SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended December 31, 1999.
Commission file number 0-20311
-------
DATA BROADCASTING CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 13-3668779
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
7050 Union Park Center, Suite 650, Midvale, Utah 84047
(Address of principal administrative offices)
Registrant's telephone number, including area code: (801) 562-2252
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
----- ----
The number of shares of common stock, par value $.01 per share, of the
registrant outstanding as of February 11, 2000 was 34,511,309.
<PAGE>
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
--------------------
DATA BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands, except per share data)
Three Months Ended Six Months Ended
December 31, December 31,
----------------- ---------------
1999 1998 1999 1998
------ ------ ------ ------
REVENUES $27,584 $27,458 $55,322 $53,128
COSTS AND EXPENSES
Cost of services 14,329 13,641 28,893 26,171
Selling, general and
administrative 10,177 9,099 19,726 17,435
Depreciation and amortization 3,001 4,057 6,186 8,098
Merger costs 1,002 - 1,002 -
------- ------- ------- -------
Total costs and expenses 28,509 26,797 55,807 51,704
------- ------- ------- -------
INCOME (LOSS) FROM OPERATIONS (925) 661 (485) 1,424
Equity in loss from
MarketWatch.com, Inc. (5,741) (1,166) (11,384) (2,089)
Other income, net 517 277 937 620
------- ------- ------- -------
LOSS BEFORE INCOME TAXES (6,149) (228) (10,932) (45)
Benefit for income taxes (2,508) (140) (4,322) (28)
------- ------- ------- -------
NET LOSS (3,641) (88) (6,610) (17)
Foreign currency translation
adjustment (4) - 85 -
------- ------- ------- -------
COMPREHENSIVE LOSS $(3,645) $ (88) $(6,525) $ (17)
======= ======= ======= =======
LOSS PER SHARE
Basic and Diluted ($0.11) ($0.00) ($0.19) ($0.00)
======= ======= ======= =======
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING
Basic and Diluted 34,526 32,755 34,552 32,861
See accompanying notes to condensed consolidated financial statements.
<PAGE>
DATA BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31, June 30,
1999 1999
-------- --------
ASSETS
- ------
Current Assets:
Cash and cash equivalents $ 43,905 $ 41,507
Accounts receivable, net 9,289 8,782
Income taxes receivable 6,134 6,141
Net assets of discontinued operations - 1,373
Prepaid expenses and other current assets 1,192 1,187
-------- --------
Total Current Assets 60,520 58,990
Property and equipment, net 16,734 14,853
Software development costs, net of accumulated
amortization of $9,035 and $8,159 3,404 3,460
Goodwill, net of accumulated amortization
of $17,913 and $15,914 43,798 45,784
Investment in MarketWatch.com, Inc. 36,082 47,554
Deferred tax assets, net 16,687 11,917
Other non-current assets 5,166 5,934
-------- --------
TOTAL ASSETS $182,391 $188,492
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts payable $7,934 $7,655
Net liabilities of discontinued operations 2,012 -
Accrued liabilities 8,134 8,541
Deferred tax liabilities 6,531 6,531
Current maturities of long-term debt - 500
Other current liabilities 507 545
------- -------
25,118 23,772
Deferred revenue 9,031 9,077
------- -------
Total Current Liabilities 34,149 32,849
Other non-current liabilities 1,933 1,485
------- -------
TOTAL LIABILITIES 36,082 34,334
------- -------
Commitments and contingencies
Stockholders' Equity:
Common stock 376 375
Additional paid-in capital 165,414 164,795
Retained earnings (deficit) (750) 5,860
Accumulated other comprehensive income (loss) 11 (74)
Treasury stock (18,742) (16,798)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 146,309 154,158
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $182,391 $188,492
======== ========
See accompanying notes to condensed consolidated financial statements.
<PAGE>
DATA BROADCASTING CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
December 31,
----------------------
1999 1998
------- --------
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net loss ($6,610) ($17)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Equity in loss of MarketWatch.com, Inc. 11,384 2,089
Depreciation and amortization 7,308 9,538
Deferred tax benefit (4,636) (415)
Other non-cash items, net 875 1,329
Changes in operating assets and liabilities, net (2,456) (2,317)
------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,865 10,207
------- -------
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchase of property and equipment (5,298) (4,564)
Proceeds from the sale of businesses 3,995 -
Capitalized software development costs (820) (706)
Cash paid for acquisitions (2) (3,923)
Investment in and advances to joint ventures - (3,403)
Other, net 763 -
------- -------
NET CASH USED IN INVESTING ACTIVITIES (1,362) (12,596)
------- -------
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Purchase of treasury stock (1,944) (4,238)
Payments of long-term debt (500) (505)
Exercise of common stock options and warrants 339 7,085
------- ------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (2,105) 2,342
------- ------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,398 (47)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 41,507 26,256
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $43,905 $26,209
======= =======
See accompanying notes to condensed consolidated financial statements.
<PAGE>
DATA BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
---------------------------------------------------
The accompanying unaudited condensed consolidated financial statements
have been prepared by Data Broadcasting Corporation and Subsidiaries
(the "Company" or "DBC") in accordance with generally accepted
accounting principles for interim financial reporting and the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
Accordingly, certain information and footnote disclosures normally
included in financial statements prepared under generally accepted
accounting principles have been condensed or omitted pursuant to such
regulations. In the opinion of management, all adjustments considered
necessary for a fair presentation of the Company's financial position,
results of operations and cash flows have been included. All such
adjustments are of a normal recurring nature. This report on Form 10-Q
for the three and six months ended December 31, 1999 should be read in
conjunction with the Company's annual report on Form 10-K for its fiscal
year ended June 30, 1999. Certain prior year amounts have been
reclassified to conform with current year's presentation.
2. MERGER WITH FINANCIAL TIMES ASSET MANAGEMENT
--------------------------------------------
On November 15, 1999, the Company announced an agreement to merge with
Financial Times Asset Management ("FTAM"), part of the Financial Times
group, which is part of Pearson plc, an international media company.
The Financial Times group will transfer ownership of FTAM to DBC in
exchange for an approximate 60% stake in the combined business. The
transaction is subject to the approval of the Company's stockholders at
a meeting to be held on February 23, 2000, regulatory approvals and
other customary conditions.
In connection with this merger, the Company incurred $1,002,000 of
transaction costs during the three months ended December 31, 1999,
including fees for legal, investment banking and accounting services.
3. INVESTMENT IN MARKETWATCH.COM, INC.
-----------------------------------
Upon the formation of the MarketWatch joint venture with CBS
Broadcasting, Inc. ("CBS"), now known as MarketWatch.com, Inc.
("MarketWatch"), the Company's interest in the net equity of the joint
venture exceeded the Company's $2,000,000 cash contribution primarily
due to the contribution to the joint venture by CBS of advertising with
a fair value of $30,000,000. This excess is being amortized as the
related advertising is utilized. The Company's equity in losses of
MarketWatch for the three and six months ended December 31, 1999 are
net of amortization of this excess of $1,334,000 and $2,119,000,
respectively. The remaining amount of this excess at December 31,
1999 is $2,716,000, which is included in "Investment in MarketWatch.com,
Inc." in the accompanying balance sheet.
DBC purchased news from MarketWatch in the amount of $839,000 and
$658,000 for the six months ended December 31, 1999 and 1998,
respectively. DBC also purchased web advertising of $185,000 and
$233,000 from MarketWatch for the six months ended December 31, 1999
and 1998, respectively.
The Company provides services to MarketWatch including accounting,
network operations, web hosting and data feeds. DBC charged
MarketWatch $611,000 and $442,000 for such services for the six months
ended December 31, 1999 and 1998, respectively; these amounts were
recorded as reductions of the gross expenses incurred by DBC.
<PAGE>
DATA BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. DISCONTINUED OPERATIONS
-----------------------
On August 31, 1999, the Company sold its music and ad business known
as InStore Satellite Network, to Muzak LLC for $4,700,000. DBC
received $3,995,000 in August, with the remaining $705,000 held in
escrow pending performance of the business over a six-month period.
This business was previously classified as a discontinued operation.
In August 1999, the Company closed the Lawyers Communication Network,
its joint venture with the American Bar Association.
5. SEGMENT INFORMATION
-------------------
DBC's reportable segments are as follows:
. Market Information - delivery of real-time financial market
information to retail and institutional customers.
. BondEdge - fixed income portfolio analytics.
The company evaluates its segments on the basis of operating income,
earnings before interest, taxes, depreciation and amortization
("EBITDA") and capital expenditures. Segment financial information is
as follows (in thousands):
Three Months Ended Six Months Ended
December 31, December 31,
1999 1998 1999 1998
------- ------- ------- -------
Revenues
Market Information $20,719 $21,563 $41,954 $41,711
BondEdge 6,865 5,895 13,368 11,417
------- ------- ------- -------
Total $27,584 $27,458 $55,322 $53,128
======= ======= ======= =======
Income (loss) from operations
Market Information $(1,220) $ (484) $(2,073) $ (856)
BondEdge 3,158 2,197 5,810 4,252
Corporate and unallocated (2,863) (1,052) (4,222) (1,972)
------- ------ ------- ------
Total $ (925) $ 661 $ (485) $1,424
======= ====== ======= ======
EBITDA
Market Information $ 854 $2,564 $ 2,276 $5,231
BondEdge 3,958 3,199 7,514 6,250
Corporate and unallocated (2,736) (1,045) (4,089) (1,959)
------ ------ ------- ------
Total $2,076 $4,718 $ 5,701 $9,522
====== ====== ======= ======
The "Corporate and unallocated" line within Income (loss) from
operations and EBITDA includes merger costs of $1,002,000 for the
three and six months ended December 31, 1999.
6. STOCKHOLDERS' EQUITY
--------------------
During the six months ended December 31, 1999 the company repurchased
241,000 shares of common stock for $1,944,000.
7. EARNINGS (LOSS) PER SHARE
-------------------------
As a result of the losses incurred by the Company for the three and six
months ended December 31, 1999 and 1998, all potential common shares
<PAGE>
DATA BROADCASTING CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
were anti-dilutive and were excluded from the diluted net loss per
share calculation for the period.
At December 31, 1999, 2,547,000 stock options were not included in the
calculation of diluted loss per share for the three months ended
December 31, 1999 since their inclusion would be anti-dilutive. At
December 31, 1998, there were 3,754,000 dilutive stock options.
8. NEW ACCOUNTING PRONOUNCEMENT
----------------------------
During its first fiscal quarter the Company adopted Financial
Accounting Standards Board Statement of Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities". The Company has not engaged in any hedging activity.
Therefore, adoption of this new standard had no impact on the Company.
9. SUBSEQUENT EVENT
----------------
On February 8, 2000, the Company terminated its debt agreement with Key
Corporate Capital, Inc. Such termination is a requirement of the FTAM
merger agreement.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
-----------------------------------------------------------
and Results of Operations
-------------------------
The Company delivers a wide range of information and analytical tools
used primarily by investors to make investment decisions. The Company
will deliver these services primarily over the Internet as a result of
its decision to transition away from the Company's historical
broadcast platforms. These services include the following:
. Real-time financial market prices - equities, mutual funds, options,
bonds, indices, futures, commodities and foreign exchange rates.
. News - proprietary business articles, news headlines, press releases,
wire services, and transcripts from U.S. and Russian government
activities.
. Access to historical financial databases - stock prices, technical
charts, research reports and SEC filings.
. Analytical tools - Technical stock charting and detailed fixed income
portfolio analysis.
These services are delivered on a subscription basis via the Internet
or communication devices that rely on FM subcarriers, satellite, cable
television or telephone lines. Most of the Company's new customers
are choosing Internet-delivered services and the Company expects the
trend toward Internet services to continue to grow while the number of
broadcast customers declines. The Company also plans to use broadband,
multi-cast technology to deliver its information and services in a
multimedia format.
With the exception of certain fixed income services, which are targeted
toward fixed income portfolio managers, most of the Company's customers
have historically been individual investors. However, the Company
expects the number of its institutional customers will increase as a
result of growth in its BondEdge and InSite services.
The Company operates in two business segments:
. Market Information - including financial and sports information
services targeted toward individual and institutional investors.
. BondEdge - fixed-income analytical software marketed to fixed-
income portfolio managers.
In May 1999, the Company sold its AgCast business to Farm Journal
Corporation ("FJ"), in exchange for $3,100,000 of convertible preferred
stock in FJ, a privately-held agribusiness information company.
MarketWatch.Com, Inc. ("MarketWatch") is a venture formed in October
1997 with CBS Broadcasting, Inc. It operates Internet web sites that
deliver a broad range of financial market information. The Company
believes that most of the visitors to this site are individual
investors. Although much of the information on MarketWatch is free to
visitors, it does offer paid subscriptions to certain of its data.
MarketWatch currently derives the bulk of its revenue from advertising.
In January 1999, MarketWatch completed an initial public offering of
its common stock, reducing DBC's ownership interest from 50 percent to
37 percent. The Company's ownership interest has been further diluted
to 32 percent, due to MarketWatch's issuance of stock for the
acquisition of BigCharts Inc., a leading provider of securities charts
on the Web.
DBC purchased substantially all of the assets of GTIS on August 31,
1998. GTIS provides real-time domestic and international fixed income,
foreign exchange, money market and precious metal information to
institutional, corporate and consumer clients worldwide. This
acquisition expands the Company's reach to institutional customers.
<PAGE>
DBC owns one business which has been classified as a discontinued
operation for accounting purposes. DBC Video installs and operates
point to multipoint video satellite services for retail merchants.
DBC will continue to operate this business, formerly part of Instore
Satellite Network ("ISN"), through the end of its existing contracts,
in accordance with the August 1999 agreement to sell ISN.
On November 15, 1999, the Company announced an agreement to merge with
Financial Times Asset Management ("FTAM"), part of the Financial Times
group, which is part of Pearson plc, an international media company.
The Financial Times group will transfer ownership of FTAM to DBC in
exchange for an approximate 60% stake in the combined business. The
transaction is subject to the approval of the Company's stockholders
at a meeting to be held on February 23, 2000, regulatory approvals and
other customary conditions. A closing on February 29, 2000 is
currently contemplated.
RESULTS OF CONTINUING OPERATIONS
- --------------------------------
SELECTED FINANCIAL DATA ($ Thousands)
For the Periods Ended December 31,
Three Months Six Months
1999 1998 1999 1998
------ ------ ------ ------
Revenues
Market information:
eSignal $ 7,410 $ 3,313 $14,087 $ 5,725
Institutional 3,940 3,840 7,883 6,438
Broadcast 9,369 14,410 19,984 29,548
BondEdge 6,865 5,895 13,368 11,417
------ ------ ------ ------
Total 27,584 27,458 55,322 53,128
Cost of services 14,329 13,641 28,893 26,171
Selling, general and
administrative
Sales and marketing 5,689 5,276 10,982 10,137
G&A 4,488 3,823 8,744 7,298
Depreciation and amortization
Equipment and leasehold
improvements 1,558 2,385 3,303 4,809
Goodwill 1,003 1,026 2,004 1,997
Software development
and other 440 646 879 1,292
Merger costs 1,002 - 1,002 -
------- ------- ------- -------
Income (loss) from
operations $ (925) $ 661 $ (485) $ 1,424
======= ======= ======= =======
Income (loss) from operations
Market information $(1,220) $ (484) $(2,073) $ (856)
BondEdge 3,158 2,197 5,810 4,252
Corporate and
unallocated (2,863) (1,052) (4,222) (1,972)
------- ------- ------- -------
$ (925) $ 661 $ (485) $ 1,424
======= ======= ======= =======
<PAGE>
Three Months
Revenues were flat overall, with strong growth in eSignal more than
offset by declines in broadcast revenues. Although the declines in
broadcast subscribers were more than offset by an increase in the
number of Internet subscribers, revenues per Internet subscriber are
generally lower than revenues per broadcast subscriber. Institutional
revenues increased slightly due to the growth of InSite. BondEdge
revenues grew by 16 percent largely due to an increase in the subscriber
base.
Operating income decreased $1,586,000 as the slight revenue increase was
more than offset by a $1,712,000 increase in operating expenses. The
Company incurred $1,002,000 of costs associated with the FTAM
transaction. Additional cost increases are related to compensation, new
office space in New York, and marketing and product development costs
for eSignal and InSite.
The Company's pre-tax share of the net losses of MarketWatch totaled
$5,741,000 in the current quarter, equal to $0.10 per share, compared
with $1,166,000, or $0.02 per share, for the same period in the prior
year. The increase in losses is primarily due to goodwill amortization
at MarketWatch associated with its June 1999 acquisition of BigCharts,
Inc.
Other income, net, increased by $240,000. This increase was mainly
caused by higher interest income of $229,000 which resulted from higher
cash balances during the period. Interest expense decreased by $27,000
due to lower levels of debt.
The effective tax rate was a 41 percent benefit for the quarter ended
December 31, 1999, compared with 61 percent benefit for the prior year
period. This was the result of non-deductible goodwill amortization
and significant losses at MarketWatch.
Weighted average shares outstanding increased by five percent due to
the issuance of shares associated with the exercise of stock options
and warrants. The increases were partially offset by the Company's
purchases of treasury shares.
Six Months
Overall, revenues increased by four percent with strong growth in
eSignal more than offset by declines in broadcast revenues. Although
the declines in broadcast subscribers were more than offset by an
increase in the number of Internet subscribers, revenues per Internet
subscriber are generally lower than revenues per broadcast subscriber.
Institutional revenues increased slightly due to the August 1998
acquisition of GTIS and the growth of InSite. BondEdge revenues grew
by 17 percent largely due to an increase in the subscriber base.
Operating income decreased $1,909,000 as the slight revenue increase
was more than offset by a $4,103,000 increase in operating expenses.
The Company incurred $1,002,000 of costs associated with the FTAM
transaction. Additional cost increases are related to compensation,
new office space in New York, and marketing and product development
costs for eSignal and InSite.
The Company's pre-tax share of the net losses of MarketWatch totaled
$11,384,000 in the current six-month period, equal to $0.20 per share,
compared with $2,089,000, or $0.04 per share, for the same period in the
prior year. The increase in losses is primarily due to goodwill
amortization at MarketWatch associated with its June 1999 acquisition of
BigCharts, Inc.
Other income, net, increased by $317,000. This increase was mainly
caused by higher interest income of $297,000 which resulted from higher
cash balances during the period. Interest expense decreased by $36,000
due to lower levels of debt.
<PAGE>
The effective tax rate was a 40 percent benefit for the six months
ended December 31, 1999, compared with 62 percent benefit for the prior
year period. This was the result of non-deductible goodwill
amortization and significant losses at MarketWatch.
Weighted average shares outstanding increased by five percent due to
the issuance of shares associated with the exercise of stock options
and warrants. The increases were partially offset by the Company's
purchases of treasury shares. Basic and diluted weighted average
shares outstanding increased by one percent.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
Cash provided by operating activities decreased by $4,342,000 from the
comparative six-month period. This was primarily due to lower
operating earnings and an increase in accounts receivable.
The Company invested $6,118,000 in the current period for property and
equipment and capitalized software development, compared with
$5,270,000 in the prior period. The Company received $3,995,000 for
the sale of ISN during the current period. In the prior period, DBC
paid $3,923,000 for the acquisition of GTIS and advanced $3,403,000 to
MarketWatch.
DBC received $339,000 in cash from the exercise of stock options and
warrants compared with $7,085,000 in the prior period. DBC used
$1,944,000 of cash to repurchase its own common stock during the
current period compared with $4,238,000 for the comparable prior period.
Due to the large number of stock options exercised during fiscal 1999,
the Company incurred a significant income tax loss for the fiscal year.
The Company intends to carryback a portion of this loss to prior years
and receive a refund during fiscal 2000 for income taxes paid during
those years.
Management believes that the cash generated by operating activities and
its existing cash are sufficient to meet the short- and long-term
working capital needs of the current operations of the Company.
DBC terminated its debt agreement with Key Corporate Capital, Inc. on
February 8, 2000. Such termination is a requirement of the FTAM
merger agreement.
BUSINESS DEVELOPMENT AND OUTLOOK
- --------------------------------
The Company has experienced substantial growth in its Internet
subscriber base over the last year and expects this trend to continue.
While Internet services generally generate less revenue per subscriber
than their broadcast counterparts, DBC expects that it will be able to
deliver Internet services to a market that is significantly larger than
its traditional market. Consequently, it expects that revenues from
its market information business will increase.
FORWARD LOOKING STATEMENTS
- --------------------------
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, research and
development activities and similar matters. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-
looking statements. In order to comply with the terms of the safe
harbor, the Company notes that a variety of factors could cause the
Company's actual results and experience to differ materially from
the anticipated results or other expectations expressed in the
Company's forward-looking statements. The risks and uncertainties that
may affect the operations, performance, development and results of the
Company's business include the following:
. The presence of competitors with greater financial resources and
their strategic response to the Company's new services.
. The acceptance of the Internet as a reliable real-time distribution
platform by institutional customers.
. The ability of the Company to broaden its subscriber base by adding
more individual investors outside of the Company's traditional
"active-trader" market.
. The potential obsolescence of the Company's services due to the
introduction of new technologies.
. Activity levels in the securities markets.
<PAGE>
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Company is a party to various legal proceedings incidental to its
business operation, none of which is expected to have a material effect
on the financial condition or results of operations of the Company.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
a. The following exhibits are filed as part of this report:
Exhibit
Number Description of Exhibit
------- ----------------------
10.1 Employment Agreement - Steven G. Crane
27 Financial Data Schedule
b. Reports on Form 8-K
On November 22, 1999, the Registrant filed a Current Report on
Form 8-K, dated November 14, 1999, which reported under Items
5 and 7, the proposed merger between the Registrant,
Interactive Data Corporation, Pearson Longman, Inc., and
Detective Merger-Sub, Inc. (a wholly-owned subsidiary of the
Registrant).
<PAGE>
<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, thereunto duly authorized.
DATA BROADCASTING CORPORATION
(Registrant)
Dated: February 11, 2000 By: /s/ Mark F. Imperiale
-------------------- -------------------------
Mark F. Imperiale
Chief Executive Officer
Dated: February 11, 2000 By: /s/ Steven G. Crane
-------------------- ------------------------
Steven G. Crane
Chief Financial Officer
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS AGREEMENT (the Agreement) is being made as of the 15th
day of October 1999 between DATA BROADCASTING CORPORATION, a
Delaware corporation (the Company), having its principal offices
at 3490 Clubhouse Drive, Jackson, Wyoming 83001, and STEVEN G.
CRANE (the Executive), an individual residing at 191 West End
Avenue, Ridgewood, New Jersey 07450.
WITNESSETH:
WHEREAS, the Company desires to employ the Executive and the
Executive desires to be employed by the Company as its Executive
Vice President and Chief Financial Officer upon the terms and
conditions contained herein.
NOW, THEREFORE, in consideration of the mutual premises and
agreements contained herein, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. Nature of Employment; Term of Employment. The Company
hereby employs the Executive and the Executive agrees to serve
the Company, upon the terms and conditions contained herein, for
a term commencing no later than November 30, 1999 (the Effective
Date) and continuing until June 30, 2002 (the Employment Term);
provided, however, that the Employment Term shall be extended to
June 30, 2003 if, prior to December 31, 2000, a Change in Control
(as defined in Section 8 of this Agreement) shall occur.
2. Duties and Powers as Employee. During the Employment
Term, the Executive shall be employed by the Company as its
Executive Vice President and Chief Financial Officer. The
Executive shall be responsible for finance and administration.
The Executive shall be based in the New York Metropolitan Area.
The Executive agrees to devote his full time and efforts to the
performance of his duties under this Agreement. In the
performance of his duties, the Executive shall be subject to the
direction of and shall report to the Chief Executive Officer of
the Company. The Executive shall be available to travel as the
needs of the business require.
3. Compensation.
(a) As compensation for his services hereunder, the
Company shall pay the Executive, during the Employment Term, a
base salary (the Base Salary) payable in equal semi-monthly
installments at the minimum annual rate of $300,000 through June
30, 2001 and $325,000 for the period July 1, 2001 through the
<PAGE>
expiration of the Employment Term. Such payments shall be
subject to withholding of all taxes payable with respect thereto
and deductions for insurance contributions and the like.
Additionally, the Executive shall participate in the present or
future employee benefit plans of the Company provided that he
meets the eligibility requirements therefor.
(b) In addition to the Base Salary provided herein
Executive is eligible for a performance bonus payment (the
Bonus), on an annual basis, in a sum equal to up to 100% of the
Executive's Base Salary paid for the fiscal year then ended. The
Company and Executive acknowledge that the expected Bonus in each
fiscal year is 50% of Base Salary paid (the Target Bonus). One
half of the Bonus shall be determined in the absolute and sole
discretion of the Compensation Committee of the Board of
Directors of the Company based upon an evaluation of the
performance of the Executive and the Company during the previous
fiscal year. One half of such Bonus shall be based upon
financial criteria established at the commencement of each fiscal
year during the Employment Term. For the Company's fiscal year
ended June 30, 2000, such Bonus shall be no less than 50% of the
Base Salary paid to the Executive during such fiscal year. To
the extent that the Company determines to pay the Bonus to the
Executive, the Bonus shall be paid to the Executive within ninety
(90) days after the end of the Company's fiscal year
notwithstanding that such date may be after the expiration of the
Employment Term.
(c) Effective as of the date of this Agreement, the
Company shall issue to the Executive a non-qualified stock option
to acquire 120,000 shares of common stock of the Company. In
addition, effective upon the first anniversary of the date of
this Agreement, the Company shall issue to the Executive a
nonqualified stock option to acquire 60,000 shares of common
stock of the Company. Each such option shall vest over a period
of three years and shall have an exercise price equal to the
market price on the date of grant.
(d) In the event the Executive's present employer
requests him to repay a loan given to him in connection with his
relocation to the New York Metropolitan Area, the Company shall
pay the Executive a one time starting bonus equal to the amount
of such loan, but no greater than $25,000.
4. Expenses; Vacations. The Executive shall be entitled to
reimbursement for reasonable travel and other out-of-pocket
expenses necessarily incurred in the performance of his duties
hereunder, upon submission and approval of written statements and
bills in accordance with the then regular procedures of the
<PAGE>
Company. The Executive shall be entitled to reasonable vacation
time in accordance with then regular procedures of the Company
governing executives as determined from time to time by the
Company's Board of Directors but in no event less than twenty
days per year.
5. Representations and Warranties of Employee. The
Executive represents and warrants to the Company that (a) he is
under no contractual or other restriction or obligation which is
inconsistent with the execution of this Agreement, the
performance of his duties hereunder, or the other rights of the
Company hereunder; and (b) he is under no physical or mental
disability that, with or without reasonable accommodation, would
hinder his performance of duties under this Agreement.
6. Non-Competition. The Executive agrees that he will not
(a) during the period he is employed under this Agreement engage
in, or otherwise directly or indirectly be employed by, or act as
a consultant or lender to, be a director, officer, employee,
owner, or partner of, any other business or organization that is
or shall then be competing with the Company, and (b) for a period
of two (2) years after he ceases to be employed by the Company
under this Agreement, directly or indirectly compete with or be
engaged in the same business as the Company, or be employed by,
or act as consultant or lender to, or be a director, officer,
employee, owner, or partner of, any business or organization
which at the time of such cessation, competes with or is engaged
in the same business as the Company, except that in each case the
provisions of this Section 6 will not be deemed breached merely
because the Executive owns not more than five percent (5.0%) of
the outstanding common stock of a corporation, if, at the time of
its acquisition by the Executive, such stock is listed on a
national securities exchange, is reported on NASDAQ, or is
regularly traded in the over-the-counter market by a member of
national securities exchange.
7. Confidential Information. All confidential information
which the Executive may now possess, may obtain during the
Employment Term, or may create prior to the end of the period he
is employed by the Company under this Agreement, relating to the
business of the Company or of any customer or supplier of the
Company shall not be published, disclosed, or made accessible by
him to any other person, form, or corporation during the
Employment Term or any time thereafter without the prior written
consent of the Company. The Executive shall return all tangible
evidence of such confidential information to the Company prior to
or at the termination of his employment.
8. Termination; Change in Control.
<PAGE>
(a) Termination for Cause. Notwithstanding anything
herein contained, if on or after the date hereof and prior to the
end of the Employment Term, the Executive is terminated For Cause
(as defined below), then the Company shall have the right to give
notice of termination of Executive's services hereunder as of a
date to be specified in such notice, and this Agreement shall
terminate on the date so specified. Termination For Cause shall
mean the Executive shall (i) be convicted of a felony crime, (ii)
commit any act or omit to take any action in bad faith and to the
detriment of the Company, (iii) commit an act of moral turpitude,
(iv) commit an act of fraud against the Company, or (v)
materially breach any term of this Agreement and fail to correct
such breach within thirty (30) days after commission thereof.
(b) Disability. In the event that the Executive shall
be physically or mentally incapacitated or disabled or otherwise
unable fully to discharge his duties hereunder, with or without
reasonable accommodation, for a period of six months, then this
Agreement shall terminate upon 90 days written notice to the
Executive.
(c) Death. In the event that the Executive shall die,
then this Agreement shall terminate on the date of the
Executive's death.
(d) Change in Control.
(i) For purposes of this Agreement, a Change in
Control shall be deemed to have occurred if:
(A) any person, as such term is used in
Section 13(d) and 14(d) of the Securities Exchange Act of 1934,
as amended (the Exchange Act) (other than (1) the Executive or
Allan R. Tessler or Alan J. Hirschfield; (2) any trustee or other
fiduciary holding securities under an employee benefit plan of
the Company or (3) any corporation owned, directly or indirectly,
by the stockholders of the Company in substantially the same
proportion as their ownership of Shares), is or becomes the
beneficial owner (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power of the
Company's then outstanding voting securities;
(B) individuals who at the Effective Date
constitute the Board, and any new director whose election by the
Board or nomination for election by the Board or nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3) of the directors then still in office
who either were directors at the beginning of the period or whose
<PAGE>
election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;
(C) the stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than (1) a merger or consolidation that would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving or parent entity outstanding
immediately after such merger or consolidation or (2) a merger or
consolidation effect to implement a recapitalization of the
Company (or similar transaction) in which no person as
hereinabove defined) acquires 50% or more of the combined voting
power of the Company's then outstanding securities;
(D) the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all of the Company's assets (or any transaction having a similar
effect).
(e) Effect of Termination or Change in Control.
(i) In the event that this Agreement is terminated
pursuant to Section 8(a), then the Executive shall be entitled to
receive only his Base Salary at the rate provided in Section 3 to
the date on which termination shall take effect.
(ii) In the event that this Agreement is terminated by
the Company pursuant to Section 8(b) or 8(c), then the Executive,
or the Executive's beneficiary (as the case may be), shall be
entitled to receive his Base Salary at the rate provided in
Section 3 to the date on which termination shall take together
with a lump sum distribution (with no present value adjustment)
equal to the Base Salary at the rate provided in Section 3 for a
period of six months. In such event then the Executive's issued
but unvested options shall vest immediately upon such
termination. The Executive, or the Executive's beneficiary (as
the case may be), shall have the right to exercise any stock
option for a period of one year following the date of
termination, but in no event beyond the expiration date of any
such option.
(iii) In the event that this Agreement is terminated
by the Company for any reason other than pursuant to Section
8(a), (b) or (c), then the Executive, or the Executive's
beneficiary (as the case may be), shall be entitled to receive
his Base Salary at the rate provided in Section 3 to the date on
<PAGE>
which termination shall take effect together with a lump sum
distribution (with no present value adjustment) equal to the Base
Salary and Target Bonus at the rate provided in Section 3 for a
period of the greater of one year or the balance of the
Employment Term. In the case of a Change in Control, any of the
Executive's issued but unvested options shall vest immediately
upon such Change in Control. The Executive, or the Executive's
beneficiary (as the case may be), shall have the right to
exercise any stock option for a period of one year following the
date of termination, but in no event beyond the expiration date
of any such option. In addition, in such case the two (2) year
period described in Section 6(b) of this Agreement shall be
reduced to one (1) year.
(f) Nothing contained in this Section 8 shall be deemed
to limit any other right the Company may have to terminate
Employee's employment hereunder upon any ground permitted by law.
9. Change of Control.
In the event of a future disposition of (or including) the
properties and business of the Company, substantially as an
entirety, by merger, consolidation, sale of assets, or otherwise,
the Company shall assign this letter and all of its rights and
obligations hereunder to the acquiring or surviving corporation,
such corporation shall assume in writing all of the obligations
of the Company, and the Company (in the event and so long as it
remains in business as an independent going enterprise) shall
remain liable for the performance of its obligations hereunder in
the event of an unjustified failure of the acquiring corporation
to perform its obligations under this letter.
10. Survival. The covenants, agreements, representations,
and warranties contained in or made pursuant to this Agreement
shall survive the Executive's termination of employment,
irrespective of any investigation made by or on behalf of any
party.
11. Modification. This Agreement sets forth the entire
understanding of the parties with respect to the subject matter
hereof, terminates and supersedes all existing agreements
(written, oral or otherwise) between them concerning such subject
matter, and may be modified only by a written instrument duly
executed by each party. The Executive acknowledges that no other
representations, oral or written, have been made regarding the
subject matter hereof, other than those explicitly provided
herein. The Executive further acknowledges that he has not
relied on any oral or written representations not explicitly
contained herein in executing this Agreement.
<PAGE>
12. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be
mailed by certified mail, return receipt requested, or delivered
against receipt to the party to whom it is to be given at the
address of such party set forth in the preamble to this Agreement
(or to such other address as the party shall have furnished in
writing in accordance with the provisions of this Section 12).
In the case of a notice to the Company, a copy of such notice
(which copy shall not constitute notice) shall be delivered to
Camhy Karlinsky & Stein LLP, 1740 Broadway, New York, New York
10019-4315, Attn. Alan I. Annex, Esq. Notice to the estate of
the Executive shall be sufficient if addressed to the Executive
as provided in this Section 12. Any notice or other
communication given by certified mail shall be deemed given at
the time of certification thereof, except for a notice changing a
party's address which shall be deemed given at the time of
receipt thereof.
13. Waiver. Any waiver by either party of a breach of any
provision of this Agreement shall not operate as or be construed
to be a waiver of any other breach of such provision or of any
breach of any other provision of this Agreement. The failure of
a party to insist upon strict adherence to any term of this
Agreement on one or more occasions shall not be considered a
waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this
Agreement. Any waiver must be in writing.
14. Binding Effect. The Executive's rights and obligations
under this Agreement shall not be transferable by assignment or
otherwise, such rights shall not be subject to encumbrance or the
claims of the Executive's creditors, and any attempt to do any of
the foregoing shall be void. The provisions of this Agreement
shall be binding upon and inure to the benefit of the Executive
and his heirs and personal representatives, and shall be binding
upon and inure to the benefit of the Company and its successors
and those who are its assigns under Section 9.
15. Headings. The headings in this Agreement are solely
for the convenience of reference and shall be given no effect in
the construction or interpretation of this Agreement.
16. Counterparts; Governing Law. This Agreement may be
executed in any number of counterparts, each of which shall be
deemed an original, but all of which together shall constitute
one and the same instrument. It shall be governed by, and
construed in accordance with, the laws of the State of Wyoming,
without giving effect to the rules governing the conflicts of
<PAGE>
laws.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above.
DATA BROADCASTING CORPORATION
By: /s/ Mark F. Imperiale
Name: Mark F. Imperiale
Title: President
/s/ Steven G. Crane
STEVEN G. CRANE
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated statements of income and balance sheets and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 43,905
<SECURITIES> 0
<RECEIVABLES> 9,289
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 60,520
<PP&E> 58,986
<DEPRECIATION> 42,252
<TOTAL-ASSETS> 182,391
<CURRENT-LIABILITIES> 34,149
<BONDS> 0
0
0
<COMMON> 376
<OTHER-SE> 145,933
<TOTAL-LIABILITY-AND-EQUITY> 182,391
<SALES> 0
<TOTAL-REVENUES> 55,322
<CGS> 0
<TOTAL-COSTS> 28,893
<OTHER-EXPENSES> 6,186
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (10,932)
<INCOME-TAX> (4,322)
<INCOME-CONTINUING> (6,610)
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<NET-INCOME> (6,610)
<EPS-BASIC> (.19)
<EPS-DILUTED> (.19)
</TABLE>
