SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM 8-K/A
-----------------------
ACXIOM CORPORATION
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
<PAGE>
The undersigned Registrant hereby amends Item 7 of its Current Report
on Form 8-K dated April 30, 1996 by filing Exhibits 23, 99.1, 99.2 and 99.3 to
that Current Report. Item 7, as amended, appears below in its entirety:
1. Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Audited financial statements of Direct Media/DMI, Inc.
are filed as Exhibit 99.1 hereto and are incorporated
herein by reference. Unaudited interim financial
statements are filed as Exhibit 99.2
(b) Pro forma financial information.
The pro forma financial information required by this
Item is filed as Exhibit 99.3 hereto and is
incorporated herein by reference.
(c) Exhibits.
*2 Asset Purchase Agreement dated April 1,
1996. Registrant agrees to furnish
supplementally to the Securities and
Exchange Commission a copy of the exhibits
to the Asset Purchase Agreement upon
request.
23 Consents of Price Waterhouse LLP
99.1 Audited financial statements of Direct Media/
DMI, Inc.
99.2 Unaudited interim financial statements of
Direct Media/DMI, Inc.
99.3 Pro forma financial information
--------------------------------
* Previously filed.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this amendment to be signed on its behalf by the
undersigned hereunto duly authorized.
ACXIOM CORPORATION
(Registrant)
By: /s/ Catherine L. Hughes
----------------------------------------
Catherine L. Hughes
Secretary and General Counsel
Date: July 11, 1996
<PAGE>
EXHIBIT INDEX
Exhibits to Form 8-K
Number in Exhibit Table Exhibit
*2 Asset Purchase Agreement dated April 1, 1996.
Registrant agrees to furnish supplementally
to the Securities and Exchange Commission a
copy of the exhibits to the Asset Purchase
Agreement upon request.
23 Consents of Price Waterhouse LLP
99.1 Audited financial statements of Direct Media/
DMI, Inc.
99.2 Unaudited interim financial statements of
Direct Media/DMI, Inc.
99.3 Pro forma financial information
- ----------------------------------
* Previously filed.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 (No. 33-63431) of
Acxiom Corporation of our report dated January 3, 1996 relating to the
consolidated financial statements of Direct Media/DMI, Inc., which appears in
the Current Report on Form 8-K/A of Acxiom Corporation dated July 11, 1996.
/s/ Price Waterhouse LLP
Stamford, Connecticut
July 11, 1996
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statements on Form S-8 (No. 33-17115,
No. 33-37609, No. 33-37610, No. 33-42351, No. 33-72310, No. 33-72312,
No. 33-63423, and No. 33-03391) of Acxiom Corporation of our report dated
January 3, 1996 relating to the consolidated financial statements of Direct
Media/DMI, Inc., which appears in the Current Report on Form 8-K/A of Acxiom
Corporation dated July 11, 1996.
/s/ Price Waterhouse LLP
Stamford, Connecticut
July 11, 1996
<PAGE>
EXHIBIT 99.1
DIRECT MEDIA/DMI, INC.
Consolidated Financial Statements
September 2, 1995 and September 3, 1994
<PAGE>
DIRECT MEDIA/DMI, INC.
Table of Contents to Consolidated Financial Statements
Page
Report of Independent Accountants 1
Consolidated Balance Sheet 2
Consolidated Statement of Income and Retained Earnings 3
Consolidated Statement of Cash Flows 4
Notes to Consolidated Financial Statements 5-8
<PAGE>
Report of Independent Accountants
January 3, 1996
To the Board of Directors and Stockholders of
Direct Media/DMI, Inc.
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income and retained earnings and of cash flow,
present fairly, in all material respects, the financial position of Direct
Media/DMI, Inc. and its consolidated affiliates at September 2, 1995 and
September 3, 1994, and the results of their operations and their cash flows for
the years then ended in conformity with generally accepted accounting
principles. These financial statements are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits 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 audits provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
<PAGE>
DIRECT MEDIA/DMI, INC.
Consolidated Balance Sheet
Assets
September 2, September 3,
1995 1994
Current assets:
Cash and cash equivalents $ 1,297,137 $ 1,211,825
Accounts receivable from mailers,
less allowance for doubtful
accounts of $334,885 and $316,273,
respectively 11,279,862 11,733,979
Prepaid expenses and other current
assets 553,498 679,576
---------- ----------
Total current assets 13,130,497 13,625,380
---------- ----------
Noncurrent assets:
Fixed assets, net 8,679,010 8,930,631
Deferred financing costs 231,114 241,443
---------- ----------
Total noncurrent assets 8,910,124 9,172,074
---------- ----------
Total assets $ 22,040,621 $ 22,797,454
========== ==========
Liabilities and stockholders' equity
Current liabilities:
Amounts due to list owners $ 1,404,651 $ 2,515,207
Accrued liabilities 7,808,863 9,213,274
Notes payable to bank - current portion 4,900,257 656,000
Obligation under lease agreement 111,902 88,685
Deferred revenues 73,740 104,096
Deferred compensation 699,200 -
---------- ----------
Total current liabilities 14,998,613 12,577,262
---------- ----------
Noncurrent liabilities:
Notes payable to bank - 4,643,920
Obligation under lease agreement 560,708 689,721
Deferred compensation 4,886,809 -
Other - 9,975
---------- ----------
Total noncurrent liabilities 5,447,517 5,343,616
---------- ----------
Stockholders' equity:
Capital stock, $1 par value; authorized
- 5,000 shares; issued - 1,000 shares;
outstanding - 986 shares in 1995 and
460 shares in 1994 986 460
Capital in excess of par value 1,851,084 10,610
Retained earnings (accumulated deficit) (236,579) 5,675,506
---------- ----------
1,615,491 5,686,576
Less - Treasury stock at cost - 14 shares
in 1995 and 540 shares in 1994 (21,000) (810,000)
---------- ----------
Total stockholders' equity 1,594,491 4,876,576
---------- ----------
Total liabilities and stockholders'
equity $ 22,040,621 $ 22,797,454
========== ==========
See accompanying notes to the financial statements.
<PAGE>
DIRECT MEDIA/DMI, INC.
Consolidated Statement of Income and Retained Earnings
For the year ended
September 2, September 3,
1995 1994
Revenues:
List brokerage and management revenues $ 39,465,537 $ 34,151,456
Other income 351,697 267,678
---------- ----------
Total revenues 39,817,234 34,419,134
---------- ----------
Expenses:
Selling expenses 17,776,009 14,856,026
General and administrative expenses 18,122,730 16,479,533
Compensation expense (Note 10) 8,216,009 -
Depreciation and amortization 1,358,368 1,092,004
Interest expense, net 256,203 423,039
---------- ----------
Total expenses 45,729,319 32,850,602
---------- ----------
Net (loss) income (5,912,085) 1,568,532
Retained earnings at beginning of year 5,675,506 4,106,974
---------- ----------
Retained earnings (accumulated deficit)
at end of year $ (236,579) $ 5,675,506
========= ==========
See accompanying notes to the financial statements.
<PAGE>
DIRECT MEDIA/DMI, INC.
Consolidated Statement of Cash Flows
For the year ended
September 2, September 3,
1995 1994
Cash flows from operating activities:-
Net income $ (5,912,085) $ 1,568,532
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 1,358,368 1,092,004
Gain on sale of assets (41,985)
Accretion of obligation under lease
agreement 81,208 78,713
(Increase) decrease in operating assets:
Accounts receivable from mailers 454,117 (2,686,366)
Prepaid expenses and other current
assets 124,244 (78,737)
Other assets 116,902
Amounts due to list owners (1,110,556) (14,314)
Increase (decrease) in operating
liabilities:
Accrued liabilities (1,414,386) 3,172,572
Deferred revenues (30,356) (39,745)
Deferred compensation 8,216,009 -
---------- ----------
Total adjustments 7,678,648 1,599,044
---------- ----------
Net cash provided by operating activities 1,766,563 3,167,576
---------- ----------
Cash flows from investing activities:
Purchase of fixed assets (1,094,584) (1,991,469)
Proceeds from sale of fixed assets - 61,953
---------- ----------
Net cash used for investing activities (1,094,584) (1,929,516)
---------- ----------
Cash flows from financing activities:
Repayment of notes payable (399,663) (200,332)
Payment of obligation under lease
agreement, net of sublease income (187,004) (276,177)
---------- ----------
Net cash used for financing activities (586,667) (476,509)
---------- ----------
Net increase in cash and cash equivalents 85,312 761,551
Cash and cash equivalents at beginning of
year 1,211,825 450,274
---------- ----------
Cash and cash equivalents at end of year $ 1,297,137 $ 1,211,825
========== ==========
Cash paid during the year for:
Interest $ 523,746 $ 475,230
========== ==========
See accompanying notes to the financial statements.
<PAGE>
DIRECT MEDIA/DMI, INC.
Notes to Consolidated Financial Statements
NOTE 1 - DESCRIPTION OF THE COMPANY:
Direct Media/DMI, Inc. (the "Company"), a New York corporation, is engaged in
mailing list management and list brokerage. The Company's fiscal year ends on
the Saturday closest to August 31 for financial statement reporting purposes. As
further described below, the Company's tax year ends on the Friday closest to
November 30.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
The following is a summary of significant accounting policies followed by the
Company:
Basis of presentation:
The accompanying consolidated financial statements include the accounts of the
Company; SPD Associates, an 84% owned real estate partnership which owns the
facilities in Greenwich, Connecticut occupied by the Company, Direct Media,
Canada, Inc., a joint venture controlled by the Company and another joint
venture, Direct Media (UK) Limited. All material transactions among the
consolidated entities have been eliminated in the preparation of the
consolidated financial statements.
Revenue recognition:
The Company's share of revenues from list brokerage and list management services
is recognized upon delivery by the Company of the owner's mailing list to the
mailer's data processing service center. Provision is made for estimated revenue
adjustments resulting from mailing list data integrity checks and other data
processing steps performed by the mailer's service center.
Accounts receivable from mailers:
Accounts receivable from mailers represents the outstanding balance of the
Company's share of revenues based on gross billings to third party mailers.
Should the mailer fail to remit to the Company all or a portion of the billings
earned by the list owner (see Note 6), the Company has no contractual obligation
to remit such uncollected funds to the list owner.
Fixed assets:
Fixed assets are recorded at cost, less accumulated depreciation. Depreciation
of furniture and fixtures, buildings, autos and computer equipment is provided
based on tax accelerated methods over the estimated useful lives of 5 to 31.5
years.
See accompanying notes to the financial statements.
<PAGE>
Cash and cash equivalents:
The Company considers all highly liquid investments having original maturities
of three months or less to be cash equivalents.
Tax elections:
The Company has elected, under Internal Revenue Code Section 1362(a), to be
taxed as an S corporation whereby income is taxed directly to the stockholders.
The Company has also elected to be taxed as an S corporation in New York State
pursuant to Section 660 of Article 22 of the New York State tax law. The Company
is taxed as a regular corporation in Connecticut.
NOTE 3 - FIXED ASSETS:
A summary of the Company's fixed assets at September 2, 1995 and September 3,
1994 is as follows:
1995 1994
---- ----
Land $ 1,917,724 $ 1,917,724
Buildings and improvements 6,762,868 6,724,267
Furniture and fixtures 651,478 539,118
Office equipment 3,110,546 2,229,273
Autos and other 745,344 680,632
---------- ----------
13,187,960 12,091,014
Less - Accumulated depreciation (4,508,950) (3,160,383)
---- ---------- ----------
$ 8,679,010 $ 8,930,631
========== ==========
NOTE 4 - NOTES PAYABLE:
At September 2, 1995 and September 3, 1994, the Company had $4,900,257 and
$5,299,920, respectively, of borrowings outstanding under the terms of a Note
Agreement with a commercial bank at an interest rate of 10.25% and 8.75%,
respectively, secured by the Company's Greenwich facilities. The Company is
currently negotiating the terms of the outstanding debt. As no agreement is
presently in place, the total outstanding balance of $4,900,257 has been
classified as current in the consolidated balance sheet.
At September 2, 1995, the Company had available lines of credit of $4,000,000.
No funds have been withdrawn from the available line of credit.
<PAGE>
NOTE 5 - OBLIGATION UNDER LEASE AGREEMENT:
The Company is obligated under a long-term lease agreement expiring in fiscal
2004 for rentals on its former headquarters facility in Port Chester, New York.
The present value of the future minimum lease payments, net of sublease income,
in the amount of $672,610 and $778,406 is reflected in the accompanying
financial statements as of September 2, 1995 and September 3, 1994,
respectively. The Company has no other material lease commitments.
NOTE 6 - ACCOUNTS RECEIVABLE FROM MAILERS:
The Company, acting in the capacity of agent for its list owner clientele, has
offset in the accompanying consolidated balance sheet the portion of the gross
receivable due from third party mailers with the corresponding amount due to the
list owners upon collection. The liability shown as "amounts due to list owners"
in the balance sheet at September 2, 1995 and September 3, 1994 represents
amounts collected by the Company on behalf of list owners and in the process of
remittance. The gross amounts of accounts receivable from mailers and amounts
due to list owners which have been offset are as follows:
1995 1994
Accounts receivable from mailers $ 63,594,577 $ 59,818,450
Amounts due to list owners (54,097,830) (50,378,198)
Unbilled revenues 2,118,000 2,610,000
Allowance for doubtful accounts (334,885) (316,273)
---------- ----------
Accounts receivable from mailers, net $ 11,279,862 $ 11,733,979
========== ==========
Unbilled revenues at September 2, 1995 and September 3, 1994 represent mailing
lists delivered to the Company's customers as of year-end which were not yet
billed.
NOTE 7 - INVESTMENT IN UNCONSOLIDATED AFFILIATE:
During 1994, the Company had a 50% equity interest in Direct Media (UK) Limited,
a list brokerage firm based in London, England. The Company had historically
accounted for its investment under the equity method. During 1994, the Company
decided to discontinue its relationship with Direct Media (UK) Limited. The
discontinuance was finalized in fiscal 1995 and the effects of the
discontinuance were not material to the results or operations of the Company.
NOTE 8 - BENEFIT PLAN:
The Company has a defined contribution profit sharing plan which allows for a
maximum contribution of 15% of all eligible employees' salaries. Contributions
to the plan totaled $485,000 for the years ended September 2, 1995 and September
3, 1994.
<PAGE>
NOTE 9 - RELATED PARTY TRANSACTIONS:
Included in gross accounts receivable from mailers, as disclosed in Note 6, is
$1,178,117 and $846,560 as of September 2, 1995 and September 3, 1994,
respectively, due from a list brokerage company controlled by a stockholder of
the Company. Management believes such amount is fully collectible.
NOTE 10 - SHAREHOLDER AGREEMENTS:
During 1995, the Company entered into Shareholder Agreements (the "Agreements")
with all shareholders who are also employees of the Company. The Agreements
cover 956 of the 986 outstanding common shares of the Company as of September 2,
1995, including 526 shares issued from treasury during 1995, at no cost to the
employees. Under the Agreements, the Company, at its sole discretion, will
repurchase the shares at $16,500 per share upon the occurrence of a purchasing
event as defined in the Agreements. The purchase price for the shares is subject
to annual adjustment by the Company's Board of Directors. Should the Company
decide to purchase the shares, the shareholder will be entitled to receive the
proceeds in five equal annual installments plus interest. The shares vest upon
the earlier of attainment of age 62 or 20 years (in certain cases 25 years) of
service to the Company.
The total amount under the Agreements to be charged to operations over the
vesting period as compensation expense is $13,624,000, of which $8,216,009 was
charged in fiscal 1995 and the balance of $5,407,991 will be charged in the
periods shown in the table below. Ultimately, the total compensation charge of
$13,624,000 will appear in the company's balance sheet as a liability for
deferred compensation in the amount of $10,994,000 and a credit to capital for
$2,630,000.
The remaining compensation charge to be recorded in each of the following five
years, and thereafter, is as follows:
Fiscal year Amount
1996 $ 1,621,886
1997 738,232
1998 311,982
1999 311,982
2000 311,982
Thereafter 2,111,927
--------------
Total $ 5,407,991
==============
<PAGE>
EXHIBIT 99.2
Direct Media/DMI, Inc.
Unaudited Consolidated Balance Sheet
December 31, 1995
Assets
Current assets
Cash & cash equivalents $ -
Accounts receivable from mailers, net 13,871,615
Prepaid expenses and other current assets 443,556
----------
Total current assets 14,315,171
Noncurrent assets
Fixed assets, net 8,743,881
Other assets 225,949
----------
Total noncurrent assets 8,969,830
----------
Total assets 23,285,001
==========
Liabilities and stockholders' equity
Current liabilities
Amounts due to list owners 1,623,310
Accrued liabilities 2,977,679
Short-term note payable bank 8,178,109
Notes payable to bank - current portion 4,766,925
Obligation under lease 111,902
----------
17,657,925
Noncurrent liabilities
Obligation under lease agreement 560,708
Deferred compensation 5,819,076
----------
6,379,784
Stockholders' equity
Capital Stock, $1 par value; authorized -
5,000 shares issued - 1,000 shares;
outstanding - 986 shares 986
Capital in excess of par value 1,851,084
Retained earnings (2,583,778)
----------
(731,708)
Less - Treasury stock at cost - 14 shares (21,000)
----------
Total stockholders' equity (752,708)
----------
----------
Total liabilities and stockholders' equity $ 23,285,001
==========
<PAGE>
Direct Media/DMI, Inc.
Unaudited Consolidated Statements of Income
For the four months
ended December 31,
1995 1994
---- ----
Revenues
List brokerage and management revenues $ 13,737,619 14,237,786
Other income 882,410 359,342
-----------------------------
Total revenues 14,620,029 14,597,128
Expenses
Selling expenses 7,324,581 3,982,884
General and administrative expenses 8,662,542 4,810,271
Deferred compensation expense 233,067 -
Depreciation and amortization 403,978 177,942
Interest expense, net 343,060 163,570
-----------------------------
Total expenses 16,967,228 9,134,666
-----------------------------
Net income $ (2,347,199) 5,462,462
=============================
<PAGE>
Direct Media/DMI, Inc.
Unaudited Consolidated Statement of Cash Flows
For the four months
ended December 31,
1995 1994
---- ----
Cash flows from operating activities:
Net income (loss) $ (2,347,199) 5,462,462
Adjustments to reconcile net income
to net cash used by operating
activities:
Depreciation and amortization 403,978 177,942
Deferred compensation 233,067 -
Change in operating assets and
liabilities:
Accounts receivable from mailers (2,591,753) (859,515)
Prepaid expenses and other current
assets 109,942 (1,948,369)
Other assets 5,165 5,165
Amounts due to list owners 218,659 (915,207)
Accrued liabilities (4,831,184) (5,246,396)
Deferred revenues (73,740) (104,096)
-----------------------------
Net cash used by operating activities (8,873,065) (3,428,015)
------------------------------
Cash flows from investing activities:
Purchase of fixed assets, net of
disposals (468,849) 346,188
------------------------------
Net cash (used for) provided by investing
activities (468,849) 346,188
------------------------------
Cash flows from financing activities:
Borrowings from bank 8,178,109 2,259,721
Repayment of notes payable (133,332) (99,999)
Payment of obligation under lease, net of
sublease income (289,721)
------------------------------
Net cash provided by financing activities 8,044,777 1,870,001
------------------------------
Net decrease in cash and cash equivalents (1,297,137) (1,211,825)
Cash and cash equivalents at beginning of
period 1,297,137 1,211,825
------------------------------
Cash and cash equivalents at end of period - -
------------------------------
Cash paid during period for:
Interest $ 523,746 129,327
<PAGE>
EXHIBIT 99.3
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The unaudited pro forma data presented in the unaudited pro forma
combined financial statements are included in order to illustrate the effect on
the Company's financial statements of the transaction described below.
In April 1996, the Company acquired the assets of Direct Media/DMI,
Inc. ("DMI") for $25 million and the assumption of certain liabilities of DMI.
The $25 million purchase price is payable in three years, is collateralized by a
letter of credit, and may, at DMI's option be paid in one million shares of
Acxiom common stock in lieu of cash plus accrued interest. Headquartered in
Greenwich, CT, DMI provides list brokerage, management, and consulting services
to business-to-business and consumer list owners and mailers. The acquisition of
DMI will be accounted for as a purchase, and accordingly, the results of
operations of DMI will be included in the consolidated results of operations
from the date of the acquisition.
The unaudited pro forma combined balance sheet at March 31, 1996
presents adjustments related to the acquisition as if the acquisition had
occurred on March 31, 1996. The unaudited pro forma combined statement of
operations for the year ended March 31, 1996 present adjustments as though the
transaction had occurred at the beginning of the period. Pro forma adjustments
have been made to reflect the accounting bases recognized in recording the
purchase and to eliminate the effects of transactions between the Company and
DMI, as well as to incorporate changes in operations of DMI that have been
implemented as a result of the acquisition.
In the opinion of management, all adjustments have been made that are
necessary to present fairly the pro forma data.
The unaudited pro forma combined financial statements should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto located in the Company's Annual Report on Form 10-K as filed with the
United States Securities and Exchange Commission, and the Financial Statements
and Notes thereto of DMI, appearing as Exhibit 99.1 to this Form 8-K/A filing.
The unaudited pro forma combined statement of operations data are not
necessarily indicative of the results that would have been reported had such
events actually occurred on the date specified, nor are they indicative of the
Company's future results.
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
For Year Ended March 31, 1996
(dollars in thousands, except per share data)
Pro Forma
Company as Adjustments for (2)
Reported (1) Direct Media/DMI, Inc. Combined
Revenue $ 269,902 41,223 311,125
Operating costs and expenses
Salaries and benefits 98,075 25,031(3) 123,106
Computer, communications and
other equipment 40,972 3,061 44,033
Data costs 63,442 - 63,442
Other operating costs and
expenses 35,755 10,379 46,134
--------------------------------------------
Total operating costs
and expenses 238,244 38,471 276,715
--------------------------------------------
Income from operations 31,658 2,752 34,410
Other income (expense):
Interest expense (1,863) (1,433)(4) (3,296)
Other, net (399) (1,566)(5) (1,965)
--------------------------------------------
(2,262) (2,999) (5,261)
Earnings (loss) before income
taxes 29,396 (247) 29,149
Income taxes 11,173 (104)(6) 11,069
--------------------------------------------
Net earnings (loss) $ 18,223 (143) $ 18,080
======= =======
Earnings per share $ 0.70 $ 0.69(7)
======= =======
Weighted average shares
outstanding 26,039 27,039
======= =======
NOTES TO UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
(1) The Company's statement of operations reflects its fiscal year ended March
31, 1996.
(2) The Pro Forma adjustments reflect the operations of Direct Media for the
year ended December 31, 1995.
(3) Excludes expenses of $8.4 million which relate to deferred compensation as
a result of issuance of common shares in Direct Media which vest over a
period of time and excludes expenses of $7.2 million related to various
bonus payments paid to Direct Media personnel. These adjustments relate
to items not considered recurring.
(4) Reflects incremental interest expense related to the acquisition financing.
(5) Reflects incremental intangible amortization of $1.4 million computed as
follows: $27.7 million over 20 years.
(6) Reflects the tax effect on the Pro Forma adjustments at a combined federal
and state tax rate of 42%.
(7) The acquisition agreement reflects that the Company will issue 1 million
shares of its common stock or pay $25 million plus interest at the election
of Direct Media. Consequently, for purposes of earnings per share, the
Company will eliminate the interest expense related to the note payable of
$25 million and include in its weighted average shares outstanding the
additional 1 million shares.
Calculated as follows:
Net Income $ 18,080
Interest expense (net of tax effect) 458
------
Adjusted Net Income 18,538
======
Weighted average common shares outstanding 27,039
======
Earnings per common share $ 0.69
======
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
March 31, 1996
(in thousands)
Pro Forma
Adjustments
Company for
as Direct Media/
Assets Reported DMI, Inc.(1) Combined
- ------ -------- ------------- --------
Current assets:
Cash and cash equivalents $ 3,469 3,469
Trade accounts receivable, net 44,474 7,902(2) 52,376
Refundable income taxes 1,537 1,537
Other current assets 4,534 514(2) 5,048
-------------------------------------
Total current assets 54,014 8,416 62,430
Property and equipment, net of
accumulated depreciation
and amortization 89,101 2,010(2) 91,111
Software, net of accumulated
amortization 10,524 10,524
Excess of cost over fair value
of net assets acquired, net
accumulated amortization 13,982 27,673(2) 41,655
Other assets 26,428 826(2) 27,254
-------------------------------------
$ 194,049 38,925 232,974
=====================================
Liabilities & Stockholders' Equity
Current liabilities
Short-term notes payable 646 11,594(2) 12,240
Current installments of long-term
debt 3,866 3,866
Trade accounts payable 13,596 13,596
Accrued expenses:
Interest 435 435
Payroll and payroll related 5,111 614(2) 5,725
Other 7,189 1,430(2) 8,619
Advances from customers 316 316
Income taxes -------------------------------------
Total current liabilities 31,159 13,638 44,797
Long-term debt, excluding current
portion 26,885 25,287(2) 52,172
Deferred income taxes 10,933 10,933
Deferred revenue 2,331 2,331
Stockholders' equity
Preferred stock
Common stock 2,435 2,435
Additional paid-in capital 54,514 54,514
Retained earnings 68,978 68,978
Foreign currency translation
adjustment (863) (863)
Treasury stock, at cost (2,323) (2,323)
-------------------------------------
Total stockholders' equity 122,741 - 122,741
=====================================
$ 194,049 38,925 232,974
=====================================
NOTES TO UNAUDITED PRO FORM A COMBINED BALANCE SHEET
(1) Reflects the Company's purchase of Direct Media as of April 1, 1996.
(2) Reflects the allocation of total consideration for Direct Media as follows:
$7.9 million for accounts receivable (net of reserve and related accounts
payable), $2.0 million for property and equipment, $.5 million for other
current assets, $.8 million for other assets and $27.7 million for
intangible assets (goodwill). Additionally, the Company assumed obligations
of $13.9 million and executed a note payable in the amount of $25 million
payable three years from the effective date of the Acquisition, April 1,
1996.
