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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
Amendment No. 1 to
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported):
June 7, 1999
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CERIDIAN CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 1-1969 52-0278528
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
8100 34th Avenue South, Minneapolis, Minnesota 55425
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (612) 853-8100
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Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
a. FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
Financial statements of ABR Information Services, Inc.
("ABR"), a Florida corporation, (as of and for each of the
fiscal years ended July 31, 1998, 1997 and 1996 (including the
accountants' report thereon)) are contained in the Annual
Report on Form 10-K of ABR for the fiscal year ended July 31,
1998 (File No. 0-24132). Unaudited financial statements of ABR
(as of and for the three-month periods ended October 31, 1998,
January 31, 1999 and April 30, 1999) are contained in the
Quarterly Reports on Form 10-Q of ABR for the quarters ended
October 31, 1998, January 31, 1999 and April 30, 1999 (File
No. 0-24132). All of the above mentioned financial statements
are incorporated herein by reference.
b. PRO FORMA FINANCIAL INFORMATION.
The following unaudited pro forma combined financial
information, including the notes thereto, give effect to the
(1) acquisition of ABR, (2) addition of $210.0 million of
indebtedness under our revolving credit facility, (3) issuance
of $450 million of 7.25% Senior Notes Due June 1, 2004, and
(4) application of the net proceeds from the senior notes
offering and the borrowings under the revolving credit
facility, and are qualified in their entirety by reference to,
and should be read in conjunction with, our historical
consolidated financial statements and ABR's historical
consolidated financial statements. We report on a calendar
year basis, while ABR reports on the basis of a fiscal year
ending July 31. The unaudited pro forma combined statements of
operations data includes the calendar year 1998 for us and the
twelve months ended October 31, 1998 for ABR. The unaudited
pro forma combined statements of operations data includes the
six months ended June 30, 1999 and 1998 for us and the six
months ended April 30, 1999 and 1998 for ABR. For the
statements of operations, the acquisition of ABR and additions
to debt are treated as if they had taken place on January 1,
1998. In combining the financial information, we have made
certain reclassifications to ABR's historical financial
statements to conform to our presentation. The unaudited pro
forma combined statements of operations data do not reflect
any adjustments for cost savings that may be realized as a
result of combining our operations with ABR's operations
following the acquisition of ABR. No unaudited pro forma
combined balance sheet is included since the results of the
ABR acquisition are included in our consolidated balance sheet
as of June 30, 1999, which consolidated balance sheet appears
in Part I, Item 1 of our Quarterly Report on Form 10-Q for the
quarter ended June 30, 1999, which consolidated balance sheet
is incorporated herein by reference.
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We have prepared the unaudited pro forma combined financial
statements based upon currently available information and
assumptions that we have deemed appropriate. This pro forma
information may not be indicative of what actual results would
have been, nor does such data purport to represent the
combined financial results of us and ABR for future periods.
In addition, the pro forma adjustments set forth in the
following unaudited pro forma combined financial information
are estimated and may differ from final adjustments.
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1998 FOR CERIDIAN AND
TWELVE MONTHS ENDED OCTOBER 31, 1998 FOR ABR
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HISTORICAL PRO FORMA
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CERIDIAN ABR ADJUSTMENTS NOTES COMBINED
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(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenue.................................................. $1,162.1 $83.4 $ - $1,245.5
Costs and Expenses
Cost of revenue....................................... 551.5 47.3 - 598.8
Selling, general and administrative................... 316.0 15.8 20.3 C1 352.1
Research and development.............................. 77.8 - - 77.8
Other expense (income)................................ (6.8) 21.8 - C2 15.0
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Total costs and expenses........................... 938.5 84.9 20.3 1,043.7
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Earnings (loss) before interest and taxes................ 223.6 (1.5) (20.3) 201.8
Interest income....................................... 10.4 5.3 (4.6) C3 11.1
Interest expense...................................... (4.3) - (42.9) C4 (47.2)
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Earnings before income taxes............................. 229.7 3.8 (67.8) 165.7
Income tax provision..................................... 65.3 4.7 (16.6) C5 53.4
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Earnings (loss) from continuing operations............... $ 164.4 $(0.9) $(51.2) $ 112.3
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Basic shares used in calculations (in 000s) 144,070 144,070
Historical basic earnings from continuing operations per
share as reported $1.14
Pro forma basic earnings from continuing operations per
share $ .78
Diluted shares used in calculations (in 000s) 147,597 147,597
Historical diluted earnings from continuing operations per
share as reported $1.11
Pro forma diluted earnings from continuing operations per
share $ .76
</TABLE>
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UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS DATA
<TABLE>
<CAPTION> SIX MONTHS ENDED JUNE 30, 1998 FOR CERIDIAN AND
SIX MONTHS ENDED APRIL 30, 1998 FOR ABR
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HISTORICAL PRO FORMA
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CERIDIAN ABR ADJUSTMENTS NOTES COMBINED
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(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenue.......................................................... $566.4 $ 35.3 $ - $601.7
Costs and Expenses
Cost of revenue............................................... 263.9 20.1 - 284.0
Selling, general and administrative........................... 159.8 6.6 10.5 C1 176.9
Research and development...................................... 37.7 - - 37.7
Other expense (income)........................................ 1.8 9.0 - C2 10.8
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Total costs and expenses................................... 463.2 35.7 10.5 509.4
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Earnings (loss) before interest and taxes........................ 103.2 (0.4) (10.5) 92.3
Interest income............................................... 5.2 2.6 (2.3) C3 5.5
Interest expense.............................................. (2.2) - (21.5) C4 (23.7)
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Earnings before income taxes..................................... 106.2 2.2 (34.3) 74.1
Income tax provision............................................. 39.1 4.5 (8.3) C5 35.3
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Earnings (loss) from continuing operations....................... $ 67.1 $ (2.3) $(26.0) $ 38.8
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Basic shares used in calculations (in 000s) 144,521 144,521
Historical basic earnings from continuing operations per share as
reported $ .46
Pro forma basic earnings from continuing operations per share
$ .27
Diluted shares used in calculations (in 000s) 147,930 147,930
Historical diluted earnings from continuing operations per share
as reported $ .45
Pro forma diluted earnings from continuing operations per share
$ .26
</TABLE>
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UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1999 FOR CERIDIAN AND
SIX MONTHS ENDED APRIL 30, 1999 FOR ABR
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HISTORICAL PRO FORMA
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CERIDIAN ABR ADJUSTMENTS NOTES COMBINED
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(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENTS OF OPERATIONS DATA:
Revenue........................................................... $643.6 $ 58.1 $ - $701.7
Costs and Expenses
Cost of revenue................................................ 296.1 31.2 - 327.3
Selling, general and administrative............................ 186.1 11.3 9.2 C1 206.6
Research and development....................................... 37.1 - - 37.1
Other expense (income)......................................... 1.7 - - 1.7
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Total costs and expenses.................................... 521.0 42.5 9.2 572.7
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Earnings (loss) before interest and taxes......................... 122.6 15.6 (9.2) 129.0
Interest income................................................ 3.8 1.8 (2.3) C3 3.3
Interest expense............................................... (4.1) - (21.5) C4 (25.6)
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Earnings before income taxes...................................... 122.3 17.4 (33.0) 106.7
Income tax provision.............................................. 44.8 6.3 (8.3) C5 42.8
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Earnings (loss) from continuing operations........................ $ 77.5 $ 11.1 $(24.7) $ 63.9
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Basic shares used in calculations (in 000s) 144,338 144,338
Historical basic earnings from continuing operations per share as
reported $ .54
Pro forma basic earnings from continuing operations per share
$ .44
Diluted shares used in calculations (in 000s) 148,981 148,981
Historical diluted earnings from continuing operations per share
as reported $ .52
Pro forma diluted earnings from continuing operations per share
$ .43
</TABLE>
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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION
NOTE A. THE ABR ACQUISITION
On May 3, 1999, we and ABR Information Services, Inc. ("ABR") jointly
announced a definitive merger agreement providing for our acquisition of ABR at
a price of $25.50 per share. The agreement provided for a tender offer for all
outstanding ABR shares, followed by a merger of a wholly owned subsidiary of
ours into ABR, and the exchange of Ceridian stock options for certain
unexercised ABR stock options.
As of June 4, 1999, the expiration date of the tender offer, 28,271,063 shares,
or 98.3% of the outstanding shares of ABR, had been validly tendered and $720.9
million was paid for the tendered shares. On July 22, 1999, the effective date
of the merger, we deposited $12.7 million with a paying agent for distribution
to the holders of the 497,788 ABR shares that remained outstanding and had
automatically converted into the right to receive $25.50 per share in cash
pursuant to the terms of the merger agreement. Also in July, we made payments
totaling $10.6 million to holders who exercised ABR stock options subsequent to
the date of the tender offer, representing the aggregate excess of the $25.50
per share tender price over the option exercise price, bringing the total cash
paid for ABR shares to $744.2 million. Direct acquisition costs amounted to
$6.8, bringing the cash purchase cost to $751.0 million. We issued stock options
with a fair value of $11.7 million in exchange for the remaining ABR stock
options, bringing the equity purchase price to a total of $762.7 million. The
valuation of net tangible assets of ABR received amounted to $110.7 million and
the total goodwill and other intangibles of $652.0 million is expected to be
amortized on average over a 30 year period. The equity purchase price will be
allocated to the assets of ABR based on their respective estimated fair values.
The allocation of purchase price to specific assets has not been completed.
NOTE B. OTHER ACQUISITIONS
During the first quarter of 1999, we acquired a majority interest in
Stored Value Systems, Inc. for cash payments totaling $20.3 million, as further
described in our Quarterly Report on Form 10-Q for the quarter ended March 31,
1999. This acquisition is deemed not material to our financial position or
results of operations and no adjustment to periods prior to its acquisition date
have been made.
NOTE C. NOTES TO THE UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS DATA
No adjustments to the historical financial statements have been made to
reflect the conforming of the accounting policies of the combined companies. The
nature and extent of such adjustments, if any, will be based upon further study
and are not expected to be significant. In combining the financial information,
we have made certain reclassifications to ABR's historical financial statements
to conform to our presentation. Such reclassifications may be refined in the
future as the result of further study, but such refinements are not expected to
materially affect the comparison of the pro forma data with historical or future
presentations of financial position or results of operations.
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NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION (CONTINUED)
The numbered adjustments appearing below are included in the pro forma
combined statements of operations data and give effect to events that are
directly attributable to the ABR acquisition, are factually supportable and are
expected to have continuing impact.
1) Reflects amortization of the total of the excess of the equity purchase
price of the ABR acquisition over the fair value of the net assets
acquired (goodwill) and other intangibles of $652.0 million, reduced by
ABR's historical goodwill amortization for the periods presented, over
an average life of 30 years, which average life we believe is
appropriate. Upon completion of an appraisal of ABR assets, the value
of each intangible asset will be finally determined and such estimated
average life could change. Proposed accounting rule changes or the SEC
also could require a decrease in this amortization period.
2) Included in ABR historical amounts are reclassifications of ABR income
and expense items to "other expense (income)" of $11.0 million for the
write-off of purchased in-process research and development related to
the acquisition of Business Computer Services, Inc. in April 1998,
$13.8 million related to a software write-off in October 1998 and lease
income of $3.0 million for the twelve months ended October 31, 1998 and
$2.0 million for the six months ended April 30, 1998.
3) Reflects forgone interest income at an annual average interest rate of
5% on $91.0 million of combined cash balances to be used for financing
the acquisition of ABR.
4) Reflects interest expense related to the debt of $660.0 million
incurred to finance the acquisition of ABR at an blended annual
interest rate of 6.5%. The blended annual interest rate on these
borrowings is subject to variability. An increase or decrease of 0.125%
in this rate would incrementally decrease or increase pro forma
combined annual earnings from continuing operations by approximately
$0.5 million.
5) Reflects the income tax effect of decreased interest income and
increased interest expense at the effective tax rate of 35%. We expect
our effective income tax rate to be higher in the future because a
significant portion of the purchase price (goodwill) will be
nondeductible for tax purposes.
c. EXHIBITS.
23.1 Consent of Grant Thornton LLP.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CERIDIAN CORPORATION
/s/ Loren D. Gross
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Loren D. Gross
Vice President and Corporate Controller
Dated: August 20, 1999
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INDEX TO EXHIBITS
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<CAPTION>
Exhibit No. Item Method of Filing
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<S> <C> <C>
23.1 Consent of Grant Thornton LLP Filed electronically herewith.
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Exhibit 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
of Ceridian Corporation:
We have issued our reports dated November 11, 1998, accompanying the
consolidated financial statements and schedule included in the Annual Report of
ABR Information Services, Inc. on Form 10-K for the year ended July 31, 1998. We
hereby consent to the incorporation by reference of said reports in the
Registration Statements of Ceridian Corporation on Form S-8 on File Nos.
33-49601, 33-61551, 33-34035, 2-97570, 33-56833, 33-54379, 33-56325, 33-62319,
33-64913, 333-01793, 333-01887, 333-03661, 333-28069, 333-58143, 333-58145,
333-66643, 333-50757 and 333-83455.
/s/ GRANT THORNTON LLP
Tampa, Florida
August 17, 1999
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