<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended March 31, 2000
--------------------
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the transition period from _______________ to _______________
Commission File Number 000-25847
-------------------
RAZORFISH, INC.
----------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 13-3804503
-------- ----------
(State or Other Jurisdiction of (I.R.S. Employer Identification
Incorporation or Organization) Number)
32 Mercer Street, 3rd Floor, New York, New York, 10013
----------------------------------------------------------
(Address of Principal Executive Offices, Including Zip Code)
(212) 966-5960
--------------
(Registrant's Telephone Number, Including Area Code)
N/A
------
(Former Name, Former Address And Former
Fiscal Year, if Changed Since Last Report)
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. [X] YES [_] NO
The number of shares outstanding of the Registrant's Class A Common Stock as of
May 9, 2000 was 93,788,211.
<PAGE>
RAZORFISH, INC.
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 1999 (audited) and
March 31, 2000
Consolidated Statements of Operations for the Three Months Ended
March 31, 1999 and 2000
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 2000
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Qualitative and Quantitive Disclosure about Market Risk
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 6. Exhibits and Reports on Form 8-K
Signatures
Exhibit Index
Exhibit 27.1 Financial Data Schedule
1
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Unaudited Consolidated Financial Statements
RAZORFISH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31, March 31,
1999 2000
--------- --------
(audited) (unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................................ $ 98,798 $ 89,623
Accounts receivable, net of allowance for doubtful accounts of $1,416 and $782
at December 31, 1999 and March 31, 2000, respectively....................... 30,420 35,254
Unbilled revenues................................................................ 15,667 23,291
Prepaid expenses and other current assets........................................ 3,731 5,181
Deferred tax assets.............................................................. 1,225 299
Due from affiliate............................................................... 3,523 2,749
-------- --------
Total current assets........................................................ 153,364 156,397
PROPERTY AND EQUIPMENT, net of accumulated depreciation and
amortization of $6,914 and $9,419 at December 31, 1999 and
March 31, 2000, respectively............................................... 15,428 16,538
INTANGIBLES, net of accumulated amortization of $3,641 and $5,748 at
December 31, 1999 and March 31, 2000, respectively......................... 79,233 188,928
LOAN TO AFFILIATE..................................................................... 2,250 3,171
OTHER ASSETS.......................................................................... 1,315 2,099
-------- --------
Total assets................................................................ $251,590 367,133
======== =========
LIABILITIES AND STOCKHOLERS' EQUITY
- -----------------------------------
CURRENT LIABILITES:
Due to affiliate $ 97 $ 106
Accounts payable and accrued expenses............................................ 36,086 29,654
Income taxes payable............................................................. 9,132 2,177
Deferred revenues................................................................ 2,464 3,543
Deferred rent.................................................................... 604 802
Current portion of long-term obligations......................................... 682 105
-------- --------
Total current liabilities................................................... 49,065 36,387
LONG-TERM OBLIGATIONS................................................................. 1,760 683
DEFERRED TAX LIABILITY................................................................ 191 1,057
OTHER LIABILITIES..................................................................... 2,221 7,760
-------- --------
Total liabilities........................................................... 53,237 45,887
</TABLE>
<TABLE>
<S> <C> <C>
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock $.01 par value; 10,000,000 shares authorized; none issued
or outstanding................................................................ -- --
Common stock:
Class A $.01 par value; 200,000,000 shares authorized; 88,811,621 and
92,976,023 issued at December 31, 1999 and March 31, 2000, respectively....... 888 930
Class B, $.01 par value; 50 shares authorized, issued, and outstanding
at December 31, 1999 and March 31, 2000....................................... -- --
Receivable from stockholder...................................................... (533) (533)
Additional paid-in capital....................................................... 200,297 318,513
Accumulated other comprehensive income........................................... 6 148
Retained earnings (deficit)...................................................... (1,717) 2,776
Treasury stock at cost; 73,584 shares at December 31, 1999 and March 31,
2000.......................................................................... (588) (588)
-------- --------
Total stockholders' equity.................................................. 198,353 321,246
--------- ---------
Total liabilities and stockholders' equity.................................. $ 251,590 $ 367,133
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
2
<PAGE>
RAZORFISH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 2000
---------- --------
(unaudited)
<S> <C>
Revenues..................................................................... $ 32,612 $ 64,116
Project personnel costs....................................................... 15,675 29,863
--------- --------
Gross profit............................................................. 16,937 34,253
Sales and marketing........................................................ 2,207 4,080
General and administrative................................................. 8,902 20,381
Non-cash compensation expense.............................................. 27 -
Amortization of intangibles................................................ 792 1,986
--------- --------
Income from operations........................................................ 5,009 7,806
Other income, net............................................................. 404 1,006
---------- ---------
Income before income taxes............................................... 5,413 8,812
Provision for income taxes.................................................... 2,313 4,319
---------- ---------
Net income............................................................... $ 3,100 $ 4,493
=========== =========
Earnings per share:
Basic............................................................... $ 0.04 $ 0.05
Diluted............................................................. $ 0.04 $ 0.05
Weighted average common shares outstanding:
Basic............................................................... 74,441 91,027
Diluted............................................................. 85,891 99,537
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
RAZORFISH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 2000
---- ----
(unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................. $ 3,100 $ 4,493
Adjustments to reconcile net income to net cash used in by operating
activities--
Allowance for doubtful accounts....................................... 110 (634)
Depreciation and amortization......................................... 2,634 4,612
Non-cash common stock option compensation............................. 27 --
Tax benefit due to stock option exercise.............................. -- 3,488
Increase in deferred tax assets....................................... -- 382
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable................................................ (12,440) (4,200)
Unbilled revenues.................................................. (1,600) (7,624)
Prepaid expenses and other current assets.......................... (3,136) (1,450)
Due from affiliate................................................. (995) 774
Other assets....................................................... (245) (164)
Accounts payable and accrued expenses.............................. 5,702 (6,432)
Deferred revenues.................................................. (1,157) 1,079
Deferred tax liabilities........................................... 60 866
Income taxes payable............................................... 1,688 (6,955)
Deferred rent...................................................... 33 198
Due to related party............................................... (500) --
Other liabilities.................................................. (320) 5,548
---------- ----------
Net cash used in operating activities............................ (7,039) (6,019)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures.................................................... (2,798) (3,615)
Proceeds from sale of marketable securities........................... 6,373 --
Purchase of marketable securities..................................... (3,488) --
Loan to affiliate..................................................... -- (921)
Payments to cancel certain earn out arrangements associated with
acquisitions.......................................................... -- (1,000)
Acquisitions of subsidiaries, net of cash acquired...................... (1,192) (2,248)
---------- ----------
Net cash used in investing activities............................... (1,105) (7,784)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Deferred registration costs............................................. (1,444) (76)
Proceeds payments to long-term obligations.............................. (986) (1,654)
Proceeds from officer's loan............................................ 368 --
Proceeds from exercise of Communicade's 10% option ................... 15,814 --
Proceeds from exercise of stock options ..............................
531 5,851
---------- -----------
Net cash provided by financing activities........................... 14,283 4,121
---------- -----------
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS.............. (31) 507
---------- -----------
Net increase (decrease) in cash and cash equivalents................ 6,108 (9,175)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................ 36,628 98,798
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................................. $ 42,736 $ 89,623
========== ==========
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING ACTIVITIES
Fair market value of common stock issued to cancel certain earn out
arrangements associated with acquisitions............................... $ -- $ 90,923
Fair market value of common stock issued for acquisitions............... $ 54,940 $ 16,996
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
RAZORFISH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands)
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Razorfish, Inc. ("Razorfish"), together with its wholly owned subsidiaries
(the "Company"), is a leading provider of global digital solutions. Digital
solutions are business solutions that use digital technologies to enhance
communications and commerce between businesses and their consumers, suppliers,
employees, and other partners. These digital solutions utilize a wide variety of
platforms, including the World Wide Web, wireless, broadband, and satellite
communications and a variety of digital devices and information appliances,
including desktop PCs, mobile phones, pagers, personal digital assistants, and
backend ERP and legacy systems. The Company thereby creates for its clients
digital solutions and designs to help them fundamentally re-architect their
business models and identify and improve communications and commerce
opportunities. Razorfish currently has offices in New York, Boston, Los Angeles,
San Francisco, Amsterdam, Hamburg, Helsinki, London, Mannheim, Milan, Oslo, and
Stockholm.
On January 12, 2000, the Board of Directors authorized a 2-for-1 stock
split of the Company's Class A common stock effected as a 100% stock dividend on
January 27, 2000 for stockholders of record on January 20, 2000. All references
in the accompanying unaudited consolidated financial statements and footnotes
have been retroactively restated to give effect to this stock split.
Principles of Consolidation
The accompanying unaudited consolidated financial statements of the Company
have been prepared pursuant to the rules of the Securities and Exchange
Commission (the "SEC"). Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to such rules and
regulations. These unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K, as amended (File No.
000-25847). In the opinion of management, the accompanying unaudited
consolidated financial statements reflect all adjustments, which are of a normal
recurring nature, necessary for a fair presentation of the results for the
periods presented.
The results of operations presented for the three months ended March 31,
1999 and 2000 are not necessarily indicative of the results to be expected for
any other interim period or any future fiscal year.
5
<PAGE>
2. SEGMENT REPORTING
The Company discloses business segments under SFAS No. 131, "Disclosures
About Segments of an Enterprise and Related Information." SFAS No. 131
established standards for the way public business enterprises report information
about operating segments in annual financial statements and required those
enterprises to report selected information about operating segments in interim
financial statements. It also required disclosures about products and services,
geographic areas, and major customers.
The Company is a provider of global digital solutions. The Company
evaluated its business activities that are regularly reviewed by executive
management and Board of Directors for which discrete financial information is
available. As a result of this evaluation, the Company determined that it has
one operating segment.
3. ACQUISITIONS
In January 2000, Razorfish acquired all of the outstanding stock of Qb
International Holding AB ("Qb"). Under the terms of the acquisition, Razorfish
issued 800 shares of its common stock with a fair value of $16,996 and paid cash
of $3,082 for a total purchase price of $20,078. The acquisition has been
accounted for under the purchase method of accounting and, accordingly, the
purchase price has been allocated to the tangible and intangible net assets
acquired and liabilities assumed on the basis of their respective fair values on
the acquisition date. As a result of this acquisition, the Company has recorded
goodwill of approximately $19,460 which is excess cost of net assets acquired
and is being amortized over a useful life of 20 years.
The following unaudited pro forma consolidated results of operations
reflects the result of operations for the three months ended March 31, 1999 and
2000, as if the acquisitions had occurred on January 1, 1999 and after giving
effect to purchase accounting adjustments. These pro forma results have been
prepared for comparative purposes only and do not purport to be indicative of
what operating results would have been had the acquisition actually taken place
on January 1, 1999 and may not be indicative of future operating results.
For the three months ended March 31,
<TABLE>
<CAPTION>
Pro forma 1999 2000
--------- ---- ----
<S> <C> <C>
Revenue $1,213 $548
Net income $ 110 $ 38
Base net income per share $ -- $ --
Diluted net income per share $ -- $ --
</TABLE>
In February 2000, Razorfish issued an aggregate of 160 shares of Common
Stock with a fair value of $7,710 and made a cash payment of $1.0 million to the
former principals of Media in consideration for their agreement to amend their
respective acquisition agreements to remove the earn-out provisions contained
therein. The payments associated with this transaction are accounted for as
additional purchase price and an adjustment to goodwill. In connection with
this agreement, Razorfish is required to issue an additional 53 shares of Common
Stock on or about January 2002.
In February 2000, Razorfish issued an aggregate of 400 shares of Common
Stock with a fair value of $16,275 to the former principals of Plastic in
consideration for their agreement to amend their respective acquisition
agreements to remove the earn-out provisions contained therein. The payments
associated with this transaction are accounted for as additional purchase price
and an adjustment to goodwill. In connection with this agreement, Razorfish is
required to issue an additional 200 shares of Common Stock on or about December
2001.
In February 2000, Razorfish issued an aggregate of 800 shares of Common
Stock with a fair value of $39,196 to the former principals of CHBi in
consideration for their agreement to amend their respective acquisition
agreements to remove a portion of the earn-out provisions contained therein. The
payments associated with this transaction are accounted for as additional
purchase price and an adjustment to goodwill. In connection with this
agreement, the former CHBi principals have a call option arising on May 31, 2000
whereby they may cause Razorfish to issue an additional 400 shares of Common
Stock in exchange for the removal of the final portion of the earn-out payment.
Razorfish has a corresponding put option arising on the same date.
6
<PAGE>
4. EARNINGS PER SHARE
The following table reconciles the denominator of the diluted earnings per
share computation as shown on the Consolidated Statements of Operations.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
Diluted EPS Computation 1999 2000
------ ------
(unaudited)
<S> <C> <C>
Basic common shares outstanding....... 74,441 91,027
Effect of common stock options........ 11,450 8,510
------ ------
Diluted common and common
equivalent shares................ 85,891 99,537
====== ======
</TABLE>
Options to purchase shares of the Company's common stock of 1,436 and
2,550 for the periods ended March 31, 1999 and 2000, respectively, were
outstanding during the respective periods but were not included in the
computation of diluted EPS because the exercise price of the options was greater
than or equal to the average market price of the common stock for the periods
reported.
5. COMPREHENSIVE INCOME
The Company accounts for comprehensive income under SFAS No. 130,
"Reporting Comprehensive Income." This statement established standards for
reporting and displaying comprehensive income and its components in a financial
statement that is displayed with the same prominence as other financial
statements. The components of comprehensive income are as follows:
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 2000
-------- --------
<S> <C> <C>
Net income ................................. $ 3,100 $ 4,493
Foreign currency translation adjustment..... (32) 142
-------- --------
Comprehensive income (loss)............ $ 3,068 $ 4,635
======== ========
</TABLE>
6. LEGAL PROCEEDINGS
On March 17, 2000, a legal action was commenced against the Company by a
former consultant of a wholly owned subsidiary for, amongst other things, breach
of contract. The Company believes that the claims are without merit and is
vigorously defending against them. No assurance can be given, however, that this
matter will be resolved in the Company's favor.
7. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards of derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. This statement is effective for all quarters of fiscal years
beginning after June 15, 1999. In July 1999, the FASB issues SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB No. 133," which amends SFAS No. 133 to be effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000. The
Company does not expect the adoption of this standard to have a material effect
on the Company's results of consolidated operations, financial position, or cash
flows.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements," which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB 101 was effective the
first fiscal quarter of fiscal years beginning after December 15, 1999 and
requires companies to report any changes in revenue recognition as a cumulative
change in accounting principle at the time of implementation in accordance with
Accounting Principles Board Opinion 20, "Accounting Changes". In March 2000, the
SEC issued SAB 101A, "Amendment: Revenue Recognition in Financial Statements,"
which delays implementation of SAB 101 until Razorfish's second fiscal quarter
of 2000. Razorfish will adopt SAB 101 and is currently in the process of
evaluating the impact, if any, SAB 101 will have on its financial position or
results of operations.
In March 2000, the Financial Accounting Standard Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25; the criteria for determining whether a plan qualifies as a
noncompensatory plan; the accounting consequence of various modifications to the
terms of previously fixed stock options or awards; and the accounting for an
exchange of stock compensation awards in a business combination. FIN 44 is
effective July 1, 2000, but certain conclusions in FIN 44 cover specific events
that occurred after either December 15, 1998 or January 12, 2000. The Company
does not expect the application of FIN 44 to have a material impact on the
Company's financial position or results of operations.
7
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report on Form 10-Q contains forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These
forward-looking statements involve risks and uncertainties, and actual results
could be significantly different than those discussed in this Quarterly Report
on Form 10-Q. All forward-looking statements included in this document are made
as of the date hereof, based on information available to the Company on the date
thereof, and the Company assumes no obligation to update any forward-looking
statements.
Overview
Razorfish is a leading provider of global digital solutions. Digital
solutions are business solutions that use digital technologies to enhance
communications and commerce between businesses and their consumers, suppliers,
employees, and other partners. Razorfish provides an integrated, end-to-end
solution. Razorfish's strategy, creative and technology professionals carry out
every aspect of a solution from strategic consulting to design of information
architectures and user-interfaces to integration of backend Enterprise Resource
Planning (ERP) and legacy systems. These digital solutions utilize a wide
variety of platforms, including the World Wide Web, wireless, broadband and
satellite communications and a variety of digital devices and information
appliances, including desktop PCs, mobile phones, pagers and personal digital
assistants. Razorfish thereby creates for its clients digital solutions designed
to help them re-architect their traditional business models and identify and
improve communications and commerce opportunities.
Razorfish's derives substantially all of its revenues from fees for
services generated on a project-by-project basis. Razorfish's services are
provided on both a fixed-time, fixed-price basis and on a time and materials
basis. Historically, Razorfish has not operated on a retainer basis; however, in
the future, Razorfish may utilize such arrangements.
Razorfish recognizes revenues for both time and materials-based
arrangements and fixed-time, fixed-price arrangements on the
percentage-of-completion method of accounting based on the ratio of costs
incurred to total estimated costs. In developing the fixed price of a project,
Razorfish follows a process that assesses the technical complexity of the
project, the nature of the work, the functions to be performed and the resources
required to complete the engagement. Razorfish periodically reassesses its
estimated costs for each project, and provisions for estimated losses on
unfinished projects are recorded in the period in which such losses are
determined. To date, such losses have not been significant. Revenues exclude
reimbursable expenses charged to clients.
Agreements entered into in connection with time and materials projects are
generally terminable by the client upon 30-days' prior written notice, and
clients are required to pay Razorfish for all time, materials and expenses
incurred by Razorfish through the effective date of termination. Agreements
entered into in connection with fixed-time, fixed-price projects, are generally
terminable by the client upon payment for work performed and the next progress
payment due. If clients terminate existing agreements or if Razorfish is unable
to enter into new engagements, Razorfish's business, financial condition, and
results of operations could be materially and adversely affected. In addition,
because a proportion of Razorfish's expenses is relatively fixed, a variation in
the number of client engagements can cause significant variations in operating
results from quarter to quarter.
Razorfish's projects vary in size and scope; therefore, a client that
accounts for a significant portion of Razorfish's revenues in one period may not
generate a similar amount of revenue in subsequent periods. No client accounted
for more than 10.0% of Razorfish's revenues in the periods ended March 31, 1999
or March 31, 2000.
8
<PAGE>
Razorfish does not believe that it will derive a significant portion of its
revenues from a limited number of clients in the near future. However, there is
a risk that the source of Razorfish's revenues may be generated from a small
number of clients. These clients may not retain Razorfish in the future. Any
cancellation, deferral, or significant reduction in work performed for these
principal clients or a significant number of smaller clients could have a
material adverse affect on Razorfish's business, financial condition, and
results of operations.
Operating and other expenses
Razorfish's project personnel costs consist primarily of compensation and
related costs of personnel dedicated to customer assignments. Project personnel
costs also include fees paid to subcontractors for work performed in connection
with projects and non-reimbursed project travel expenses.
Razorfish's selling and marketing costs consist primarily of compensation
and related costs of sales and marketing personnel, travel expenses, and
marketing programs and promotion costs.
Razorfish's general and administrative costs consist primarily of
compensation and related costs of the management and administrative functions,
including finance and accounting, human resources and internal information
technology, and the costs of Razorfish's facilities and other general corporate
expenses.
Seasonality
In general, the laws of the European countries in which Razorfish operates
mandate that all employees receive significantly more vacation days than in the
United States. For example, in Sweden, each employee must receive a minimum of
25 days paid vacation per year. These vacations are typically taken in the third
quarter, resulting in declining revenues during this period due to a reduction
in both billable hours and client demand.
9
<PAGE>
Quarter-to-quarter fluctuations in margins
Razorfish's operating results and quarter-to-quarter margins may
fluctuate in the future as a result of many factors, some of which are beyond
Razorfish's control. Historically, Razorfish's quarterly margins have been
impacted by:
. the number of client engagements undertaken or completed;
. a change in the scope of ongoing client engagements;
. seasonality;
. a shift from fixed-fee to time and materials-based contracts;
. the number of days during the quarter;
. utilization rates of employees;
. marketing and business development expenses;
. charges relating to strategic acquisitions;
. pricing changes in the information technology services market; and
. economic conditions generally or in the information technology services
market.
Razorfish expects this trend to continue.
Results of operations
The following table sets forth certain consolidated statement of operations
data of Razorfish both in actual dollars and as a percentage of revenues for
the period indicated:
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1999 2000
---- ----
(unaudited)
(dollars in millions)
Percent Percent
of of
Amount revenue Amount revenue
------ -------- ------- -------
<S> <C> <C> <C> <C>
Revenues................................................... $ 32.6 100% $ 64.1 100%
Project personnel.......................................... 15.7 48 29.8 46
------- -------- ------- -------
Gross profit................................. 16.9 52 34.3 54
Sales and marketing.................................... 2.2 7 4.1 6
General and administrative............................. 8.9 27 20.4 32
Amortization of intangibles............................ 0.8 2 2.0 3
------- -------- ------- -------
Income from operations..................................... 5.0 15 7.8 12
Other income, net.......................................... 0.4 1 1.0 2
------- -------- ------- -------
Income before income taxes................. 5.4 17 8.8 14
Provision for income taxes................................. 2.3 7 4.3 7
------- -------- ------- -------
Net income................................. $ 3.1 10% $ 4.5 7%
======= ======== ======= =======
</TABLE>
10
<PAGE>
Three Months Ended March 31, 2000 Compared to the Three Months Ended March 31,
1999
Revenues
The Company's revenues increased $31.5 million, or 97%, to $64.1 million
for the three months ended March 31, 2000 from $32.6 million for the comparable
period in 1999. This increase in revenue was primarily due to the growth of the
Company's offices as a result of the increase in the number, complexity and the
length of the projects completed, an increase in the billing rates of the
Company's employees, the amount spent per project by clients, and revenues
related to the acquisition that was completed in the first quarter of 2000.
Project personnel costs
The Company's project personnel costs increased $14.1 million, or 90%, to
$29.8 million for the three months ended March 31, 2000 from $15.7 million for
the comparable period in 1999. As a percentage of revenues, project personnel
costs decreased to 46% for the three months ended March 31, 2000 from 48% in the
comparable period in 1999 due to increased billing rates of the Company's
employees creating higher gross margins. In addition, there was a decline in
project employees as compared to the total number of employees.
Sales and marketing
The Company's sales and marketing costs increased $1.9 million, or 86%, to
$4.1 million for the three months ended March 31, 2000 from $2.2 million for the
comparable period in 1999. The increase in sales and marketing costs in absolute
dollar terms was primarily due to an increase in the number of solutions
managers who spend a portion of their time on sales and marketing activities and
an increase in spending on promotional activities. As a percentage of revenues,
sales and marketing expenses decreased to 6% for the three months ended March
31, 2000 from 7% for the comparable period in 1999. The decrease in sales and
marketing costs as a percentage of revenue was primarily due to the decline in
sales and marketing personnel as compared to the total number of employees.
General and administrative
The Company's general and administrative expenses increased $11.5 million,
or 129%, to $20.4 million for the three months ended March 31, 2000 from $8.9
million for the comparable period in 1999. As a percentage of revenues, general
and administrative expenses increased to 32% for the three months ended March
31, 2000 from 27% for the comparable period in 1999. The increase in general and
administrative expenses in absolute dollar terms and as a percentage of revenue
was a result of the increase in the number of non-billable employees and an
increase in other types of general and administrative expenses, such as salaries
and bonuses, rent expense, equipment rental, and depreciation.
Amortization of intangibles
Amortization of intangibles for the Company was $2.0 million for the three
months ended March 31, 2000 compared to $0.8 million for the comparable period
in 1999. This increase was due to the amortization of intangibles resulting from
the purchase of Qb in January 2000, acquisitions closed in the second and third
quarters of 1999, and the consideration paid to the principles of three
companies acquired by the Company in previous years to amend their respective
acquisition agreements to remove the earn-out provisions contained therein.
Income Taxes
11
<PAGE>
The effective income tax rate was 43% and 49% for the three months ended
March 31, 2000 and 1999, respectively. The differences in the effective tax rate
for the periods was primarily the result of non-tax deductible expenses,
including amortization of intangibles and non-cash compensation expense.
Liquidity and Capital Resources
Prior to its initial public offering, Razorfish relied on borrowings under
lines of credit provided by Omnicom to finance its working capital requirements
and capital expenditures. (See "Lines of credit and other financings" below.) In
1999, Razorfish met its working capital requirements through cash generated from
the proceeds of its initial public offering that was completed in April 1999.
Razorfish believes that cash generated by operations combined with the
proceeds of its initial public offering will be sufficient to meet its working
capital needs for the next twelve months.
The Company's net cash used in operating activities was $6.0 million for
the three months ended March 31, 2000 compared to net cash used in operating
activities of $7.0 million for the three months ended March 31, 1999. Net cash
used in operating activities during the period ended December 31, 2000 was
mainly due to an increase in unbilled revenues of $7.6 million, a decrease in
accounts payable and accrued expenses of $6.4 million, an increase in accounts
receivable of $4.2 million, and an increase in prepaid and other current assets
of $1.5 million. This was partially offset by an increase in other liabilities
of $5.5 million, depreciation and amortization of $4.6 million, tax benefit due
to stock option exercises of $3.5 million, and in increase in deferred revenues
of $1.1 million. Net cash used in operating activities during the period ended
March 31, 1999 was mainly due to an increase in accounts receivable of $12.4
million, an increase in prepaid and other current expenses of $3.1 million, an
increase in unbilled revenues of $1.6 million, and a decrease in deferred
revenues of $1.1 million. This was partially offset by an increase in accounts
payable and accrued expenses of $5.7 million, depreciation and amortization of
$2.6 million, and an increase in income taxes payable of $1.7 million.
The Company's net cash used in investing activities was $7.8 million for
the three months ended March 31, 2000 compared to $1.1 million for the three
months ended March 31, 1999. Net cash used in investing activities for the
period ended March 31, 2000 was mainly due to capital expenditures of $3.6
million, net cash paid for acquisitions of $2.2 million, and purchase of earn
out agreements of $1.0 million. Net cash used in investing activities for the
period ended March 31, 1999 was mainly due to capital expenditures of $2.8
million, purchase of marketable securities of $3.4 million, and net cash paid
for acquisitions of $1.2 million. This was offset by proceeds from sale of
marketable securities of $6.4 million.
The Company's net cash provided by financing activities was $4.1 million
for the three months ended March 31, 2000 compared to $14.3 million for the
three months ended March 31, 1999. Net cash provided for the period ended March
31, 2000 was mainly due to proceeds received from the exercise of stock options
of $5.9 million. This was partially offset by payments to long-term obligations
of $1.7 million. . Net cash provided for the period ended March 31, 1999 was
mainly due to proceeds from the exercise of Communicade's 10% option of $15.8
million. This was partially offset by deferred registration costs of $1.4
million.
Capital expenditures, earn-out payments and rent expenses
Razorfish's capital expenditures for the period ended March 31, 2000 were
$3.6 million compared to $2.8 million for the comparable period in 1999. The
increase in capital expenditures during 2000 was due primarily to leasehold
improvements made to Razorfish's leased office space and to purchase computer
12
<PAGE>
hardware and software and furniture and fixtures. Razorfish does not have any
material commitments for capital expenditures for the foreseeable future. During
the period ended March 31, 2000, Razorfish made payments of $1.0 million in
connection with earn-out arrangements under certain acquisition agreements
entered into in 1998.
In February 2000, Razorfish issued an aggregate of 160 shares of Common
Stock with a fair value of $7,710 and made a cash payment of $1.0 million to the
former principals of Media in consideration for their agreement to amend their
respective acquisition agreements to remove the earn-out provisions contained
therein. The payments associated with this transaction are accounted for as
additional purchase price and an adjustment to goodwill. In connection with
this agreement, Razorfish is required to issue an additional 53 shares of Common
Stock on or about January 2002.
In February 2000, Razorfish issued an aggregate of 400 shares of Common
Stock with a fair value of $16,275 to the former principals of Plastic in
consideration for their agreement to amend their respective acquisition
agreements to remove the earn-out provisions contained therein. The payments
associated with this transaction are accounted for as additional purchase price
and an adjustment to goodwill. In connection with this agreement, Razorfish is
required to issue an additional 200 shares of Common Stock on or about December
2001.
In February 2000, Razorfish issued an aggregate of 800 shares of Common
Stock with a fair value of $39,196 to the former principals of CHBi in
consideration for their agreement to amend their respective acquisition
agreements to remove a portion of the earn-out provisions contained therein. The
payments associated with this transaction are accounted for as additional
purchase price and an adjustment to goodwill. In connection with this agreement,
the former CHBi principals have a call option arising on May 31, 2000 whereby
they may cause Razorfish to issue an additional 400 shares of Common Stock in
exchange for the removal of the final portion of the earn-out payment. Razorfish
has a corresponding put option arising on the same date.
Lines of credit and other financings
In September 1996, Razorfish entered into a Shareholders Agreement with
Communicade (f/k/a JWL Associates Corp.), a wholly owned subsidiary of Omnicom,
and Messrs. Dachis and Kanarick, pursuant to which Omnicom agreed that, as long
as it was a shareholder of Razorfish, it would provide Razorfish with a line of
credit of up to $2.0 million for working capital purposes and a financing line
of credit in connection with Razorfish's acquisition of "new media" companies.
The Shareholders Agreement terminated upon the effectiveness of a new
Stockholders Agreement entered into by Razorfish, Communicade, Spray Ventures
and Messrs. Dachis and Kanarick in connection with the acquisition of Spray.
Pursuant to the terms of the Stockholders Agreement, Communicade provided the
working capital line of credit and the acquisition line of credit to Razorfish
on the same terms and conditions as were set forth in the Shareholders
Agreement. Razorfish repaid all outstanding amounts under the working capital
line of credit in February 1999 with the proceeds from the exercise of the 10%
option by Communicade described below. Razorfish repaid all outstanding amounts
under the acquisition line of credit in April 1999 with the proceeds of its
initial public offering. At the time Razorfish repaid this debt, there was a
total of $4.0 million outstanding and the applicable interest rate was 5.95%.
The Stockholders Agreement terminated on the closing of its initial public
offering; accordingly, Razorfish no longer has available any line of credit.
Pursuant to the terms of the Stockholders Agreement, Communicade was
granted an option to purchase from Razorfish the number of shares of Common
Stock equal to 10% of Razorfish's Common Stock on a fully diluted basis on the
date the option is exercised. The purchase price per share upon exercise of the
10% option was equal to 80% of the price per share sold in Razorfish's initial
public offering. In February 1999, Communicade exercised this option and
purchased 3,953,620 shares of Common Stock. The aggregate purchase price that
Communicade paid for these shares was approximately $25.3 million.
At December 31, 1998, Spray had a loan of SEK 23,576,000 ($2.8 million
based upon the December 31, 1998 exchange rate of SEK 8.1023 = $1.00) due to
Spray Ventures. The terms and conditions of this loan were the same as
Razorfish's borrowings from Omnicom. Razorfish repaid this loan in February 1999
with the proceeds of the 10% option.
Currency fluctuation and the euro conversion
Razorfish does not believe that it is subject to material currency
fluctuations as a result of its international operations. Revenues from the
operations of its European subsidiaries are currently denominated primarily in
the applicable local currencies. Razorfish does not plan to repatriate such
revenues to the United States in the foreseeable future. Historically, Razorfish
has not experienced any material changes in quarter-to-quarter operating results
due to currency fluctuations. However, no assurance can be given that quarterly
results will not be impacted in the future, for financial reporting purposes
only, due to the conversion into dollars of non-dollar denominated revenues.
Eleven of the fifteen member states of the European Union have agreed to
adopt the euro as their common legal currency. On January 1, 1999, these members
began the process of converting their native currencies to the euro, and on that
date the euro commenced trading on currency exchanges and became available for
non-cash transactions. For the period from January 1, 1999 to January 1, 2002,
both the euro and the native currencies will be legal tender in the
participating member states. During this period, the conversion rates for
currencies will be determined by a formula that has been established by the
European
13
<PAGE>
Commission. On January 1, 2002, new euro-denominated bills and coins will be
fully deployed and all native bills and coins will be withdrawn by July 1, 2002.
In addition, as of January 1, 1999, the new European Central Bank gained
the authority to direct monetary policy with respect to the euro, including
money supply and official interest rates for the euro. Some of the rules and
regulations with regard to the euro have yet to be promulgated and completed by
the European Commission.
While the United Kingdom and Sweden, two of the countries in which
Razorfish operates, are members of the European Union, they are not
participating in the euro conversion; however, they may elect to convert to the
euro at a later date. Risks related to the conversion to the euro may not impact
Razorfish directly, but could have a materially adverse effect on its clients'
businesses, which could have an indirect effect on their demand for Razorfish's
services. Razorfish's management does not believe that the conversion to the
euro will have a material or adverse impact on its business.
Year 2000 Compliance
In late 1999, Razorfish completed the implementation of its plans to become
Year 2000 ready, through the final remediation and testing of its systems. As a
result of those planning and implementation efforts, Razorfish has not
experienced any significant disruptions in mission critical information
technology and non-information technology systems and believes those systems
successfully responded to the Year 2000 date change. Razorfish is not aware of
any material problems resulting from Year 2000 issues, either with its services
or internal systems, or with the products and services of third parties.
Razorfish will continue to monitor its mission critical computer applications
and those of its suppliers and vendors throughout the year 2000 to ensure that
any latent Year 2000 matters that may arise are addressed properly.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 133, "Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards of derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. This statement is effective for all quarters of fiscal years
beginning after June 15, 1999. In July 1999, the FASB issues SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB No. 133," which amends SFAS No. 133 to be effective for
all fiscal quarters of all fiscal years beginning after June 15, 2000. The
Company does not expect the adoption of this standard to have a material effect
on the Company's results of consolidated operations, financial position, or cash
flows.
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin ("SAB") 101, "Revenue Recognition in Financial
Statements," which provides guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB 101 was effective the
first fiscal quarter of fiscal years beginning after December 15, 1999 and
requires companies to report any changes in revenue recognition as a cumulative
change in accounting principle at the time of implementation in accordance with
Accounting Principles Board Opinion 20, "Accounting Changes". In March 2000, the
SEC issued SAB 101A, "Amendment: Revenue Recognition in Financial Statements,"
which delays implementation of SAB 101 until Razorfish's second fiscal quarter
of 2000. Razorfish will adopt SAB 101 and is currently in the process of
evaluating the impact, if any, SAB 101 will have on its financial position or
results of operations.
In March 2000, the Financial Accounting Standard Board issued FASB
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation - an interpretation of APB Opinion No. 25" ("FIN 44"). FIN 44
clarifies the application of APB Opinion No. 25 and among other issues clarifies
the following: the definition of an employee for purposes of applying APB
Opinion No. 25; the
14
<PAGE>
criteria for determining whether a plan qualifies as a noncompensatory plan; the
accounting consequence of various modifications to the terms of previously fixed
stock options or awards; and the accounting for an exchange of stock
compensation awards in a business combination. FIN 44 is effective July 1, 2000,
but certain conclusions in FIN 44 cover specific events that occurred after
either December 15, 1998 or January 12, 2000. The Company does not expect the
application of FIN 44 to have a material impact on the Company's financial
position or results of operations.
15
<PAGE>
Item 3. Qualitative and Quantitative Disclosures About Market Risk
Not applicable
PART II. OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit No. Description
- ----------- -----------
2.1 Agreement and Plan of Merger, dated as of August 10, 1999, by and
between Razorfish, Razorfish Merger Sub and i-Cube.(2)
3.1 Certificate of Incorporation of Razorfish, Inc. (the "Company"),
as amended.(2)
3.2 By-laws of Razorfish.(1)
4.1 Stockholders Agreement, dated as of October 1, 1998, among
Razorfish, Spray Ventures, Communicade, Jeffrey A. Dachis and
Craig M. Kanarick.(1)
4.2 Amendment to Stockholders Agreement, dated February 3, 1999, among
Razorfish, Spray Ventures, Communicade, Jeffrey A. Dachis and
Craig M. Kanarick.(1)
4.6 Registration Rights Agreement, dated March 30, 1999, between
Razorfish and Communicade Inc.(1)
4.7 Specimen Common Stock Certificate of Razorfish.(1)
10.1 The Amended and Restated 1997 Stock Option and Incentive Plan.(1)
10.2 1999 Amended and Restated Stock Incentive Plan.(2)
10.3 Employment Agreement, dated September 18, 1996, between Razorfish
and Jeffrey A. Dachis.(1)
10.4 Non-competitive Agreement, dated September 18, 1996, between
Razorfish and Jeffrey A. Dachis.(1)
10.5 Employment Agreement, dated September 18, 1996, between
Razorfish and Craig M. Kanarick(1)
10.6 Non-competitive Agreement, dated September 18, 1996, between
Razorfish and Craig M. Kanarick.(1)
10.7 Employment Agreement, dated June 19, 1997, between Razorfish and
Jean-Philippe Maheu.(1)
10.8 Employment Agreement, dated June 1, 1997, between Razorfish and
Evan Orensten.(1)
10.9 Employment Agreement, dated October 1, 1998, between Razorfish
and Per Bystedt.(1)
10.10 Employment Agreement, dated October 1, 1998, between Razorfish
and Jonas Svensson.(1)
10.11 Employment Agreement, dated August 10, 1999, between Razorfish and
Michael Pehl.(4)
10.12 Letter Agreement, dated as of August 9, 1999, between Razorfish
and Lawrence P. Begley.(4)
10.13 Lease Agreement, dated October 28, 1996, between Razorfish and
Man Yun Real Estate Corporation.(1)
10.14 Lease Agreement, dated April 30, 1997, between Razorfish and Man
Yun Real Estate Corporation.(1)
10.15 Lease Agreement, dated December 23, 1998, between C.H.B.I.
Razorfish Limited and the Mayor and Commonality and Citizens of
the City of London.(1)
10.16 Lease Agreement, dated March 10, 1998, between J&R Bechelli and
Alpha Online, Inc., as amended by letter dated February 9,
1999.(1)
10.17 Lease Agreement No. 731 100, dated April 12, 1996, between Spray
(f/k/a Spray Interative Media Agency AB) and Bojner Estate AB
("Boyner") and the English translation thereof.(1)
10.18 Lease Agreement No. 741 100, dated September 30, 1997, between
Spray (f/k/a Spray Interative Media Agency AB) and Bojner Estate
AB ("Bojner") and the English translation thereof.(1)
10.19 Lease Contract No. 01009 001 024 ("Trygg-Hansa Lease"), dated
April 30, 1998, between Spray and Trygg-Hansa ("Trygg-Hansa")
and the English translation thereof.(1)
10.20 Supplement No. 1, dated April 30, 1998, to Trygg-Hansa Lease and
the English translation thereof.(1)
10.21 Supplement No. 2, dated August 18, 1998, to Trygg-Hansa Lease
and the English translation thereof.(1)
10.22 Personal Guarantee for Premises, dated April 29, 1998, made by
Lars T. Andersson and per Bystedt in favor of Trygg-Hansa with
respect to Trygg-Hansa Lease and the English translation
thereof.(1)
10.23 Personal Guarantee for Premises, dated April 29, 1998, made by
Johan Ihrfelt and Jonas Svensson in favor of Trygg-Hansa with
respect to Trygg-Hansa Lease and the English translation
thereof.(1)
10.24 Rent Contract Covering Business Premises, dated February 3,
1998, between Spray Interactive Media AB and DEGI Deutsche
Gesellschaft fur Immobilienfonds mbH and the English translation
thereof.(1)
10.25 Rental Agreement for Office Space No. 910539, dated April 25, 1997,
between Spray Interactive Media Oy and Valtion Kiinteistolaitos
(State real property Authority)/Uusimaa ("State Real Property
Authority") and the English translation thereof.(1)
10.26 Rental Agreement for Office Space No. 910539, dated May 14, 1997,
between Spray Interactive Media Oy and State Real Property Authority
and the English translation thereof.(1)
10.27 Lease Contract, dated June 17, 1998, between Spray Geelmuyden.Kiese
A.S. and Kongensgate 2 ANS and the English translation thereof.(1)
10.28 Subscription and Exchange Agreement, dated as of October 1,
1998, among Razorfish, Spray Ventures AB and Communicade.(1)
10.29 First Amendment to the Subscription and Exchange Agreement,
dated November 25, 1998, among Razorfish, Spray Ventures AB,
Spray Network AB and Communicade.(1)
10.30 Second Amendment to the Subscription and Exchange Agreement,
dated December 10, 1998, among Razorfish, Spray Ventures AB,
Spray Network AB and Communicade.(1)
10.31 Stock Purchase Agreement, dated as of October 1, 1998, among
Communicade, Jeffrey A. Dachis and Craig M. kanarick.(1)
10.32 Stock Purchase Agreement, dated October 23, 1998, among
Communicade and Spray Ventures AB.(1)
10.33 Amendment to Stock Purchase Agreement, dated December 10, 1998,
between Communicade and Spray Ventures AB.(1)
10.34 Loan Agreement, dated September 18, 1996, between Razorfish and
Omnicom Finance Inc.(1)
10.35 Forms of Voting Agreements.(2)
10.36 Letter Agreement dated August 8, 1995 between i-Cube and Silicon
Valley Bank.(2)
10.37 Promissory Note dated August 8, 1998 between i-Cube and Silicon
Valley Bank.(2)
10.38 Commercial Security Agreement dated August 8, 1995 between
i-Cube and Silicon Valley Bank.(2)
10.39 Negative Pledge Agreement dated August 8, 1995 between i-Cube
and Silicon Valley Bank.(2)
10.40 Letter Agreement dated October 7, 1996 between i-Cube and
Silicon Valley Bank.(2)
10.41 Promissory Note dated July 31, 1997 between i-Cube and Silicon
Valley Bank.(2)
10.42 Loan Modification Agreements between Registrant and Silicon
Valley Bank dated August 6, 1996, August 7, 1996 and August 28,
1997, respectively.(2)
10.43 Lease Agreement dated november 20, 1996 between i-Cube,
RR&C Development Company and Patrician Associates, Inc.(2)
10.44 Lease Agreement dated as of July 14, 1995 between i-Cube and
Riverfront Office Park Joint Venture.(2)
10.45 Amendment No. 1 to Lease Agreement dated as of July 14, 1995
between i-Cube and Riverfront Office Park Joint Venture.92)
10.46 Sublease dated as of June 19, 1995 between i-Cube and MathSoft
Inc.(2)
18.1 Letter re: Change in Certifying Accountant.(3)
21.1 Subsidiaries of Razorfish.
23.1 Consent of PricewaterhouseCoopers LLP.
23.2 Consent of Arthur Andersen LLP.
27.1 Financial Data Schedule.
(1) Filed as an exhibit to Razorfish's Registration Statement on Form S-1 or
amendments thereto declared effective by the Securities and Exchange
Commission on April 26, 1999 (File No. 333-71043) and incorporated herein by
reference.
(2) Filed as an exhibit to Razorfish's Registration Statement on Form S-4 or
amendments thereto declared effective by the Securities and Exchange
Commission on October 1, 1999 (File No. 333-87031) and incorporated herein
by reference.
(3) Filed as an exhibit to Razorfish's Report on Form 8-K/A that was filed with
the Securities and Exchange Commission on December 10, 1999 and incorporated
herein by reference.
(4) Filed as an exhibit to Razorfish's Report on Form 10-K that was filed with
the Securities and Exchange Commission on March 30, 2000 and incorporated
herein by reference
(b) Reports on Form 8-K:
On each of February 14 and February 17, 2000, the Company Filed
forms 8-K/A to report its consolidated financial statements,
including balance sheet, statement of operations, statement of
stockholders' equity and statement of cash flows, and its pro
forma financial statements and related exhibits in connection with
its acquisition of Lee Associates, Inc. on December 1, 2000.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly cause this report to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of New York, state of
NewYork, on May 15, 2000.
RAZORFISH, INC.
By: /s/ Jeffrey A. Dachis
-------------------------------------
Jeffrey A. Dachis
President and Chief Executive Officer
By: /s/ John J. Roberts
-------------------------------------
John J. Roberts
Chief Financial Officer
(Principal Financial and Accounting
Officer)
17
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<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
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