<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
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) October 1, 1999
ONESOURCE INFORMATION SERVICES, INC.
--------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 000-25849 04-3204522
- ---------------------------- ------------- -------------------
(State or Other Jurisdiction (File Number) (IRS Employer
of Incorporation) Identification No.)
300 Baker Avenue 150 CambridgePark Drive
Concord, MA 01742 Cambridge, MA 02140
(Address of Principal Executive Offices) (Former Address)
(978) 318-4300
(Registrant's telephone number, including area code)
<PAGE> 2
The undersigned registrant hereby amends Item 7, of its current report on form
8-K dated October 1, 1999 to read in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) FINANCIAL STATEMENTS OF CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
The following financial statements required by Item 7 with respect to the
registrant's acquisition of Corporate Technology Information Services,
Inc. are filed as part of this report:
Report of independent accountants
Balance sheet as of March 31, 1999 and September 30, 1999 (unaudited)
Statement of operations for the year ended March 31, 1999
and for the six months ended September 30, 1998 and 1999 (unaudited)
Statement of stockholders' deficit for the year ended March 31, 1999
and for the six months ended September 30, 1999 (unaudited)
Statement of cash flow for the year ended March 31, 1999
and for the six months ended September 30, 1998 and 1999 (unaudited)
Notes to financial statements
(b) PRO FORMA FINANCIAL INFORMATION
The following pro forma financial information of OneSource Information
Services, Inc. required by Item 7 with respect to the Registrant's
acquisition of Corporate Technology Information Services, Inc.
Pro forma condensed balance sheet as of September 30, 1999 (unaudited)
Pro forma condensed statement of operations for the year ended December
31, 1998 (unaudited)
Pro forma condensed statement of operations for the nine months ended
September 30, 1999 (unaudited)
Notes to pro forma condensed financial statements
(c) EXHIBITS
2.1* Agreement and plan of merger among OneSource Information Services,
Inc. and Corporate Technology Information Services, Inc. dated
September 8, 1999.
2.2* Escrow Agreement dated September 8, 1999 by and among the
Registrant, Corporate Technology Information Services, Inc.,
Andrew Campbell and Citizens Bank of Massachusetts.
23.1 Consent of PricewaterhouseCoopers LLP
27.1 Financial Data Schedule
99.1* Press release of registrant dated September 9, 1999.
99.2* Press release of registrant dated October 1, 1999.
* previously filed
2
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
Corporate Technology Information Services, Inc.
In our opinion, the accompanying balance sheet as of March 31, 1999 and the
related statements of operations, of stockholders' deficit and of cash flows
present fairly, in all material respects, the financial position of Corporate
Technology Information Services, Inc. ("CTI") at March 31, 1999 and the results
of its operations and its cash flows for the year then ended in conformity with
generally accepted accounting principles. These financial statements are the
responsibility of CTI'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.
PricewaterhouseCoopers LLP
October 22, 1999
Boston, Massachusetts
3
<PAGE> 4
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
BALANCE SHEET
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30, MARCH 31,
1999 1999
------------ ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 45,683 $ 15,086
Accounts receivable, net of allowance for
doubtful accounts of $69,000 and $51,000 at
September 30, 1999 (unaudited) and March 31,
1999, respectively 562,017 840,620
Inventory 43,257 65,783
Prepaid expenses and other current assets 50,436 70,659
---------- -----------
Total current assets 701,393 992,148
Property and equipment, net 326,170 342,339
---------- -----------
Total assets $1,027,563 $ 1,334,487
========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Current portion of capital lease obligations
and long-term debt $ 75,360 $ 68,518
Notes payable to stockholders -- 145,000
Loan payable to vendor -- 111,082
Line of credit 341,500 --
Accounts payable and accrued expenses 218,773 761,397
Deferred revenue 1,727,569 1,799,700
---------- -----------
Total current liabilities 2,363,202 2,885,697
Capital lease obligations and long-term debt,
net of current portion 100,603 137,153
---------- -----------
Total liabilities 2,463,805 3,022,850
---------- -----------
Commitments (Note 9) -- --
Stockholders' deficit:
Common stock, $0.01 par value; 3,500,000 shares
authorized; 2,813,493 and 2,697,772 shares
issued and outstanding at September 30, 1999
(unaudited) and March 31, 1999, respectively 28,135 26,978
Additional paid-in capital 2,241,969 1,949,935
Accumulated deficit (3,706,346) (3,665,276)
---------- -----------
Total stockholders' deficit (1,436,242) (1,688,363)
---------- -----------
Total liabilities and stockholders' deficit $1,027,563 $ 1,334,487
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
STATEMENT OF OPERATIONS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
------------------------ MARCH 31,
1999 1998 1999
---------- ---------- ----------
(unaudited)
<S> <C> <C> <C>
Revenues $2,463,736 $2,109,416 $5,162,392
Cost of revenues 407,526 519,748 1,000,365
---------- ---------- ----------
Gross profit 2,056,210 1,589,668 4,162,027
Selling, general and administrative expenses 2,049,735 1,816,581 4,234,398
---------- ---------- ----------
Income (loss) from operations 6,475 226,913 (72,371)
Interest expense 46,845 62,899 127,420
---------- ---------- ----------
Loss before provision for income taxes (40,370) (289,812) (199,791)
Provision for income taxes 700 4,500 9,840
---------- ---------- ----------
Net loss $ (41,070) $ (294,312) $ (209,631)
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
STATEMENT OF STOCKHOLDERS' DEFICIT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL TOTAL
-------------------- PAID-IN ACCUMULATED STOCKHOLDERS'
SHARES PAR VALUE CAPITAL DEFICIT DEFICIT
--------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance, March 31, 1998 2,697,772 $26,978 $1,648,639 $(3,455,645) $(1,780,028)
Compensation expense associated with equity awards -- -- 301,296 -- 301,296
Net loss -- -- -- (209,631) (209,631)
--------- --------- ---------- ----------- -----------
Balance, March 31, 1999 2,697,772 26,978 1,949,935 (3,665,276) (1,688,363)
Issuance of common stock pursuant to conversion of
stockholders' notes (unaudited) 115,721 1,157 192,101 -- 193,258
Compensation expense associated with equity
awards (unaudited) -- -- 99,933 -- 99,933
Net loss (unaudited) -- -- -- (41,070) (41,070)
--------- --------- ---------- ----------- -----------
Balance, September 30, 1999 (unaudited) 2,813,493 $28,135 $2,241,969 $(3,706,346) $(1,436,242)
========= ======= ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
STATEMENT OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS ENDED
SEPTEMBER 30, YEAR ENDED
--------------------- MARCH 31,
1999 1998 1999
--------- --------- ----------
(unaudited)
<S> <C> <C> <C>
Cash flows relating to operating activities:
Net loss $ (41,070) $(294,312) $(209,631)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization 48,356 47,672 97,222
Compensation expense associated with equity awards 99,933 155,218 301,296
Changes in assets and liabilities:
Accounts receivable 278,603 158,295 (36,322)
Inventory 22,526 39,650 23,277
Prepaid expenses and other current assets 20,223 (14,579) (31,442)
Deposits -- 4,061 3,770
Accounts payable (103,492) 17,015 (3,507)
Accrued expenses and accrued compensation (390,874) 2,961 256,218
Deferred revenue (72,131) 57,123 323,152
--------- --------- ---------
Net cash provided by (used in) operating activities (137,926) 173,104 724,033
--------- --------- ---------
Cash flows relating to investing activities:
Purchases of property and equipment (32,187) (11,115) (17,857)
--------- --------- ---------
Cash flows relating to financing activities:
Net (payments) borrowings on line of credit 341,500 (200,000) (410,000)
Borrowings of long-term debt -- -- 200,000
Payments of long-term debt (3,334) (49,232) (525,000)
Borrowings under loan payable to vendor -- -- 111,082
Payments of loan payable to vendor (111,082) -- (139,231)
Payments of capital lease obligations (26,374) (26,889) (52,361)
--------- --------- ---------
Net cash used by financing activities 200,710 (276,121) (815,510)
--------- --------- ---------
Increase (decrease) in cash and cash equivalents 30,597 (114,132) (109,334)
Cash and cash equivalents, beginning of period 15,086 124,420 124,420
--------- --------- ---------
Cash and cash equivalents, end of period $ 45,683 $ 10,288 $ 15,086
========= ========= =========
Supplemental disclosures of cash flow information:
Cash paid for interest $ 74,203 $ 69,654 $ 102,329
Cash paid for taxes $ 1,388 $ 9,000 $ 15,239
Supplemental disclosures of noncash investing
and financing activities:
Property and equipment acquired under capital
lease obligations $ -- $ 39,262 $ 47,738
Conversion of notes payable to stockholders and
accrued interest into common stock $ 193,258 $ -- $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. NATURE OF BUSINESS
Corporate Technology Information Services, Inc. ("CTI") researches
technology companies and publishes detailed information in print
directories and on CD-ROM. These products are marketed primarily to
corporations, government agencies and universities worldwide. CTI sells its
products through a direct sales force located throughout the United States
and manages its business as a single segment.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
All highly liquid investments with an original maturity of three months or
less are considered to be cash equivalents.
REVENUE RECOGNITION
CTI's CD-ROM products are sold on a subscription basis pursuant to customer
contracts that span varying periods of time but generally are for a period
of one year. In accordance with its customer agreements, CTI initially
records receivables and defers the related revenue at the time amounts are
billed to customers. Revenues are recognized ratably over the related
subscription period.
CTI also produces print directories on an annual basis. The related revenue
is recognized upon shipment, provided that fees are fixed and determinable
and collection of the related receivable is probable.
INVENTORY
Inventory consists of the printing cost of directories and electronic
media. Inventory is stated at the lower of cost or market, cost being
determined using the first-in, first-out method.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated using the
straight-line method over the estimated useful lives of the related assets.
Major renewals and betterments are capitalized and repairs and maintenance
are charged to expense in the period incurred. Equipment held under capital
leases is stated at the fair value of the equipment at inception of the
leases and is amortized on the straight-line method over the term of the
leases.
ADVERTISING AND MARKETING COSTS
Advertising and marketing costs are expensed when incurred. Advertising
expense was $100,954 for the year ended March 31, 1999.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially expose CTI to a concentration of
credit risk include cash and cash equivalents and accounts receivable. CTI
maintains cash in excess of federally insured deposits at a financial
institution from time to time. CTI does not believe that such deposits are
subject to any unusual credit risk beyond the normal credit risk associated
with operating its business. Credit risk with respect to accounts
receivable is limited due to the large number of customers comprising CTI's
client base. CTI maintains reserves for potential credit losses and such
losses, in the aggregate, have not historically exceeded management's
expectations.
8
<PAGE> 9
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
ACCOUNTING FOR STOCK-BASED COMPENSATION
CTI accounts for stock-based compensation to employees in accordance with
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock
Issued to Employees" and related interpretations. CTI follows the
disclosure requirements of Statement of Financial Accounting Standards
("SFAS")No. 123, "Accounting for Stock-Based Compensation."
UNAUDITED INTERIM FINANCIAL STATEMENTS
Data and information as of September 30, 1999 and for the six months ended
September 30, 1998 and 1999 is unaudited. In the opinion of CTI's
management, the September 30, 1998 and 1999 unaudited interim financial
statements include all adjustments, consisting only of normal recurring
adjustments, necessary for a fair representation of the financial position
and results of operations for those periods. The results of operations for
the six-month period ended September 30, 1999 are not necessarily
indicative of the results of operations for the year ended March 31, 2000.
USE OF 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
disclosures 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.
3. PROPERTY AND EQUIPMENT
Property and equipment, net, as of March 31, 1999 consisted of the
following:
<TABLE>
<CAPTION>
USEFUL LIFE
(IN YEARS)
-----------
<S> <C> <C>
Computer equipment 5 $410,706
Software 5 77,327
Office furniture and equipment 5-7 125,300
Equipment under capital lease 5 246,694
Leasehold improvements 5 51,088
--------
911,115
Less: accumulated depreciation and amortization 568,776
--------
$342,339
========
</TABLE>
Depreciation and amortization expense relating to fixed assets was $97,222 for
the year ended March 31, 1999, of which $39,380 related to amortization of
assets held under capital leases. Accumulated amortization of equipment held
under capital leases was $82,780 at March 31, 1999.
9
<PAGE> 10
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
4. BORROWINGS
LINE OF CREDIT
CTI has a line of credit agreement with a bank which permits borrowings up
to $500,000. Borrowings are secured by all business assets of CTI and are
guaranteed by a principal stockholder. Any borrowings under the line of
credit are due on demand and bear interest at the bank's prime rate plus
1.5%. There were no borrowings outstanding at March 31, 1999 and $341,500
was outstanding at September 30, 1999 (unaudited).
NOTES PAYABLE TO STOCKHOLDERS
CTI issued notes payable to stockholders and an entity controlled by a
stockholder in November 1997. The convertible subordinated notes bear
interest at 18% and are due in November 1999. The notes, including accrued
interest, may be converted into common stock in whole or in part at any
time under terms in the agreement at an option price of $1.67 per share.
CTI recorded related interest expense of $26,100 for the year ended March
31, 1999. In June 1999, the notes plus accrued interest of $48,258 were
converted into 115,721 shares of common stock.
LOAN PAYABLE TO VENDOR
CTI has two loans payable to its principal vendor for printing services to
finance its annual directory printing costs. The loans are payable in
principal only in six monthly installments of $29,548 through July 1999.
Interest is due on the notes monthly at the bank's prime rate plus 2%
(10.25% at March 31, 1999). CTI repaid the loan in full at September 30,
1999.
LONG-TERM DEBT
CTI has a term loan with a bank secured by all business assets of CTI and
guaranteed by a principal stockholder. The loan is payable interest only
through August 1999 at the bank's prime rate plus 1.5% (9.25% at March 31,
1999). Thereafter, principal will be repaid at $1,667 per month with the
remaining outstanding balance due in September 2000. In connection with
this loan, CTI issued a warrant exercisable at $1.67 per share for up to
30,000 shares of CTI's common stock. The value ascribed to these warrants
was insignificant.
Future maturities of long-term debt as of March 31, 1999 were as follows:
<TABLE>
<S> <C>
Fiscal year ended March 31,
2000 $ 11,667
2001 88,333
--------
$100,000
========
</TABLE>
10
<PAGE> 11
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
CAPITAL LEASE OBLIGATIONS
CTI leases certain equipment under capital lease obligations which expire
through February 2002. Future minimum lease payments under capital lease
obligations as of March 31, 1999 were as follows:
<TABLE>
<S> <C>
Fiscal year ended March 31,
2000 $ 69,939
2001 43,330
2002 10,007
--------
123,276
Less imputed interest 17,605
--------
Present value of minimum lease payments $105,671
========
</TABLE>
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses as of March 31, 1999 consisted of the
following:
<TABLE>
<S> <C>
Accounts payable $103,492
Accrued compensation 460,482
Other accrued expenses 197,423
--------
$761,397
========
</TABLE>
6. STOCK PLANS
CTI adopted a Non-Qualified Stock Option Plan in 1997 ("1997 Plan"). Under
the 1997 Plan, CTI may grant options to employees for up to 303,000 shares
of its common stock. Options vest in accordance with operational goals and
upon maintaining standards of professional behavior set by CTI, and are
exercisable for $0.01 per share over a period ending the shorter of a) ten
years after grant, b) CTI is purchased or c) CTI offers its shares to the
public.
Transactions under the 1997 Plan during the year ended March 31, 1999 are
summarized below:
<TABLE>
<CAPTION>
WEIGHTED-
NUMBER OF AVERAGE
SHARES EXERCISE PRICE
--------- --------------
<S> <C> <C>
Outstanding - March 31, 1998 246,266 $0.01
Forfeited (34,061) 0.01
-------
Outstanding - March 31, 1999 212,205 0.01
=======
</TABLE>
11
<PAGE> 12
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
As of March 31, 1999, 56,976 options were vested under the 1997 Plan at an
option price of $0.01 per share and options outstanding had a weighted
average remaining contractual life of eight years.
Under APB No. 25, option awards under the 1997 Plan are variable as to the
number of shares to be received. Accordingly, CTI recognizes compensation
expense under the intrinsic method until the option awards vest. During the
year ended March 31, 1999 and the six months ended September 30, 1999
(unaudited), CTI recorded compensation expense of $301,296 and $99,933
related to the unvested options outstanding under the 1997 Plan.
As discussed in Note 2, CTI follows SFAS No. 123 through disclosure only.
Had compensation cost for CTI's option plans been determined based on the
fair value at the grant dates, as prescribed by SFAS No. 123, CTI's net
loss would have been substantially the same for the year ended March 31,
1999.
The fair value of each option award outstanding at March 31, 1999 is
estimated using the minimum value method with the following assumptions:
dividend yield of 0.0%; risk-free interest rate of 5.1%; and a
weighted-average expected option term of eight years. Because additional
option awards are expected to be made each year and options vest over
several years, the above pro forma disclosures are not representative of
pro forma effects of reported net income for future years.
7. INCOME TAXES
Because CTI has provided a valuation allowance for the full amount of its
net deferred tax assets, CTI has no provision for deferred income taxes for
the year ended March 31, 1999. The components of the provision for current
income taxes for the year ended March 31, 1999 were as follows:
<TABLE>
<S> <C>
Current:
Federal $ 8,840
State 1,000
--------
$ 9,840
========
The income tax provision for the year ended March 31, 1999 differs from the
U.S. federal statutory tax rate of 34% as a result of the following items:
<S> <C>
Income tax benefit at U.S. federal statutory tax rate $(68,516)
State taxes, net of federal benefit 660
Increase in valuation allowance 79,418
Other (1,722)
--------
Provision for income taxes $ 9,840
========
</TABLE>
12
<PAGE> 13
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The net deferred tax assets and liabilities as of March 31, 1999 were
comprised of the following:
<TABLE>
<S> <C>
Deferred tax assets:
Deferred revenue $ 724,739
Deferred compensation expense related to equity awards 121,332
Net operating loss carryforwards 527,493
Investment tax credits 6,105
Other 12,030
----------
Gross deferred tax assets 1,391,699
Valuation allowance (1,374,645)
----------
Total deferred tax assets 17,054
----------
Deferred tax liabilities:
Capitalized inventory costs (16,444)
Property and equipment related (610)
----------
Total deferred tax liabilities (17,054)
----------
Net deferred tax asset $ --
==========
</TABLE>
For income tax purposes, CTI has $1,310,000 of net operating loss
carryforwards expiring at various dates through 2018. Realization of these
deferred tax benefits is dependent on generating sufficient taxable income
in the future. Due to the uncertainty of realization of these tax benefits,
CTI has provided a valuation allowance for the full amount of its net
deferred tax assets. Under the Internal Revenue Code, certain substantial
changes in CTI's ownership will limit the amount of net operating loss and
tax credit carryforwards that can be utilized in any one year to offset
future taxable income or tax liability.
8. RETIREMENT PLANS
CTI has a profit sharing 401(k) salary reduction plan with employer
matching provisions covering substantially all of its employees. CTI's
contribution to the 401 (k) plan is determined annually at the discretion
of the Board of Directors. CTI's contribution totaled $12,176 for the year
ended March 31, 1999.
13
<PAGE> 14
CORPORATE TECHNOLOGY INFORMATION SERVICES, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
9. COMMITMENTS
CTI leases office facilities under an operating lease which expires in June
2001. In addition to base rent, CTI is responsible to pay its proportionate
share of real estate tax and operating costs as specified in the agreement.
The operating lease also provides for annual base rent increases. Rent
expense was $203,725 for the year ended March 31, 1999. Future minimum
lease payments under all noncancellable operating leases as of March 31,
1999 were as follows:
<TABLE>
<S> <C>
Fiscal year ended March 31,
2000 $204,491
2001 208,531
2002 52,259
--------
$465,281
========
</TABLE>
10. SUBSEQUENT EVENT
On September 8, 1999, CTI entered into an Agreement and Plan of Merger to
sell CTI's outstanding common stock for $7.6 million, including the
assumption of liabilities as of September 30, 1999. The merger was
completed on October 1, 1999.
14
<PAGE> 15
(b) Pro Forma Financial Information
ONESOURCE INFORMATION SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma condensed financial information gives
effect to the acquisition of Corporate Technology Information Services, Inc.
("CTI") by OneSource Information Services, Inc. ("OneSource") in a transaction
to be accounted for as a purchase in accordance with APB Opinion No. 16 (the
"Acquisition"). Under the purchase method of accounting, the purchase price is
allocated to the assets acquired and liabilities assumed based on their fair
values at the date of the Acquisition. Estimates of the fair values of the
assets and liabilities of CTI have been combined with the recorded values of the
assets and liabilities of OneSource in the unaudited pro forma condensed balance
sheet as of September 30, 1999.
The unaudited pro forma condensed balance sheet has been prepared to
reflect the Acquisition as if it occurred on September 30, 1999. The unaudited
pro forma condensed statements of operations reflect the results of operations
of OneSource and CTI for the year ended December 31, 1998 and the nine months
ended September 30, 1999 as if the Acquisition occurred on January 1, 1998 and
January 1, 1999, respectively.
The unaudited pro forma condensed financial information is presented for
illustrative purposes only and is not necessarily indicative of the combined
financial position or results of operations in future periods or the results
that actually would have been realized had OneSource and CTI been a combined
company during the specified periods. The unaudited pro forma condensed
financial information, including the notes thereto, is qualified in its entirety
by reference to, and should be read in conjunction with, the historical
consolidated financial statements of OneSource, included in its Registration
Statement on Form S-1, as amended, as filed with the Securities and Exchange
Commission on March 3, 1999 and its quarterly report Form 10-Q for the nine
months ended September 30, 1999 and the historical financial statements of CTI
included elsewhere in this Form 8-K/A.
15
<PAGE> 16
ONESOURCE INFORMATION SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED BALANCE SHEET
(In thousands, except share data)
<TABLE>
<CAPTION>
OneSource CTI
September 30, September 30,
1999 1999 Adjustments Pro Forma
------------ ------------ ----------- ---------
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and cash equivalents ................................... $14,665 $ 46 $ -- $14,711
Deposit for subsequent acquisition .......................... 7,610 -- (7,610)(A) --
Accounts receivable, net .................................... 6,212 562 -- 6,774
Deferred subscription costs ................................. 5,972 -- (249)(E) 5,723
Inventory ................................................... -- 43 -- 43
Prepaid expenses and other current assets ................... 219 51 4 (A) 174
(100)(D)
------- ------ ------ -------
Total current assets ..................................... 34,678 702 (7,955) 27,425
Property and equipment, net ..................................... 2,749 326 -- 3,075
Other assets .................................................... 1,033 -- -- 1,033
Intangible assets ............................................... -- -- 7,606 (A) 9,582
232 (B)
1,436 (C)
204 (D)
104 (E)
------- ------ ------ -------
Total assets ........................................... $38,460 $1,028 $1,627 $41,115
======= ====== ====== =======
Liabilities and Stockholders' Equity (Deficit)
Current liabilities:
Current portion of capital lease obligations ................ $ 285 $ 75 $ -- $ 360
Line of credit .............................................. -- 341 -- 341
Accounts payable and accrued expenses ....................... 4,397 219 232 (B) 4,952
104 (D)
Accrued royalties ........................................... 4,192 -- (145)(E) 4,047
Deferred revenues ........................................... 15,448 1,728 -- 17,176
------- ------ ------ -------
Total current liabilities ................................ 24,322 2,363 191 26,876
Capital lease obligations and long-term debt .................... 59 101 -- 160
------- ------ ------ -------
Total liabilities ...................................... 24,381 2,464 191 27,036
------- ------ ------ -------
Stockholders' equity (deficit):
Common stock ................................................ 100 28 (28)(C) 100
Additional paid-in capital .................................. 28,246 2,242 (2,242)(C) 28,246
Unearned compensation ....................................... (399) -- -- (399)
Accumulated deficit ......................................... (13,736) (3,706) 3,706 (C) (13,736)
Accumulated other comprehensive loss ........................ (132) -- -- (132)
------- ------ ------ -------
Total stockholders' equity (deficit) ................... 14,079 (1,436) 1,436 14,079
------- ------ ------ -------
Total liabilities and stockholders' equity (deficit) ... $38,460 $1,028 $1,627 $41,115
======= ====== ====== =======
</TABLE>
See accompanying notes to the unaudited pro forma condensed financial
information.
16
<PAGE> 17
ONESOURCE INFORMATION SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
OneSource CTI
Year ended Year ended
December 31, 1998 March 31, 1999 Adjustments Pro Forma
----------------- -------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues ................................................... $ 30,428 $5,162 $ (487)(E) $ 35,103
Cost of revenues ........................................... 13,655 1,000 (428)(E) 14,227
----------- ------ ------- -----------
Gross profit ............................................... 16,773 4,162 (59) 20,876
----------- ------ ------- -----------
Operating expenses:
Selling and marketing .................................. 11,577 1,880 13,457
Platform and product development ....................... 6,313 592 6,905
General and administrative ............................. 3,847 1,763 5,610
Amortization of Intangibles ............................ -- -- 1,446 (F) 1,446
----------- ------ ------- -----------
Total operating expenses ............................ 21,737 4,235 1,446 27,418
----------- ------ ------- ------------
Loss from operations ................................ (4,964) (73) (1,505) (6,542)
Interest expense, net ...................................... (595) (127) (574)(G) (1,296)
Gain on sale of product line ............................... 12,797 -- -- 12,797
----------- ------ ------- -----------
Income (loss) before income taxes ................... 7,238 (200) (2,079) 4,959
Provision for income taxes ................................. 250 10 -- 260
----------- ------ ------- -----------
Net income (loss) ................................... 6,988 (210) (2,079) 4,699
Less: income attributable to Class P common stock .......... 1,367 -- (228) 1,139
----------- ------ ------- -----------
Net income (loss) attributable to common stock ...... $ 5,621 $ (210) $(1,851) $ 3,560
=========== ====== ======= ===========
Class P common stock:
Basic and diluted earnings per share ................... $ 1.91 $ 1.59
Weighted average Class P common shares outstanding ..... 717,541 717,541
Common stock:
Basic earnings per share ............................... $ 0.85 $ 0.54
Diluted earnings per share ............................. $ 0.59 $ 0.37
Weighted average common shares outstanding:
Basic ............................................... 6,640,834 6,640,834
Diluted ............................................. 9,563,151 9,563,151
Pro forma earnings per share:
Basic .................................................. $ O.92 $ 0.62
Diluted ................................................ $ 0.66 $ 0.45
Weighted average common shares outstanding:
Basic ............................................... 7,620,172 7,620,172
Diluted ............................................. 10,542,489 10,542,489
</TABLE>
See accompanying notes to the unaudited pro forma condensed financial
information.
17
<PAGE> 18
ONESOURCE INFORMATION SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
OneSource CTI
Nine months ended Nine months ended
September 30, 1999 September 30, 1999 Adjustments Pro Forma
------------------ ------------------ ----------- ---------
<S> <C> <C> <C> <C>
Revenues .......................................... $ 25,241 $4,434 $ (450)(E) $ 29,225
Cost of revenues .................................. 10,805 718 (346)(E) 11,177
---------- ------ ------- ----------
Gross profit ...................................... 14,436 3,716 (104) 18,048
---------- ------ ------- ----------
Operating expenses:
Selling and marketing ......................... 9,205 1,674 10,879
Platform and product development .............. 5,739 452 6,191
General and administrative .................... 4,185 1,647 5,832
Amortization of Intangibles ................... -- -- 1,085 (F) 1,085
---------- ------ ------- ----------
Total operating expenses .................. 19,129 3,773 1,085 23,987
---------- ------ ------- ----------
Loss from operations ...................... (4,693) (57) (1,189) (5,939)
Interest expense, net ............................. (99) (75) (285)(G) (459)
Other income ...................................... 1,500 -- -- 1,500
---------- ------ ------- ----------
Loss before income taxes .................. (3,292) (132) (1,474) (4,898)
Provision for income taxes ........................ -- (31) -- (31)
---------- ------ ------- ----------
Net loss .................................. $ (3,292) $(101) $(1,474) $ (4,867)
========== ====== ======= ==========
Common stock:
Basic and diluted earnings per share .......... $ (0.39) $ (0.58)
Weighted average common shares outstanding:
Basic and diluted ......................... 8,340,049 8,340,049
Pro forma earnings per share:
Basic and diluted ............................. $ (0.37) $ (0.55)
Weighted average common shares outstanding:
Basic and diluted ......................... 8,845,204 8,845,204
</TABLE>
See accompanying notes to the unaudited pro forma condensed financial
information.
18
<PAGE> 19
ONESOURCE INFORMATION SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
BASIS OF PRESENTATION:
On October 1, 1999, OneSource Information Services, Inc. ("OneSource")
acquired Corporate Technology Information Services, Inc. ("CTI"), a Delaware
corporation located in Woburn, Massachusetts. CTI is a provider of high
technology company profiles with a focus on emerging private companies. Pursuant
to the terms of an Agreement and Plan of Merger, the consideration paid by
OneSource was $7.6 million in cash. A portion of the cash consideration is being
held in escrow to be released in accordance with the Agreement and Plan of
Merger and an Escrow Agreement. For financial statement purposes, this
acquisition was accounted for as a purchase and; accordingly, the results of
operations of CTI subsequent to September 30, 1999, will be included in
OneSource's consolidated statements of operations.
Under the purchase method of accounting, the purchase price is allocated to the
assets acquired and liabilities assumed based on their estimated values at
October 1, 1999, the date of the acquisition. Estimates of the fair values of
the assets and liabilities of CTI have been combined with the recorded values of
the assets and liabilities of OneSource in the unaudited pro forma condensed
financial information.
The following summarizes the purchase accounting by OneSource Information
Services, Inc. to record the Acquisition, including the fair value of the assets
acquired and liabilities assumed and the excess of the acquisition price over
the fair value of the assets acquired and liabilities assumed. The book value of
tangible assets acquired and liabilities assumed approximate their fair value.
<TABLE>
<S> <C>
Cash purchase price $ 7,606
Fair value of liabilities assumed 2,464
Cash to be paid for unvested stock options 232
Acquisition related expenses of OneSource 204
Elimination of intercompany accounts 104
-------
$10,610
=======
</TABLE>
The purchase price is allocated to the tangible and intangible assets acquired
based on their fair values as follows:
<TABLE>
<S> <C>
Net tangible assets $ 1,028
Trademark 145
Subscriber list 1,150
Database 986
Non-compete agreement 400
Goodwill 6,901
-------
$10,610
=======
</TABLE>
The following describes the pro forma adjustments in the accompanying unaudited
pro forma condensed financial information:
(A) To record the cash consideration exchanged in the Acquisition.
(B) To record liability for cash to be paid for unvested stock options of CTI.
(C) To eliminate the historical stockholders' deficit of CTI.
19
<PAGE> 20
(D) To record OneSource's acquisition related costs.
(E) To eliminate intercompany transactions and balances between OneSource and
CTI.
(F) To record amortization of intangible assets over useful lives of three to
seven years.
(G) To eliminate interest income associated with the funds used for
acquisition of CTI.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
OneSource Information Services, Inc.
Date: December 13, 1999 By: /s/ Roy D. Landon
-------------------- ---------------------------------------
Roy D. Landon
Vice President, Chief Financial Officer
(Principal Financial Officer)
21
<PAGE> 22
EXHIBIT INDEX
Exhibit
Index
2.1* Agreement and Plan of Merger among OneSource Information Services, Inc.
and Corporate Technology Information Services, Inc. dated September 8,
1999.
2.2* Escrow Agreement dated September 8, 1999 by and among the Registrant,
Corporate Technology Information Services, Inc., Andrew Campbell and
Citizens Bank of Massachusetts.
23.1 Consent of PricewaterhouseCoopers LLP
27.1 Financial Data Schedule
99.1* Press release of the registrant dated September 9, 1999.
99.2* Press release of the registrant dated October 1, 1999.
* previously filed
22
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 333-85363) of OneSource Information Services, Inc.
of our report dated October 22, 1999, relating to the financial statements of
Corporate Technology Information Services, Inc., appearing in Amendment 1 to the
Current Report in Form 8-K/A of OneSource Information Services, Inc. dated
December 13, 1999.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 13, 1999
23
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM ONESOURCE
INFORMATION SERVICES INC.'S PRO FORMA CONDENSED BALANCE SHEET (UNAUDITED) FOR
SEPTEMBER 30, 1999 AND PRO FORMA CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1
<CASH> 14,711
<SECURITIES> 0
<RECEIVABLES> 7,131
<ALLOWANCES> 357
<INVENTORY> 43
<CURRENT-ASSETS> 27,425
<PP&E> 8,626
<DEPRECIATION> 5,551
<TOTAL-ASSETS> 41,115
<CURRENT-LIABILITIES> 26,876
<BONDS> 0
0
0
<COMMON> 100
<OTHER-SE> 13,979
<TOTAL-LIABILITY-AND-EQUITY> 41,115
<SALES> 29,225
<TOTAL-REVENUES> 29,225
<CGS> 11,177
<TOTAL-COSTS> 11,177
<OTHER-EXPENSES> 23,987
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 459
<INCOME-PRETAX> (4,898)
<INCOME-TAX> (31)
<INCOME-CONTINUING> (4,867)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,867)
<EPS-BASIC> (0.58)
<EPS-DILUTED> (0.58)
</TABLE>
