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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q/A
(AMENDMENT NO. 1)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition period from ________ to ________
Commission File Number: 0-25674
CBT GROUP PUBLIC LIMITED COMPANY
(Exact name of registrant as specified in its charter)
Republic of Ireland Not Applicable
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
900 CHESAPEAKE DRIVE
REDWOOD CITY, CALIFORNIA 94063
(Address of principal executive offices, including zip code)
(650) 817-5900
(Registrant's telephone number, including area code)
Indicate by check mark whether 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 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 American Depositary Shares (issued or issuable in exchange for
Registrant's issued and outstanding Ordinary Shares) outstanding as of October
31, 1998 was 44,355,890.
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CBT GROUP PUBLIC LIMITED COMPANY
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
Number
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<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of December 31, 1997 3
and as of September 30, 1998
Condensed Consolidated Statements of Operations for the three 4
and nine month periods ended September 30, 1997 and 1998
Condensed Consolidated Statements of Cash Flows for the nine 5
month periods ended September 30, 1997 and 1998
Notes to Condensed Consolidated Financial Statements 6
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This quarterly report on Form 10-Q/A ("Form 10Q/A") is being filed as
Amendment No. 1 to the Registrant's Quarterly Report on Form 10-Q filed with
the Secrities and Exchange Commission on November 16, 1998 ("Form 10-Q") for
the purposes of amending Item 1 to include additional disclosure in the Notes
to Condensed Consolidated Financial Statements.
2
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PART I FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
CBT GROUP PLC
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1997 1998
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets
Cash $ 35,505 $ 63,086
Short term investments 36,038 36,217
Accounts receivable, net 40,031 43,484
Inventories 615 701
Deferred tax assets, net 140 234
Prepaid expenses 4,198 5,830
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Total Current assets 116,527 149,552
Intangible assets 5,600 4,502
Property and equipment, net 10,207 16,569
Investment 200 550
Deferred tax assets, net 342 47
Other assets 8,453 13,883
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Total assets 141,329 185,103
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Borrowings under bank overdraft facility and overdrafts 13 54
Accounts Payable 4,820 5,927
Accrued payroll and related expenses 6,411 3,579
Other accrued liabilities 16,715 21,427
Deferred revenues 4,551 1,859
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Total Current Liabilities 32,510 32,846
Non Current Liabilities
Other accrued liabilities 519 287
Minority equity interest 622 622
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Total Non Current Liabilities 1,141 909
Shareholders' Equity
Ordinary Shares: 30,000,000 shares authorized , IR37.5p par value, at 6,372 6,678
December 31, 1997 and 120,0000 shares authorized, par value IR9.375p at
September 30, 1998;
Issued and outstanding: 10,511,190 shares at December 31, 1997 and
44,213,526 shares at September 30, 1998
Additional paid-in-capital 97,868 126,432
Accumulated surplus 2,984 17,302
Deferred compensation (112) -
Cumulative translation adjustment 566 936
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Shareholders' equity 107,678 151,348
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Total liabilities and shareholders' equity 141,329 185,103
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</TABLE>
Note: The condensed consolidated balance sheet at December 31, 1997 has been
derived from the audited financial statements at that date and has been restated
to reflect the acquisition of The ForeFront Group, Inc (see note 2 below). In
addition, the balance sheet does not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements.
3
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CBT GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Nine Months
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Ended September 30, Ended September 30,
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1997 1998 1997 1998
---- ---- ---- ----
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues $35,136 $35,182 $91,618 $119,963
Cost of revenues 5,657 5,998 15,511 18,639
------- ------- ------- --------
Gross profit 29,479 29,184 76,107 101,324
Operating expenses:
Research and development 5,105 5,762 14,267 18,756
Sales and marketing 14,680 17,684 40,923 53,174
General and administrative 2,624 4,179 8,588 10,987
Acquired research and development 3,650 -- 4,097 --
Cost of acquisitions 242 -- 1,168 5,505
------- ------- ------- --------
Total operating expenses 26,301 27,625 69,043 88,422
------- ------- ------- --------
Income from operations 3,178 1,559 7,064 12,902
Other income, net 2,599 1,786 3,819 3,689
------- ------- ------- --------
Income before provision for income taxes 5,777 3,345 10,883 16,591
Provision for income taxes 1,043 468 2,379 2,273
------- ------- ------- --------
Net income 4,734 2,877 8,504 14,318
======= ======= ======= ========
Net income per equivalent ADS (1) - Basic $0.12 $0.07 $0.21 $0.33
======= ======= ======= ========
ADSs used in computing net income per 40,984 43,944 40,146 43,262
equivalent ADS - Basic ======= ======= ======= ========
Net income per equivalent ADS (1) - $0.11 $0.06 $0.19 $0.31
Diluted ======= ======= ======= ========
ADSs used in computing net income per 44,983 46,498 44,247 46,222
equivalent ADS - Diluted ======= ======= ======= ========
</TABLE>
(1) Net income per equivalent ADS gives effect to the two-for-one split of
Registrants' ADSs effected in March 1998. Prior periods have been restated
to give effect to such split.
4
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CBT GROUP PLC
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
INCREASE (DECREASE) IN CASH
(dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1997 1998
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(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 8,504 $14,318
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 3,096 4,306
(Gain) / Loss on Disposal of Assets (1,869) 178
Accrued interest on short-term investments 193 347
Compensation Expense 66 112
Non cash acquired Research and Development costs 4,097 -
Changes in operating assets and liabilities:
Accounts receivable (8,088) (3,474)
Inventories (45) (62)
Deferred tax assets - 201
Prepaid expenses and other assets (3,962) (7,091)
Accounts payable 631 1,211
Accrued payroll and related expenses and other accrued liabilities 3,256 1,651
Deferred revenues (1,868) (2,606)
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Net cash provided by operating activities 4,011 9,091
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (4,207) (9,814)
Proceeds from disposal of property and equipment 1,869 -
Net Cash paid for Lantec acquisition (1,803) -
Payments to acquire short-term investments (1,390) (78,980)
Proceeds from disposal of investments - 78,454
Payments to acquire investment (200) (350)
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Net cash used in investing activities (5,731) (10,690)
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CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of bank loans (794) -
(Repayments) / Proceeds under bank overdraft facility (138) 41
Proceeds from issuance of preferred shares in subsidiary 605 -
Proceeds from issuance of ordinary shares, net 11,238 28,870
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Net cash provided by financing activities 10,911 28,911
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Effect of exchange rate changes on cash (30) 269
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Net increase in cash 9,161 27,581
Cash at beginning of period 17,560 35,505
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Cash at end of period $26,721 $63,086
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</TABLE>
5
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CBT GROUP PLC
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 INTERIM CONSOLIDATED FINANCIAL STATEMENTS
These interim unaudited condensed and consolidated financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. The
accompanying interim financial statements should be read in conjunction with
the financial statements and related notes included in the Company's Annual
Report to Shareholders (Form 10-K) for the year ended December 31, 1997. In the
opinion of management, all adjustments (consisting of normal recurring
accruals), considered necessary for a fair presentation of financial position,
results of operations and cash flows at the dates and for the periods presented
have been included. The results of operations for the periods presented are not
necessarily indicative of the results expected for the full financial year or
for any future period.
NOTE 2 ACQUISITION OF THE FOREFRONT GROUP, INC.
On May 29, 1998, CBT Group PLC ("CBT," or the "Company") completed the
acquisition of The ForeFront Group, Inc ("ForeFront"). The Company issued
approximately 2.2 million ADSs in connection with the acquisition and assumed
options, warrants and other rights to acquire ForeFront common stock that can
be exercised for approximately 1.0 million ADSs. The transaction is being
accounted for as a "pooling of interests" in accordance with U.S. generally
accepted accounting principles.
Reconciliations of revenue and earnings previously reported by CBT, based on
CBT's separate results before restating for the ForeFront pooling, to the
combined amounts currently presented in the condensed financial statements and
notes to the condensed financial statements are as follows:
<TABLE>
<CAPTION>
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Three Months Ended Nine Months Ended
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September 30, 1997 September 30, 1997
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CBT ForeFront Revised CBT ForeFront Revised
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(dollars in thousands) (dollars in thousands)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Revenue $30,412 $4,724 $35,136 $78,576 $13,042 $91,618
- --------------------------------------------------------------------------------
Net Income $5,906 $(1,172) $4,734 $13,469 $(4,965) $8,504
- --------------------------------------------------------------------------------
</TABLE>
NOTE 3 SHARE SPLIT
On March 9, 1998 the Company effected a two-for-one split of its issued and
outstanding ADSs. Subsequent thereto, the Company's shareholders approved a
proposal at the Company's 1998 Annual General Meeting to subdivide each of the
Ordinary Shares of IR37.5p into four Ordinary Shares of IR9.375p (the "Ordinary
Share Split"). As a consequence of the Ordinary Share Split, effective May 22,
1998 each ADS represents and is exchangeable for one Ordinary Share (the "Ratio
Change"). Aside from the Ratio Change, the Ordinary Share Split had no effect
on the ADSs and had no effect on the number of ADSs outstanding.
NOTE 4 NEW ACCOUNTING STANDARDS
The Company adopted Statement of Financial Accounting Standard (SFAS) No. 130,
"Reporting Comprehensive Income" as of January 1, 1998. SFAS No. 130 requires
disclosure of total non-stockholder changes in equity in interim periods and
additional disclosures of the components of non-stockholder changes in equity
on an annual basis. Total non-stockholder changes in equity include all changes
in equity during a period except those resulting from investments by and
distribution to stockholders. The Company has restated information for all
prior periods reported below to conform to this standard.
6
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The Company's total comprehensive earnings were as follows:
<TABLE>
<CAPTION>
Nine months ended
September 30,
1997 1998
---- ----
(dollars in thousands) (Unaudited) (Unaudited)
<S> <C> <C>
Net Income $8,504 $14,318
Foreign Currency Translation Gains 15 370
-- ---
Total Comprehensive Income 8,519 14,688
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</TABLE>
NOTE 5 COMPUTATION OF NET INCOME PER SHARE
The Company has adopted Statement of Financial Accounting Standards (SFAS)
No. 128. This statement requires the presentation of basic and diluted net
income per share. Basic net income per share is computed using the weighted
average number of ordinary shares outstanding during the period. Diluted net
income per share is computed using the weighted average number of ordinary and
dilutive ordinary equivalent shares outstanding during the period. Dilutive
ordinary equivalent shares outstanding include stock options, warrants and
exchangeable shares. The Company has restated all prior period per share data
presented as required by SFAS No. 128. Restated numbers as computed using the
diluted method under SFAS No. 128 approximate those computed using the
previous method as defined in Accounting Principals Board Opinion No. 15.
NOTE 6 COMMITMENTS AND CONTINGENCIES
See Legal Proceedings in Part II, Item 1 and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Part I, Item 2
herein.
7
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
CBT GROUP PLC
Date: April 6, 1999 By: /s/ William G. McCabe
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Mr. William G. McCabe
Chairman of the Board
Date: April 6, 1999 By: /s/ Gregory M. Priest
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Mr. Gregory M. Priest
Chief Executive Officer and President
8
