<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K(A)
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report: September 10, 1996
---------------------------------------------------------------
(Date of the earliest event reported)
AMERICAN BUSINESS INFORMATION, INC.
- ------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 0-19598 47-0751545
- ---------------------------- --------------- ----------------------
(State or other juris- (Commission (I.R.S. Employer
diction of incorporation) File Number) Identification Number)
5711 South 86/th/ Circle, Omaha, Nebraska 68127
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
402/593-4500
--------------------------------------------------
Registrant's telephone number, including area code
<PAGE>
American Business Information, Inc. (the "Company") hereby amends Item 7 of its
Form 8-K filed to report an event occurring on September 10, 1996 to include the
following:
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial statements of businesses acquired.
The following financial statements of Digital Directory Assistance, Inc.
are filed with this report:
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
(a) Independent Auditors' Report 3
Balance Sheets as of December 31, 1995 and June 30, 1996 4
(unaudited)
Statements of Operations for the year ended December 31, 1995 5
and the six months ended June 30, 1996 (unaudited)
Statements of Stockholders' Deficit for the year ended December 31, 1995 6
and the six months ended June 30, 1996 (unaudited)
Statements of Cash Flows for the year ended December 31, 1995 7
and the six months ended June 30, 1996 (unaudited)
Notes to Financial Statements 8 - 13
(b) Pro forma financial information. 14
Pro Forma Consolidated Balance Sheet as of June 30, 1996 15
Pro Forma Consolidated Statement of Operations for the year 16
ended December 31, 1995
Pro Forma Consolidated Statement of Operations for the six 17
months ended June 30, 1996
Notes to Unaudited Pro Forma Consolidated Financial Statements 18
</TABLE>
1
<PAGE>
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.
Date: 11/25/96 /s/ Jon H. Wellman
------------ --------------------------------------
Jon H. Wellman, Executive Vice President
and Chief Financial Officer
2
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Stockholders and Board of Directors
of Digital Directory Assistance, Inc.
We have audited the accompanying balance sheet of Digital Directory
Assistance, Inc. (the Company) as of December 31, 1995 and the related
statements of operations, stockholders' deficit and cash flows for the year then
ended. 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 audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards 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. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of December
31, 1995, and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
As discussed in Note 7, all of the Company's common stock was purchased by
American Business Information, Inc. in September of 1996.
Washington, D.C.
November 22, 1996
3
<PAGE>
<TABLE>
<CAPTION>
DIGITAL DIRECTORY ASSISTANCE, INC.
BALANCE SHEETS
________
ASSETS
DECEMBER 31, 1995 JUNE 30, 1996
----------------- -------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 439,121 $ -
Trade accounts receivable, net of allowances of
$1,439,304 and $1,747,940 (unaudited), respectively 908,680 2,410,098
Prepaid expenses and other current assets 61,748 112,790
----------- -----------
Total current assets 1,409,549 2,522,888
Property and equipment, net 130,224 132,148
----------- -----------
Total assets $ 1,539,773 $ 2,655,036
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities $ 507,418 $ 1,368,627
Accrued payroll expenses 172,887 320,522
Accrued royalties 746,481 1,118,996
Accrued royalties - related party 154,795 247,496
Deferred revenue 740,624 625,710
Due to stockholder 122,984 127,903
Due to related party 135,532 439,262
----------- -----------
Total current liabilities 2,580,721 4,248,516
Commitments and contingencies
Stockholders' deficit:
Common stock, par value $1.00; 10,000 shares authorized;
1,000 shares issued and outstanding at December 31, 1995
and June 30, 1996 (unaudited), respectively 1,000 1,000
Additional paid-in capital 82,985 82,985
Accumulated deficit (1,124,933) (1,677,465)
----------- -----------
Total stockholders' deficit (1,040,948) (1,593,480)
----------- -----------
Total liabilities and stockholders' deficit $ 1,539,173 $ 2,655,036
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
DIGITAL DIRECTORY ASSISTANCE, INC.
STATEMENTS OF OPERATIONS
________
FOR THE FOR THE SIX
YEAR ENDED MONTHS ENDED
DECEMBER 31, 1995 JUNE 30, 1996
----------------- -------------
(UNAUDITED)
<S> <C> <C>
Net sales $8,417,106 $4,995,543
Costs and expenses:
Production costs 3,736,949 2,269,111
Selling, general and administrative 5,453,206 3,270,412
---------- ----------
Operating loss (773,049) (543,980)
Other income (expense):
Other income 4,203 4,003
Interest expense (1,181) (12,555)
---------- ----------
Net loss $ (770,027) $ (552,532)
========== ==========
Net loss per common share $ (770.03) $ (552.53)
========== ==========
Weighted average number of common shares
used in computing net loss per common share 1,000 1,000
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE>
DIGITAL DIRECTORY ASSISTANCE, INC.
STATEMENTS OF STOCKHOLDERS' DEFICIT
________
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL ACCUMULATED
SHARES PAR VALUE PAID-IN CAPITAL DEFICIT TOTAL
------ --------- --------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994
(unaudited) 1,000 $1,000 $ - $ (354,906) $ (353,906)
Contribution to capital - - 82,985 - 82,985
Net loss - - - (770,027) (770,027)
----- ------ ------- ----------- -----------
Balance at December 31, 1995 1,000 $1,000 $82,985 $(1,124,933) $(1,040,948)
Net loss (unaudited) - - - (552,532) (552,532)
----- ------ ------- ----------- -----------
Balance at June 30, 1996
(unaudited) 1,000 $1,000 $82,985 $(1,677,465) $(1,593,480)
===== ====== ======= =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
DIGITAL DIRECTORY ASSISTANCE, INC.
STATEMENTS OF CASH FLOWS
________
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED SIX MONTHS
DECEMBER 31,1995 JUNE 1996
---------------- ------------
(UNAUDITED)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(770,027) $ (552,532)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 61,448 60,978
Change in allowances 550,816 308,636
Loss on disposal 6,565 -
Noncash interest to related parties 1,181 12,555
Changes in operating assets and liabilities:
Trade accounts receivable (120,607) (1,810,054)
Prepaid expenses and other current assets 124,181 (51,042)
Accounts payable and accrued liabilities (40,103) 861,209
Accrued compensation 127,789 147,635
Accrued royalties (250,687) 372,515
Accrued royalties - related party 154,795 92,701
Deferred revenue 101,288 (114,914)
--------- -----------
Net cash used in operating activities (53,361) (672,313)
--------- -----------
Cash flows from investing activities:
Purchases of property and equipment (108,535) (62,902)
--------- -----------
Net cash used in investing activities (108,535) (62,902)
Cash flows from financing activities:
Proceeds of borrowing from stockholder 133,313 -
Payments to stockholder (10,878) -
Proceeds of borrowing from related party 125,000 296,094
Payments to related party (5,898) -
--------- -----------
Net cash provided by financing activities 241,537 296,094
Net increase (decrease) in cash and cash equivalents 79,641 (439,121)
--------- -----------
Cash and cash equivalents, beginning 359,480 439,121
--------- -----------
Cash and cash equivalents, ending $ 439,121 $ -
========= ===========
Supplemental disclosure of non-cash investing and financing
activities:
Contribution to paid in capital $ 82,985 $ -
========= ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE>
DIGITAL DIRECTORY ASSISTANCE, INC.
NOTES TO FINANCIAL STATEMENTS
________
1. GENERAL
Digital Directory Assistance, Inc. ("the Company") was incorporated in Maryland
on November 12, 1986. The Company publishes and distributes CD-ROM telephone
directories and related products under the PhoneDisc(R) brand name.
Three customers accounted for approximately 37% and 43% of revenues for the year
ended December 31, 1995 and the six months ended June 30, 1996 (unaudited),
respectively.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
All information pertaining to the six months ended June 30, 1996 is unaudited,
but in the opinion of management, contains all adjustments (which consist of
normal recurring adjustments) that are necessary for a fair presentation of such
financial information.
The principal accounting policies of the Company are as follows:
USE OF ESTIMATES AND ASSUMPTIONS
--------------------------------
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
disclosure 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.
CASH AND CASH EQUIVALENTS
-------------------------
Cash equivalents consist of highly liquid debt instruments purchased with
an original maturity of three months or less and are carried at cost which,
due to their short maturity, approximates fair value.
8
<PAGE>
DIGITAL DIRECTORY ASSISTANCE, INC.
NOTES TO FINANCIAL STATEMENTS
________
REVENUE RECOGNITION
-------------------
The Company recognizes revenue from the sale of product at the time of
shipment. A portion of the revenue is deferred and recognized over the
subscription term when the Company is required to provide updated
information. Allowances are made currently for estimated returns,
estimated uncollectible amounts, and estimated advertising credits. Actual
experience has been within management's expectations.
CONCENTRATION OF CREDIT RISK
----------------------------
The Company sells software directly to individuals and through distributors
to retail outlets located throughout the United States. Individual
customers pay by credit card or check. The Company performs ongoing credit
evaluations of its distributors and requires no collateral. The allowance
for doubtful accounts is considered adequate at December 31, 1995, and June
30, 1996 (unaudited), respectively, to cover potential losses.
The Company maintains cash balances in two financial institutions in
Maryland and Massachusetts. These balances are insured by the Federal
Deposit Insurance Corporation up to $100,000 per financial institution.
Uninsured amounts held at these institutions totaled $507,158 and $119,695
as of December 31, 1995 and June 30, 1996 (unaudited), respectively.
INCOME TAXES
------------
The Company is taxed as an S corporation. Accordingly, federal and state
income taxes are the personal responsibility of the stockholders, and no
provision for income taxes is required for the Company.
PROPERTY AND EQUIPMENT
----------------------
Property and equipment, consisting of computer equipment, furniture and
fixtures and software, are stated at cost. Repair and maintenance
expenditures are charged to operations in the period incurred.
Depreciation and amortization are computed under the straight line method
based on the useful lives of the property and equipment, typically three to
seven years.
9
<PAGE>
DIGITAL DIRECTORY ASSISTANCE, INC.
NOTES TO FINANCIAL STATEMENTS
________
All of the Company's property and equipment assets are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. If the sum of the expected future
cash flows is less than the carrying amount of the asset, a loss is
recognized.
RESEARCH AND DEVELOPMENT COSTS
------------------------------
Research and development costs are expensed as incurred. The Company did
not incur any material research and development expenses during 1995 or the
six months ended June 30, 1996 (unaudited).
SOFTWARE DEVELOPMENT COSTS
--------------------------
Software development costs are capitalized subsequent to the establishment
of technological feasibility for products as evidenced by detailed program
designs, in accordance with Statement of Financial Accounting Standards No.
86, "Accounting for the Cost of Computer Software to be Sold, Leased or
Otherwise Marketed". Capitalization ceases when the products are available
for general release to customers. During 1995 and the six months ended
June 30, 1996 (unaudited), respectively, the Company's product development
activity consisted only of updates for which the costs qualifying for
capitalization were immaterial. Previously capitalized software
development costs were fully amortized prior to January 1, 1995.
DEVELOPER ROYALTIES
-------------------
The Company has royalty agreements with certain information database owners
for its PhoneDisc(R) product. These agreements provide for royalty
payments to these database owners based on various percentages of the net
product sales (gross revenue less returns and other items as defined in
these agreements). Expenses under these royalty agreements are included in
production costs and totaled $2,143,768 and $1,365,382 during 1995 and the
six months ended June 30, 1996 (unaudited), respectively.
10
<PAGE>
DIGITAL DIRECTORY ASSISTANCE, INC.
NOTES TO FINANCIAL STATEMENTS
________
INVENTORY
---------
The Company maintains a limited supply of products on hand. These
inventories, if material, are stated at the lower of cost or market using
the specific identification method. As of December 31, 1995 and June 30,
1996 (unaudited), respectively, the amount of inventory on hand was not
material.
3. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31, 1995 JUNE 30, 1996
----------------- -------------
(UNAUDITED)
<S> <C> <C>
Computer equipment $150,228 $211,978
Furniture and fixtures 23,182 24,334
Software 44,457 44,457
-------- --------
217,867 280,769
Less accumulated depreciation and amortization (87,643) (148,621)
-------- --------
Property and equipment, net $130,224 $132,148
======== ========
</TABLE>
4. COMMITMENTS AND CONTINGENCIES
The Company leases office space in Bethesda, Maryland under an operating lease
that expires February 28, 1997. The Company also leases office space in
Marblehead, Massachusetts under an operating lease that expired September 30,
1996. The Company also leases storage space on a month-to-month basis.
The future minimum payments under the non-cancelable lease for office space with
original terms greater than one year as of December 31, 1995 are as follows:
YEAR ENDING DECEMBER 31,
1996 $115,616
1997 53,589
--------
$169,206
========
Rent expense under operating leases for the year ended December 31, 1995 and the
six months ended June 30, 1996 (unaudited) totaled $127,084 and $62,765,
respectively.
11
<PAGE>
DIGITAL DIRECTORY ASSISTANCE, INC.
NOTES TO FINANCIAL STATEMENTS
________
5. RELATED PARTY TRANSACTIONS
The majority stockholder periodically makes advances to the Company. At
December 31, 1995 and June 30, 1996 (unaudited), these advances totaled $122,984
and $127,903, respectively. These advances are repayable on demand with
interest at 8% per annum. Interest expense on these advances for 1995 and the
six months ended June 30, 1996 (unaudited) totaled $549 an $4,919,
respectively.
The Company periodically receives advances from Digital Library Systems, Inc.
(DLS), a company whose sole stockholder is also the major stockholder of the
Company. At December 31, 1995 and June 30, 1996 (unaudited), these advances and
accrued interest totaled $135,532 and $439,262, respectively. These advances
are due on demand with the interest at 8 per cent per annum. Interest expense
on these advances for 1995 and the six months ended June 30, 1996 (unaudited)
totaled $632 and $7,636, respectively.
One of the Company's principal data suppliers in 1995 is partially owned by the
majority stockholder of the Company. Cost of sales for 1995 and the six months
ended June 30, 1996 (unaudited), respectively, includes $827,532 and $510,374
of royalties expense for this data supplier.
6. PROFIT-SHARING PLAN
The Company has a 401(k) plan covering substantially all full-time employees.
Under the terms of the Plan, eligible employees may elect to defer a portion of
their compensation which is then contributed to the Plan. In addition, the
Company has elected to match 25% of employee contributions, up to four percent
of their annual compensation. Employer contributions vest 20% per year of
service. The Company contributed $1,360 to this plan during 1995 and $680
(unaudited) for the six months ended June 30, 1996.
12
<PAGE>
DIGITAL DIRECTORY ASSISTANCE, INC.
NOTES TO FINANCIAL STATEMENTS
________
7. SUBSEQUENT EVENT
In June of 1996, a competitor filed a lawsuit against the Company relating to
product packaging that the Company began using in early 1996. The lawsuit seeks
injunctive relief and an unspecified amount of damages for alleged trade dress
infringement, false representations, unfair competition and unfair trade
practices by the Company. The Company has filed a Motion to Dismiss the
Complaint and a Motion to Transfer Venue, both of which are pending decision by
the court. Discovery on the case has not yet begun and although the Company has
legitimate defenses, the Company's legal counsel is unable to determine the
probable outcome of the litigation. Management believes that the lawsuit is
frivolous and intends to vigorously contest the claim. In the opinion of
management, the amount of the ultimate liability with respect to the lawsuit
will not materially affect the Company's financial position or results of
operations.
In September 1996, all of the Company's outstanding common stock was purchased
by American Business Information, Inc.
13
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma consolidated financial statements give effect
to the purchase transaction pursuant to the Asset Purchase Agreement dated
September 10, 1996 between the Company and Digital Directory Assistance, Inc.
("DDA"). The pro forma consolidated balance sheet assumes that the purchase
occurred on June 30, 1996. The pro forma consolidated statements of operations
assume that the purchase occurred on January 1, 1995. The merger will be
accounted for using the purchase method of accounting. The pro forma
consolidated financial statements presented herein are shown for illustrative
purposes only and are not necessarily indicative of the future financial
position or future results of operations of the Company, or of the financial
position or results of operations of the Company that would have actually
occurred had the transaction been in effect as of the date or for the period
presented.
The unaudited pro forma consolidated financial statements and related notes
should be read in conjunction with the historical financial statements and
related notes of the Company and DDA.
14
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BUSINESS INFORMATION, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 1996
(IN THOUSANDS)
HISTORICAL HISTORICAL PRO FORMA ABI/PHONEDISC
ABI PHONEDISC ADJUSTMENTS COMBINED
--- --------- ----------- --------
ASSETS
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $11,361 - (4,000) (a) 7,361
Marketable securities 24,433 - 24,433
Trade accounts receivable, net 19,548 2,410 21,958
Prepaid expenses 2,899 113 3,012
Deferred marketing costs 2,301 - 2,301
------------------------------------- ----------
Total current assets 60,542 2,523 (4,000) 59,065
------------------------------------- ----------
Property and equipment, net 15,773 132 15,905
Notes receivable 2,874 - 2,874
Intangible assets, net of accumulated amortization 14,993 - 8,739 (a) 23,732
Other assets 1,999 - 1,999
------------------------------------- ----------
$96,181 $ 2,655 $ 4,739 $103,575
===================================== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable and current portion of
long-term debt $ 469 - 7,925 (a) 8,394
Accounts payable 3,342 1,369 4,711
Accrued payroll expenses 1,854 321 2,175
Accrued expenses 1,411 2,559 3,970
Income taxes payable 550 - 550
Deferred income taxes 885 - 885
------------------------------------- ----------
Total current liabilities 8,511 4,249 7,925 20,685
------------------------------------- ----------
Long-Term debt, net of current portion 672 - 672
Deferred income taxes 2,483 - 2,483
Stockholders' equity:
Preferred stock 0 - -
Common stock 52 1 (1) 52
Paid-in capital 24,574 83 5,137 (a) 29,794
Net unrealized holding gain (loss) (478) - (478)
Retained earnings 60,367 (1,678) (8,322) (a) 50,367
------------------------------------- ----------
Total stockholders' equity 84,515 (1,594) (3,186) 79,735
------------------------------------- ----------
$96,181 $ 2,655 $ 4,739 $103,575
===================================== ==========
See notes to pro forma consolidated financial statements
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
AMERICAN BUSINESS INFORMATION, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL HISTORICAL PRO FORMA ABI / PHONEDISC
ABI PHONEDISC ADJUSTMENTS COMBINED
--- ---------- ----------- --------
Net sales $86,766 8,417 - 95,183
Costs and expenses: -
Database and production costs 24,080 3,737 - 27,817
Selling, general and administrative 34,000 5,453 - 39,453
Depreciation and amortization 3,388 - 874 (c) 4,262
--------------------------------------------- -----------------
61,468 9,190 874 71,532
--------------------------------------------- -----------------
Operating income 25,298 (773) (874) 23,651
Other income (expense):
Investment income 1,322 4 - 1,326
Interest expense (157) (1) (126) (d) (284)
--------------------------------------------- -----------------
Income before income taxes and
discontinued operation 26,463 (770) (1,000) 24,693
Income taxes 9,800 - (655) (b) 9,145
--------------------------------------------- -----------------
Income from continuing operations 16,663 (770) (345) 15,548
Loss from discontinued operation (484) - - (484)
Loss on sale of discontinued operation (1,833) - - (1,833)
--------------------------------------------- -----------------
Net income $ 14,346 $ (770) $ (345) $ 13,231
============================================= =================
Earnings per share:
Income from continuing operations $ 0.80 $ 0.73
Loss on discontinued operation and
sale of subsidiary $ (0.11) $ (0.11)
--------------- ------------------
Net Income $ 0.69 $ 0.62
============== ==================
Weighted average shares outstanding 20,738 600 (a) 21,338
=============== =============== ==================
See notes to pro forma consolidated financial statements
</TABLE>
16
<PAGE>
AMERICAN BUSINESS INFORMATION, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
HISTORICAL HISTORICAL PRO FORMA ABI/PHONEDISC
ABI PHONEDISC ADJUSTMENTS COMBINED
--- --------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Net sales $49,110 4,996 - 54,106
Costs and expenses: -
Database and production costs 13,452 2,269 - 15,721
Selling, general and administrative 20,265 3,270 - 23,535
Depreciation and amortization 1,805 - 437 (c) 2,242
------------------------------------- -------
35,522 5,539 437 41,498
------------------------------------- -------
Operating income 13,588 (543) (437) 12,608
Other income (expense):
Investment income 1,045 4 - 1,049
Interest expense (33) (13) - (46)
------------------------------------- -------
Income before income taxes and
discontinued operation 14,600 (552) (437) 13,611
Income taxes 5,515 - (366) (b) 5,149
------------------------------------- -------
Income from continuing operations 9,085 (552) (71) 8,462
Loss from discontinued operation - - - -
Loss on sale of discontinued operation - - - -
------------------------------------- -------
Net income $ 9,085 $ (552) $ (71) $ 8,462
===================================== =======
Earnings per share:
Income from continuing operations $ 0.44 $ 0.40
Loss on discontinued operation and
sale of subsidiary $ - $ -
-------
Net Income $ 0.44 $ 0.40
======= =======
Weighted average shares outstanding 20,792 600 (a) 21,392
======= ===== =======
</TABLE>
See notes to pro forma consolidated financial statements
17
<PAGE>
AMERICAN BUSINESS INFORMATION, INC.
NOTES TO UNAUDITED FORMA CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS)
Note 1: Historical financial information for ABI and PhoneDisc included in the
pro forma financial statements are based on the balance sheets of ABI and
PhoneDisc as of June 30, 1996, and on the statements of operations of ABI and
PhoneDisc for the twelve months ended December 31, 1995, and the six months
ended June 30, 1996, respectively.
Note 2: The unaudited pro forma consolidated financial statements reflect the
following adjustments:
(a) Represents the purchase transaction by ABI of PhoneDisc through the
issuance of 600 shares of ABI common stock, payment of $4,000 in cash,
and the issuance of a promissory note of $7,925. The total value of
consideration paid was $17,145. A write-off of purchased research and
development costs totaling $10,000 is not reflected on the pro forma
consolidated statements of operations. The excess of purchase price
over the net assets acquired of $10,000 was attributable to purchased
research and development and was expensed at the date of purchase (and
not reflected in the pro forma statements of operations). The
remaining balance of $8,739 was recorded as goodwill on the balance
sheet.
(a) Adjustment to reflect inclusion of income taxes (at 37%) for PhoneDisc
which was a Subchapter S Corporation prior to acquisition and income
tax effect of pro forma adjustments.
(c) Reflects amortization of goodwill on a straight-line basis over 10
years.
(d) Reflects interest of 5.1% on the promissory note issued in the
purchase transaction for the term of the note.
18
