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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K/A
Amendment No. 1
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) March 8, 1996
Commission File Number 0-25104
CONTINENTAL INFORMATION SYSTEMS
CORPORATION
(Exact name of registrant)
New York 16-0956508
(State of organization) (I.R.S. Employer Identification Number)
One Northern Concourse, P.O. Box 4785, Syracuse, New York 13221-4785
(Address of principal executive offices and zip code)
(315) 455-1900
(Registrant's telephone number)
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<PAGE>
Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquired
*Report of Independent Accountants
*Balance Sheets of GMCCCS Corp. (dba LaserAccess) as of December 31,
1995 and 1994
*Statements of Operations and Retained Earnings (Accumulated
deficit) of GMCCCS Corp. (dba LaserAccess) for the year ended
December 31, 1995, the seven months ended December 31, 1994, the
year ended May 31, 1994 and the year ended May 31, 1993
*Statements of Cash Flows of GMCCCS Corp. (dba LaserAccess) for the
year ended December 31, 1995, the seven months ended December 31,
1994, the year ended May 31, 1994 and the year ended May 31, 1993
*Notes to Financial Statements
(b) Pro Forma Financial Information
Unaudited Pro Forma Consolidated Balance Sheet as of February 29,
1996
Unaudited Pro Forma Consolidated Statement of Operations for the
nine months ended February 29, 1996
Unaudited Pro Forma Consolidated Statement of Operations for the
year ended May 31, 1995
Notes to Unaudited Pro Forma Consolidated Statements
(c) Exhibits
2.1 *Stock Purchase Agreement among CIS Corporation, GMCCCS
Corp. (dba LaserAccess), Greg M. Cody and Charles C.
Sinks, dated March 8, 1996
10.1 *Employment Agreement between CIS Corporation and Greg M.
Cody, dated March 8, 1996
10.2 *Employment Agreement between CIS Corporation and Charles
C. Sinks, dated March 8, 1996
- ------------------------
*Previously filed with the Company's Form 8-K on March 21, 1996.
<PAGE>
SIGNATURE
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.
CONTINENTAL INFORMATION SYSTEMS
CORPORATION
BY: /s/ Frank J. Corcoran
-----------------------
Frank J. Corcoran
Senior Vice President,
Chief Financial Officer
and Treasurer
Dated: May 3, 1996
<PAGE>
INDEX TO PRO FORMA FINANCIAL INFORMATION
Unaudited Pro Forma Consolidated Balance Sheet
as of February 29, 1996
Unaudited Pro Forma Consolidated Statement of Operations
for the nine months ended February 29, 1996
Unaudited Pro Forma Consolidated Statement of Operations
for the year ended May 31, 1995
Notes to Unaudited Pro Forma Consolidated Statements
<PAGE>
CONTINENTAL INFORMATION SYSTEMS CORPORATION
Unaudited Pro Forma Consolidated Financial Information
On March 8, 1996, Continental Information Systems Corporation (the "Company"),
through its wholly-owned subsidiary, CIS Corporation, acquired 100% of the
capital stock of GMCCCS Corp. (doing business as "LaserAccess") for a purchase
price of approximately $4,608,000, payable in cash of approximately $2,304,000
at closing and the balance of approximately $2,304,000 in the form of notes
payable in three equal annual installments, commencing March 8, 1997, with
interest of 8.25% on the unpaid principal balance.
The acquisition was accounted for using the purchase method of accounting.
Allocations of the purchase price have been determined based upon preliminary
estimates of fair market value and, therefore, are subject to change.
Differences between the amounts included herein and the final allocations are
not expected to be material. The pro forma statements should be read in
conjunction with the historical financial statements of the Company and
LaserAccess.
The following Pro Forma Consolidated Statements of Operations for the nine
months ended February 29, 1996 and for the year ended May 31, 1995 have been
prepared as if the purchase transaction had occurred at the beginning of fiscal
1995. The Pro Forma Balance Sheet at February 29, 1996 has been prepared as if
the purchase accounting had been applied at that date.
The Company has a fiscal year ending on May 31, whereas LaserAccess has a fiscal
year ending on December 31. Therefore, the accompanying Pro Forma Consolidated
Balance Sheet combines balances from the Company and LaserAccess on these
respective dates. The accompanying Pro Forma Consolidated Statements of
Operations for the nine months ended February 29, 1996 includes the Company's
Results of Operations for the nine months ended February 29, 1996 and
LaserAccess' Results of Operations for the nine months ended December 31, 1995.
The accompanying Pro Forma Consolidated Statements of Operations for the year
ended May 31, 1995, includes the Company's Results of Operations for the six
months ended May 31, 1995 (Reorganized Company) and the six months ended
November 30, 1994 (Predecessor Company). (As disclosed previously, for financial
reporting purposes, the emergence from bankruptcy protection was recorded as of
November 30, 1994 and to distinguish between the operations of the Company after
reorganization (sometimes referred to as the "Reorganized Company") and
operations prior to reorganization, the term "Predecessor Company" is used when
reference is made to pre-reorganization periods). Additionally, the Pro Forma
Consolidated Statements of Operations for the year ended May 31, 1995, include
LaserAccess' Results of Operations for the twelve months ended March 31, 1995.
Reorganization items and Loss from Discontinued Operations have been excluded
from the Pro Forma Results of Operations to more closely represent normal
operations.
The pro forma adjustments are based upon available information and certain
assumptions that management believes are reasonable.
The Pro Forma Statements do not purport to represent what the Company's Results
of Operations would actually have been if such transactions had occurred at the
beginning of the period or to project the Results of Operations as of any future
date or for any future period.
<PAGE>
<TABLE>
<CAPTION>
Continental Information Systems Corporation
and its Subsidiaries
In Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
Historical Historical
CIS Laser Access
--- ------------
February 29, 1996 December 31, 1995 Adjustments Pro Forma
----------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents ...................................... $ 6,093 $ 431 $(2,304) (1) $ 4,220
Accounts receivable, net ....................................... 2,951 297 (35) (2) 3,213
Inventory ...................................................... 4,364 597 -- 4,961
Net investment in direct financing leases ...................... 13,675 139 -- 13,814
Rental equipment, net .......................................... 8,515 -- -- 8,515
Net assets of discontinued operations .......................... 1,264 -- -- 1,264
Furniture, fixtures and equipment, net ......................... 727 7 -- 734
Accrued interest and other assets .............................. 2,642 30 -- 2,672
Goodwill ....................................................... -- -- 3,587 (1) 3,587
Deferred tax assets ............................................ 5,691 -- -- 5,691
-------- ------ ------- --------
Total assets ......................................... $ 45,922 $1,501 $ 1,248 $ 48,671
======== ====== ======= ========
Liabilities and Shareholders' Equity:
Liabilities:
Accounts payable and other liabilities ..................... $ 1,512 $ 330 $ 150 (1) $ 1,957
(35) (2)
Discounted lease rental borrowings ......................... 10,188 -- -- 10,188
Income tax liability ....................................... 64 -- -- 64
Note payable to Liquidating Estate ......................... 136 -- -- 136
Notes payable - other ...................................... -- -- 2,304 (1) 2,304
-------- ------ ------- --------
Total liabilities ...................................... 11,900 330 2,419 14,649
-------- ------ ------- --------
Shareholders' Equity:
Common stock ................................................... 70 1 (1) (3) 70
Additional paid-in capital ..................................... 34,930 148 (148) (3) 34,930
Retained earnings (Accumulated deficit) ........................ (978) 1,022 (1,022) (3) (978)
-------- ------ ------- --------
Total shareholders' equity ................................ 34,022 1,171 (1,171) 34,022
-------- ------ ------- --------
Total liabilities and shareholders' equity ................ $ 45,922 $1,501 $ 1,248 $ 48,671
======== ====== ======= ========
See accompanying notes to the unaudited pro forma consolidated financial information.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Continental Information Systems Corporation
and its Subsidiaries
In Thousands (Except per Share Data)
- ------------------------------------------------------------------------------------------------------------------------------------
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED FEBRUARY 29, 1996
Historical Historical
CIS Laser Access
--- -------------
For the nine For the nine
months ended months ended
February 29, 1996 December 31, 1995 Adjustments Pro Forma
----------------- ----------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenues:
Equipment rentals $ 5,083 $ -- $ (3) (1) $ 5,080
Income from direct financing leases 898 8 -- 906
Equipment sales 12,603 4,122 (1,836) (1) 14,889
Interest, fees and other income 1,921 -- -- 1,921
------- ------ ------- -------
20,505 4,130 (1,839) 22,796
------- ------ ------- -------
Costs and Expenses:
Depreciation of rental equipment 2,548 -- -- 2,548
Cost of sales 9,035 2,329 (1,836) (1) 9,528
Interest on secured liabilities 350 -- 143 (4) 493
Investor share, sublease and other
operating expenses 939 -- (3) (1) 936
Selling, general and administrative expense 6,209 1,036 179 (5) 7,424
------- ------ ------- -------
19,081 3,365 (1,517) 20,929
------- ------ ------- -------
Income from continuing operations
before income taxes 1,424 765 (322) 1,867
Provision for income taxes 541 -- (125) (6) 706
290 (7)
------- ------ ------- -------
Income from continuing operations $ 883 $ 765 $ (487) $ 1,161
======= ====== ======= =======
Income per share from continuing operations $ .13 $ .17
======= =======
Weighted average number of shares
outstanding 7,000 7,000
===== =====
See accompanying notes to the unaudited pro forma consolidated financial information.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Continental Information Systems Corporation
and its Subsidiaries
In Thousands (Except per Share Data)
- ------------------------------------------------------------------------------------------------------------------------------------
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1995
Historical CIS
---------------------------------------------------------------
Reorganized Predecessor
Company Company Combined
----------- ----------- --------
For the six For the six For the twelve
months ended months ended months ended
May 31 1995 November 30, 1994 May 31 1995
---------------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Equipment rentals $ 4,726 $ 9,500 $14,226
Income from direct financing leases 621 705 1,326
Equipment sales 4,571 10,771 15,342
Interest, fees and other income 1,844 4,731 6,575
------- ------- -------
11,762 25,707 37,469
------- ------- -------
Costs and Expenses:
Depreciation of rental equipment 1,465 2,865 4,330
Cost of sales 3,496 5,562 9,058
Interest on secured liabilities 277 137 414
Investor share, sublease and other
operating expenses 873 3,627 4,500
Selling, general and administrative expenses 3,418 5,310 8,728
------- ------- -------
9,529 17,501 27,030
------- ------- -------
Income from continuing operations
before income taxes 2,233 8,206 10,439
Provision for income tax 849 45 894
------- ------- -------
Income from continuing operations $ 1,384 $ 8,161 $ 9,545
======= ======= =======
Income per share from continuing operations $ .20 $ 1.16 $ 1.36
======= ======= =======
Weighted average number of shares outstanding 7,000 7,000 7,000
===== ===== =====
<PAGE>
<CAPTION>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED MAY 31, 1995 (Continued)
Historical
Laser Access
------------
For the twelve
months ended
March 31, 1995 Adjustments Pro Forma
---------------------------------------------------------
<S> <C> <C> <C>
Revenues:
Equipment rentals $ - $ (15) (1) $14,211
Income from direct financing leases 132 - 1,458
Equipment sales 4,918 (2,158) (1) 18,102
Interest, fees and other income - - 6,575
------ ------- -------
5,050 (2,173) 40,346
------ ------- -------
Costs and Expenses:
Depreciation of rental equipment - - 4,330
Cost of sales 3,597 (2,158) (1) 10,497
Interest on secured liabilities - (137) (2) 661
194 (3)
Investor share, sublease and other 190 (4)
operating expenses - (15) (1) 4,485
Selling, general and administrative expenses 1,093 239 (5) 10,060
------ ------- -------
4,690 (1,687) 30,033
------ ------- -------
Income from continuing operations
before income taxes 360 (486) 10,313
Provision for income tax - (190) (6) 841
137 (7)
------ ------- -------
Income from continuing operations $ 360 $ (433) $ 9,472
====== ======= =======
Income per share from continuing operations $ 1.35
=======
Weighted average number of shares outstanding 7,000
=====
See accompanying notes to the unaudited pro forma consolidated financial information.
</TABLE>
<PAGE>
CONTINENTAL INFORMATION SYSTEMS CORPORATION
Notes to Unaudited Pro Forma Consolidated Financial Information
(in thousands)
Notes to the Unaudited Pro Forma Consolidated Balance Sheet:
1. The acquisition of GMCCCS (dba LaserAccess) was effected by the payment
of approximately $2,304,000 in cash and the issuance of notes payable
in the amount of approximately $2,304,000 (payable in three equal
annual installments, commencing March 8, 1997, with interest at 8.25%
on the unpaid principal balance) based upon the net assets acquired at
March 8, 1996. The transaction will be accounted for as a purchase. The
total purchase price, historical book value and preliminary adjustments
of book value resulting from the acquisition are summarized as follows
(in thousands):
Purchase price of net assets acquired $4,608
------
Adjustments to determine goodwill:
Historical net book value of net assets acquired (1,171)
To increase current liabilities for financial, legal,
accounting and similar expenses pertaining to
acquisition 150
------
Total adjustments (1,021)
------
Goodwill $3,587
======
The purchase price of approximately $4.6 million is expected to be
funded by cash generated internally from operations. In addition to the
purchase price to be paid in cash and notes, CIS Corporation is
obligated to pay the sellers an annual earn out payment for each of the
first four years following the March 8, 1996 sale. The earn out payment
is based upon the annual pretax income of LaserAccess.
2. To eliminate intercompany receivables/payables.
3. Entries to eliminate the equity of LaserAccess in the Unaudited Pro
Forma Consolidated Balance Sheet are as follows:
Common Stock $ (1)
Additional paid-in capital (148)
Retained earnings (1,022)
-------
$(1,171)
=======
<PAGE>
Notes to the Unaudited Pro Forma Consolidated Statements of Operations:
1. Equipment sales/cost of sales and equipment rentals/investor share,
sublease and other operating expenses have been adjusted to eliminate
intercompany transactions.
2. Interest expense on discounted leases for the Predecessor Company has been
adjusted to eliminate interest on debt obligations of the Liquidating
Estate.
3. Interest expense has been increased to reflect the interest cost on the
estimated average principal balance outstanding, of approximately $4.7
million, on the Note payable to the Liquidating Estate.
4. Interest expense has been increased to reflect the interest cost on the
Notes payable to the former owners of LaserAccess.
5. Selling, general and administrative expense has been increased to reflect
the amortization of goodwill over a fifteen year period.
6. An adjustment has been made for the estimated tax effect of the pro forma
adjustments.
7. LaserAccess formerly operated as a Subchapter S corporation and therefore
did not record tax expense at the corporate level. An adjustment has been
made for the estimated tax effect of LaserAccess' historical income.
