (date of inception) through January 2,
1998 has been prepared to give effect to (i) the acquisitions of Relational
Technologies, Inc., The Hackett Group, Inc. and Delphi Partners, Inc. on August
1, 1997, October 13, 1997 and November 12, 1997, respectively (the "1997
Acquisitions") (ii) the acquisition of Legacy Technology, Inc. ("Legacy") on May
20, 1998 (iii) the acquisition of Infinity Consulting Group, Inc. ("Infinity")
on September 30, 1998, (iv) the Conversion (the "Conversion") into a total of
7,160,104 shares of Common Stock of all of the Company's outstanding shares of
Class A Convertible Preferred Stock and Class B Convertible Preferred Stock
concurrent with the Offering and (v) the sale of 3,324,500 Shares of Common
Stock by the Company and the application of the net proceeds therefrom, as if
such transactions had occurred as of April 23, 1997. The following Unaudited Pro
Forma Consolidated Statement of Operations of the Company for the nine months
ended October 2, 1998, gives effect to (i) the Legacy Acquisition, (ii) the
Infinity Acquisition, (iii) the Conversion and (iv) the sale of 3,324,500 shares
of Common Stock by the Company and the application of the net proceeds
therefrom, as if such transactions had occurred as of April 23, 1997.
Under the terms of certain earn-out provisions contained in their respective
purchase agreements, the sellers of The Hackett Group, Inc., Delphi Partners,
Inc., Legacy Technology, Inc. and Infinity Consulting Group, Inc. may be
entitled to additional consideration. In March 1998, the Company waived the
earnout provisions in The Hackett Group, Inc.'s purchase agreement and recorded
additional goodwill of $3.1 million. The maximum amount that can be earned by
the sellers of Delphi Partners, Inc., Legacy Technology, Inc. and Infinity
Consulting Group, Inc. which has not already been recorded in the Company's
financial statements, is $2.5 million, $1.3 million and $1.6 million,
respectively. The additional goodwill recorded by the Company in connection with
the acquisition of The Hackett Group, Inc., combined with the maximum amount of
additional goodwill which could be recorded by the Company in connection with
the acquisition of Delphi Partners, Inc., Legacy Technology, Inc. and Infinity
Consulting Group, Inc. would increase the Company's annual amortization expense
by approximately $567,000.
The Unaudited Pro Forma Consolidated Financial Information is intended for
informational purposes only and is not necessarily indicative of the results
that would have occurred if the transactions had occurred on the dates indicated
or which may be realized in the future. The Unaudited Pro Forma Consolidated
Financial Information should be read in conjunction with the historical
financial statements of the companies acquired in connection with the 1997
Acquisitions, the Legacy and Infinity Acquisitions and the Company's
Consolidated Financial Statements and the notes thereto included in the Form S-1
filed by the Company with the Securities and Exchange Commission or elsewhere in
this Amendment No.1 to the Form 8-K.
<PAGE>
<TABLE>
<CAPTION>
ANSWERTHINK CONSULTING GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD APRIL 23, 1997 (DATE OF INCEPTION) THROUGH JANUARY 2, 1998
HISTORICAL PRO FORMA
----------------------------------------------------------- --------------------------------------------------
THE 1997 LEGACY INFINITY LEGACY INFINITY
COMPANY ACQUISITIONS ACQUISITION ACQUISITION ACQUISITION ACQUISITION ACQUISITION
(A) (B) (C) (D) ADJUSTMENTS ADJUSTMENTS ADJUSTMENTS
-------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues $ 14,848,172 $13,968,338 $5,197,329 $4,376,195 $ -- $ -- $ --
Costs and expenses:
Project
personnel and
expenses 13,333,921 6,668,208 2,686,646 3,855,411 -- -- --
Selling, general
and
administrative 8,084,558 5,558,301 2,567,597 152,102 362,390 (E) 290,929 (E) 186,320 (E)
Settlement costs 1,902,608 -- -- -- -- -- --
In-process
research and
development
technology 4,000,000 -- -- -- -- -- --
------------ ----------- ---------- ---------- --------- --------- ---------
Total costs and
operating
expenses 27,321,087 12,226,509 5,254,243 4,007,513 362,390 290,929 186,320
------------ ----------- ---------- ---------- --------- --------- ---------
Income (loss) from
operations (12,472,915) 1,741,829 (56,914) 368,682 (362,390) (290,929) (186,320)
Other income
(expense):
Interest income
(expense), net 382,463 28,437 (6,294) 12,188 (419,664) (F) (176,588) (F) (174,292) (F)
Income tax
benefit -- -- 6,081 -- -- -- --
------------ ----------- ---------- ---------- --------- --------- ---------
Net income (loss)(H) $(12,090,452) $ 1,770,266 $ (57,127) $ 380,870 $(782,054) $(467,517) $(360,612)
============ =========== ========== ========== ========= ========= =========
Net loss per common
share-basic and
diluted $ (1.91)
------------
Weighted average
common shares
outstanding 6,342,319
<CAPTION>
OFFERING PRO FORMA
PRO FORMA ADJUSTMENTS AS ADJUSTED
-------------- -------------- --------------
<S> <C> <C> <C>
Net revenues $ 38,390,034 $ -- $ 38,390,034
Costs and expenses:
Project
personnel and
expenses 26,544,186 -- 26,544,186
Selling, general
and
administrative 17,202,197 -- 17,202,197
Settlement costs 1,902,608 -- 1,902,608
In-process
research and
development
technology 4,000,000 -- 4,000,000
------------ -------- ------------
Total costs and
operating
expenses 49,648,991 -- 49,648,991
------------ -------- ------------
Income (loss) from
operations (11,258,957) -- (11,258,957)
Other income
(expense):
Interest income
(expense), net (353,750) 886,099 (G) 532,349
Income tax
benefit 6,081 -- 6,081
------------ -------- ------------
Net income (loss)(H) $(11,606,626) $886,099 $(10,720,527)
============ ======== ============
Net loss per common
share-basic and
diluted $ (0.79) $ (0.67)
------------ ------------
Weighted average
common shares
outstanding 14,782,917 15,915,225 (I)
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Statement
of Operations
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
A. Represents the historical consolidated statement of operations of the
Company for the period April 23, 1997 (date of inception) through January
2, 1998.
B. Represents the historical consolidated statement of operations of the 1997
Acquisitions from April 23, 1997 (date of inception) until such 1997
Acquisitions were completed by the Company.
C. Represents the historical statement of operations of Legacy Technology,
Inc. from April 23, 1997 through January 2, 1998.
D. Represents the historical statement of operations of Infinity Consulting
Group, Inc. ("Infinity") from April 23, 1997 through January 2, 1998.
E. Adjusts goodwill amortization expense to reflect the allocation of the
purchase price for each of the 1997 Acquisitions, the Legacy Acquisition
and the Infinity Acquisition beginning on April 23, 1997 using a 15-year
life. On September 30, 1998, the Company acquired Infinity Consulting
Group, Inc. for $2.7 million in cash, 186,000 shares of the Company's
common stock valued at $3.4 million and contingent consideration up to a
maximum of $1.6 million upon the achievement of certain pre-tax profit
targets related to the performance of Infinity during the 12-month period
ending August 31, 1999. The acquisitions resulted in total goodwill of
approximately $21.6 million.
F. Adjustment to interest as if debt incurred in connection with the 1997
Acquisitions, the Legacy Acquisition and the Infinity Acquisition was
outstanding for the period April 23, 1997 (date of inception) through
January 2, 1998. Approximately $2.7 million of debt was assumed to be
outstanding for the Infinity Acquisition. The interest rate on the debt is
variable but was assumed to be approximately 8.5% for purposes of the pro
forma adjustments.
G. Upon the closing of the Offering, the Company retired all outstanding debt
except certain notes payable to shareholders totaling $4.1 million.
Interest expense has been adjusted to reflect the use of a portion of the
Offering proceeds to repay the outstanding debt. The debt that was repaid
is comprised of $8.2 million outstanding under the Company's revolving
credit facility with BankBoston, N.A., a $3.8 million promissory note
payable to the sole stockholder of The Hackett Group, Inc. based on the
achievement of earnings targets for 1997, a $2.8 million promissory note
payable to the stockholders of Legacy Technology, Inc. and $2.7 million of
debt assumed to be outstanding for the Infinity Acquisition.
H. No income tax provision or benefit is required due to the Company's current
tax loss and the inability of the Company to currently use the benefits of
its loss carryforward.
I. Pro forma loss per share has been calculated based upon 15,915,225 shares
outstanding. This represents the sum of the total shares outstanding on a
pro forma basis prior to the Offering (14,782,917 shares) and the number of
shares required to be sold in the Offering (1,132,308 shares) to repay debt
and amounts due to shareholders ($14.7 million).
<PAGE>
<TABLE>
<CAPTION>
ANSWERTHINK CONSULTING GROUP, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED OCTOBER 2, 1998
HISTORICAL
-------------------------------------------- PRO FORMA PRO FORMA
THE LEGACY INFINITY LEGACY INFINITY
COMPANY ACQUISITION ACQUISITION ACQUISITION ACQUISITION OFFERING
(A) (B) (C) ADJUSTMENTS ADJUSTMENTS PRO FORMA ADJUSTMENTS
-------------- -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net revenues $69,618,772 $2,029,137 $6,624,631 $ -- $ -- $ 78,272,540 $ --
Costs and expenses:
Project
personnel and
expenses 41,635,490 1,330,571 4,573,637 -- -- 47,539,698 --
Selling, general
and
administrative 20,058,587 667,368 245,599 129,302 (D) 186,320 (D) 21,287,176 --
Compensation
related to
vesting of
restricted
shares 40,843,400 -- -- -- -- 40,843,400 --
------------ ---------- ----------- ---------- ---------- ------------ --------
Total costs and
operating
expenses 102,537,477 1,997,939 4,819,236 129,302 186,320 109,670,274 --
------------ ---------- ----------- ---------- ---------- ------------ --------
Income (loss) from
operations (32,918,705) 31,198 1,805,395 (129,302) (186,320) (31,397,734) --
Other income
(expense):
Interest income
(expense), net (294,407) (2,020) 19,038 (71,567) (E) -- (348,956) 672,239 (F)
------------ ---------- ----------- ---------- ---------- ------------ --------
Net (loss) income(G) $(33,213,112) $ 29,178 $ 1,824,433 $ (200,869) $ (186,320) $(31,746,690) $672,239
============ ========== =========== ========== ========== ============ ========
Net loss per common
share-basic and
diluted $ (1.93) $ 1.48
------------ ------------- --------
Weighted average
common shares
outstanding 17,239,565 21,389,478
<CAPTION>
PRO FORMA
AS
ADJUSTED
--------------
<S> <C>
Net revenues $ 78,272,540
Costs and expenses:
Project
personnel and
expenses 47,539,698
Selling, general
and
administrative 21,287,176
Compensation
related to
vesting of
restricted
shares 40,843,400
------------
Total costs and
operating
expenses 109,670,274
------------
Income (loss) from
operations (31,397,734)
Other income
(expense):
Interest income
(expense), net 323,283
------------
Net (loss) income(G) $(31,074,451)
============
Net loss per common
share-basic and
diluted $ 1.41
------------
Weighted average
common shares
outstanding 22,015,773 (H)
</TABLE>
See accompanying notes to Unaudited Pro Forma Consolidated Statement
of Operations
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
A. Represents the historical consolidated statement of operations of the
Company for the nine months ended October 2, 1998.
B. Represents the historical statement of operations of Legacy Technology,
Inc. from January 1, 1998 through May 20, 1998.
C. Represents the historical statement of operations of Infinity Consulting
Group, Inc. from January 1, 1998 through September 30, 1998.
D. Adjusts goodwill amortization expense to reflect the allocation of the
purchase price for the Legacy Acquisition from January 1, 1998 through May
20, 1998 and for the Infinity Acquisition from January 1, 1998 through
September 30, 1998 using a 15-year life.
E. Adjustment to interest expense as if debt incurred in connection with the
Legacy Acquisition was outstanding from January 1, 1998 through May 20,
1998. The interest rate on the debt was assumed to be 8.5% for purposes of
the pro forma adjustment.
F. Upon the closing of the Offering, the Company retired all outstanding debt
except certain notes payable to shareholders totaling $4.1 million.
Interest expense has been adjusted to reflect the use of a portion of the
Offering proceeds to retire the debt.
G. No income tax provision or benefit is required due to the Company's current
tax loss and the inability of the Company to currently use the benefits of
its loss carryforward.
H. Pro forma loss per share has been calculated based upon 22,015,773 shares
outstanding. This represents the sum of the total shares outstanding on a
pro forma basis prior to the Offering (21,389,478 shares) and the weighted
average effect of the number of shares required to be sold in the offering
(626,295 shares) to repay debt and amounts due to shareholders ($14.7
million).
