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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
AMENDMENT NO.2
(AMENDING ITEM 7 (b))
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 15, 1998
ARI NETWORK SERVICES, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 0-19608 39-1388360
- ---------------- ----------- --------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) No.)
330 E. Kilbourn Avenue 53202
Milwaukee, Wisconsin --------------
- ---------------------------------------- (Zip Code)
(Address of principal executive office)
Registrant's telephone number, including area code: (414) 278-7676
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This Amendment No. 2 revises certain of the pro forma information included in
Item 7 (b) of the Current Report on Form 8-K/A filed on November 30, 1998 by ARI
Network Services, Inc.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information.
Included in this Report are the following pro forma financial
statements of ARI Network Services, Inc.:
1. ARI Network Services, Inc. unaudited Pro Forma
Condensed Balance Sheet at July 31, 1998;
2. ARI Network Services, Inc. unaudited Pro Forma
Condensed Statement of Operations for the Year Ended
July 31, 1998
3. ARI Network Services, Inc. unaudited Notes to Pro Forma
Condensed Financial Statements.
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ITEM 7(b)
ARI NETWORK SERVICES, INC.
UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
The following unaudited pro forma financial information relates to the
Company's September 15, 1998 acquisition of substantially all of the assets and
the assumption of specified liabilities of Powercom 2000, a division of Briggs &
Stratton Corporation ("Powercom"). The transaction will be accounted for as a
purchase business combination. The pro forma amounts have been prepared based on
certain purchase accounting and other pro forma adjustments (as described in the
accompanying notes) to the historical financial statements of the Company and
Powercom.
The unaudited pro forma condensed balance sheet at July 31, 1998
reflects the historical financial position of the Company at July 31, 1998 and
Powercom at June 28, 1998, with pro forma adjustments as if the acquisition had
occurred on July 31, 1998. The unaudited pro forma condensed statement of
operations for the year ended July 31, 1998 reflects the historical results of
operations of both companies with pro forma acquisition adjustments as if the
acquisition had occurred on August 1, 1997. The pro forma adjustments are
described in the accompanying notes and give effect to events that are (a)
directly attributable to the acquisition, (b) factually supportable, and (c) in
the case of certain statement of operations adjustments, expected to have a
continuing impact.
The unaudited pro forma condensed financial statements should be read
in connection with the Company's and Powercom's historical financial statements
and related footnotes.
The unaudited pro forma financial information presented is for
information purposes only and does not purport to represent what the Company's
and Powercom's financial position or results of operations as of the dates
presented would have been had the acquisition in fact occurred on such date or
at the beginning of the period indicated or to project the Company's and
Powercom's financial position or results of operations for any future date or
period.
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Item 7 (b)
ARI NETWORK SERVICES, INC.
PRO FORMA UNAUDITED CONDENSED BALANCE SHEET
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ARI POWERCOM ----------- -------------
JULY 31, 1998 JUNE 28, 1998 ADJUSTMENTS COMBINATION
------------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash $ 194 $ 263 $ 457
Trade receivables 2,643 514 3,157
Inventory -- 29 29
Other 118 74 192
-------- -------- --------
Total current assets 2,955 880 3,835
Net equipment & leasehold improvements 395 757 1,152
Other assets 336 -- 2,900 (a) 3,236
Net network system 9,122 513 0 9,635
-------- -------- -------- --------
Total assets $ 12,808 $ 2,150 $ 2,900 $ 17,858
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts Payable $ 581 $ 451 $ 1,032
Unearned income 776 1,293 500 (a) 2,569
Accrued expenses 778 465 1,243
Other current liabilities -- 391 391
Current portion of debt obligations 58 665 (500)(a) 223
-------- -------- -------- --------
Total current liabilities 2,193 3,265 0 5,458
Long term debt 1,653 -- 1,653
Shareholders' equity:
Preferred stock -- -- --
Common stock 4 -- 1 (a) 5
Additional paid-in-capital 85,028 -- 1,784 (a) 86,812
Investment in subsidiary 15,473 (15,473)(a)
Accumulated deficit (76,070) (16,588) 16,588 (a) (76,070)
-------- -------- -------- --------
Total shareholders' equity 8,962 (1,115) 2,900 10,747
-------- -------- -------- --------
Total liabilities & shareholders' equity $ 12,808 $ 2,150 $ 2,900 $ 17,858
======== ======== ======== ========
</TABLE>
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ARI NETWORK SERVICES, INC.
PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS
(Dollars in thousands, except pe share data)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ARI POWERCOM ----------- ------------
JULY 31, 1998 JUNE 28, 1998 ADJUSTMENTS COMBINATION
------------- ------------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues $ 7,964 $ 3,561 $ (712)(b) $ 10,813
Operating expenses:
Variable costs of products and services sold 1,946 2,795 (2,049)(c) 2,692
Depreciation and amortization 2,142 713 628 (d) 3,483
Network operations 708 616 (376)(f) 948
Selling, general and administrative 4,586 5,018 (3,138)(e) 6,466
Network construction and expansion 2,198 5,072 (4,454)(f) 2,816
-------- -------- -------- --------
11,580 14,214 (9,389) 16,405
Less capitalized portion (1,546) 0 (286)(f) (1,832)
-------- -------- -------- --------
Total operating expenses 10,034 14,214 (9,675) 14,573
-------- -------- -------- --------
Operating loss (2,070) (10,653) 8,963 (3,760)
Other income (expense) (70) (714) 681 (g) (103)
-------- -------- -------- --------
Loss before benefit for income taxes (2,140) (11,367) 9,644 (3,863)
Benefit for income taxes 0 4,248 (4,248)(h) 0
-------- -------- -------- --------
Net loss $ (2,140) $ (7,119) $ 5,396 $ (3.863)
======== ======== ======== ========
Average common shares outstanding 4,119 840 (i) 4,959
Net loss per share $ (0 .52) $ (0.78)
</TABLE>
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ARI NETWORK SERVICES, INC.
NOTES TO UNAUDITED PRO FORMA
CONDENSED FINANCIAL STATEMENTS
a) To record the September 15, 1998 acquisition of Powercom. Purchase
accounting adjustments include: (i) the issuance of 840,000 shares of ARI
common stock at $2.125 per share as part of the acquisition price; (ii)
the payment of certain long term debt by Briggs & Stratton Corporation
prior to the closing in exchange for future software and services; (iii)
the elimination of Powercom's equity prior to the acquisition including
investment in subsidiary of $15,473,000 and accumulated deficit of
$16,588,000; and (iv) the recognition of $2,900,000 of intangibles.
b) To eliminate revenues by 20% for estimated overlap in the companies'
customers.
c) To eliminate cost of goods sold for reallocation of commissions to
selling, general and administrative expense and the reductions in force
implemented at closing.
d) To record the increase in amortization of intangibles of $2,900,000
(amortized over 5 years) and capitalized software amortization of
$414,000 (amortized over 3 years).
e) To (i) eliminate selling, general and administrative expense to reflect
the reductions in force and office closures and related expenses in
Germany, United Kingdom, Ireland, Australia and Canada implemented at
closing and (ii) reallocate commissions from cost of goods sold .
f) To eliminate network operations, construction and expansion to reflect
the reductions in force and office closures implemented at closing and to
record related capitalized portions.
g) To eliminate interest expense related to the investment of Briggs &
Stratton Corporation in its Powercom division calculated at 10.5% on one
half of the year's operating loss less depreciation and amortization plus
capitalized network construction and expansion.
h) To eliminate the benefit for income taxes that would not be received by
the combined entity.
i) The weighted average number of shares of Common Stock outstanding are
adjusted for the issuance of the 840,000 shares of ARI Common Stock for
the acquisition of Powercom.
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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.
Date: December 16, 1998 ARI NETWORK SERVICES, INC.
By: /s/ Brian E. Dearing
------------------------------
Brian E. Dearing, President,
CEO and Acting CFO
