UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): November 20, 1997
ITC LEARNING CORPORATION
(FORMERLY KNOWN AS INDUSTRIAL TRAINING CORPORATION)
(Exact name of registrant as specified in its charter)
MARYLAND 0-13741 52-1078263
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification Number)
13515 DULLES TECHNOLOGY DRIVE
HERNDON, VIRGINIA 20171-3413
(Address of principal executive offices)
Registrant's telephone number, including area code: (703) 713-3335
NONE
(Former name and address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On November 20, 1997, ITC Learning Corporation (the "Registrant" or "ITC")
entered into a Stock Purchase Agreement (the "Agreement") to sell all of the
shares of stock of ITC's wholly-owned subsidiary, Anderson Soft-Teach ("AST") to
Anderson Holdings, Inc., an Illinois corporation (the "Purchaser"). Anderson
Soft-Teach is a developer and marketer of multimedia PC skills training
courseware located in Los Gatos, California. The sale was concluded on November
20, 1997. The consideration for the transaction was $4 million in cash and a
secured promissory note in the amount of $950,000. The Purchaser is obligated
to make quarterly interest payments on the promissory note at an annual interest
rate of 8%, with the balance due at the end of three years. The consideration
was determined through arm's length negotiations between ITC and the Purchaser.
Anderson Holdings, Inc. is headed by Bette Tomaszewicz, a twenty year training
industry veteran, and a former employee and officer of ITC. As part of the
Agreement, ITC agreed to repurchase 100,000 shares of ITC common stock held by
Ms. Tomaszewicz at $5 per share which is equivalent to the market value of the
stock when the parties first entered into negotiations. No other material
relationship between the Purchaser and the Registrant, or any of its affiliates,
officers and directors existed prior to the transaction.
The description of the transaction contained herein is qualified in its entirety
by reference to the Agreement, which is attached hereto as Exhibit 2.1 and is
incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
a) Financial statements of business acquired. Not applicable.
b) The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
Pro Forma Condensed Consolidated Statement of Operations of ITC Learning
Corporation for nine months ended September 30, 1997. As the original
acquisition of AST occurred on December 31, 1996 and no results of
operations pertaining to AST were included in ITC's audited Statement of
Operations for the year ending December 31, 1996, a pro forma Statement of
Operations is not presented for this period.
Pro Forma Condensed Consolidated Balance Sheet of ITC Learning Corporation
as of September 30, 1997.
c) Exhibits
2.1 Stock Purchase Agreement dated as of November 20, 1997 by and between
Anderson Holdings, Inc., an Illinois corporation and ITC Learning
Corporation, a Maryland corporation and the Registrant. (A list of
exhibits and schedules to the Stock Purchase Agreement is set forth
therein. The Registrant agrees to furnish to the Commission, upon
request, a copy of any such exhibits or schedules not otherwise filed
herewith.)
99.1 Press Release of the Registrant dated November 20, 1997.
2
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
On November 20, 1997, ITC Learning Corporation ("ITC") entered into a Stock
Purchase Agreement with Anderson Holdings, Inc. for the sale of the business of
ITC's wholly-owned subsidiary, Anderson Soft-Teach ("AST").
Pursuant to the Agreement, ITC received $4,000,000 in cash and a secured
promissory note for $950,000 in exchange for all the issued and outstanding
shares of capital stock of AST and elimination of certain outstanding inter-
company obligations.
The Unaudited Pro Forma Financial Statements which follow include the effects of
the sale on financial position and results of operations of ITC and its
remaining subsidiaries. These statements assume that AST was sold prior to
January 1, 1997. The transaction is expected to result in a gain of
approximately $800,000. This gain has not been included in the Pro Forma
Statement of Operations.
The Pro Forma Financial Statements are presented for comparative purposes only
and are not indicative of what the actual results of operations would have been
had the transaction occurred as of the beginning of the respective periods nor
do they purport to indicate the results which may be attained in the future.
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ITC LEARNING CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
STATEMENT OF OPERATIONS
(Unaudited)
NINE MONTHS ENDING SEPT. 30, 1997
AS REPORTED ADJUSTMENTS PRO FORMA
------------ ---------------- ------------
Revenues $16,297,834 $(3,849,795) (1) $12,448,039
Cost of Sales 9,844,537 (1,907,769) (1) 7,936,768
----------- ----------- -----------
Gross Profit 6,453,297 (1,942,026) 4,511,271
Selling, general and
administrative expenses 8,953,365 (2,086,436) (1) 6,866,929
Equity in earnings of
affiliates (198,503) (198,503)
Interest income,
net of expense (138,473) (2,158) (1) (140,631)
----------- ----------- -----------
Income loss, before provision
for income taxes (2,163,092) 146,568 (2,016,524)
Income taxes (benefit) (716,000) (18,000) (2) (734,000)
----------- ----------- -----------
Net income (loss) $(1,447,092) $ 164,568 $(1,282,524)
=========== =========== ===========
Net income (loss) per
common share $ (0.37) $ (0.33)
=========== ===========
Weighted average no.
of shares outstanding 3,897,027 3,897,027
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(1) Eliminate results of operations for AST from January 1, 1997 through
September 30, 1997.
(2) Eliminate tax provision allocated to AST.
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ITC LEARNING CORPORATION
PRO FORMA CONDENSED CONSOLIDATED
BALANCE SHEET
(Unaudited)
AS REPORTED PRO FORMA PRO FORMA
Sept. 30, 1997 ADJUSTMENTS SEPT. 30, 1997
-------------- ----------- ---------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,406,570 $ 3,222,651 (2),(3),(4) $ 5,629,221
Accounts receivable 5,326,039 (998,931) (2) 4,327,108
Due from affiliates 100,194 100,194
Inventories 4,123,849 (290,193) (2) 3,833,656
Prepaid expenses 364,502 (12,858) (2) 351,644
Income taxes receivable 278,595 (169,061) (2) 109,534
Other current assets 7,239 7,239
----------- -----------
Total current assets 12,606,988 1,751,608 14,358,596
Long-term receivable 1,015,978 1,015,978
Property and equipment, net 1,060,499 (263,751) (2) 796,748
Capitalized program development costs, net 4,576,124 (772,376) (2) 3,803,748
Intangible assets 3,653,526 (1,980,978) (2) 1,672,548
Deferred tax asset 516,403 (18,000) (1) 498,403
Other assets 42,312 920,428 (2),(3) 962,740
----------- ----------- -----------
Total assets $23,471,830 $ (363,069) $23,108,761
=========== =========== ===========
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ITC LEARNING CORPORATION
(Unaudited)
AS REPORTED PRO FORMA PRO FORMA
SEPT. 30, 1997 ADJUSTMENTS SEPT. 30, 1997
-------------- -------------- --------------
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current Liabilities:
Line of credit $ 0 $ 0
Current installments
of long-term debt 34,515 34,515
Accounts payable 1,124,244 (319,683) (2) 804,561
Due to affiliates 321,580 321,580
Accrued compensation
and benefits 745,269 (141,582) (2) 603,687
Other accrued expenses 1,156,199 301,128 (2),(3) 1,457,327
Deferred revenue 4,711,373 (512,434) (2) 4,198,939
-------------- -------------- --------------
Total current liabilities 8,093,180 (672,571) 7,420,609
Deferred lease obligations 102,829 (29,013) (2) 73,816
-------------- -------------- --------------
Total liabilities 8,196,009 (701,584) 7,494,425
Commitments
Stockholders' equity:
Common stock, $.10 par value,
12,000,000 shares authorized; 3,897,034
issued and outstanding 389,693 389,693
Additional paid-in capital 16,068,696 (462,500) (4) 15,606,196
Note receivable from ESOP (67,177) (67,177)
Retained earnings (deficit) (1,070,347) 801,015 (1),(2),(3),(4) (269,332)
Foreign currency translation adjustment (45,044) (45,044)
-------------- -------------- --------------
Total stockholders' equity 15,275,821 338,515 15,614,336
-------------- -------------- --------------
Total liabilities and stockholders' equity $ 23,471,830 $ (363,069) $ 23,108,761
============== ============== ==============
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(1) Allocate income tax benefit to subsidiary.
(2) Eliminate AST balance sheet.
(3) Record proceeds of AST sale and resulting gain and record certain
transaction costs related to sale.
(4) Record repurchase of stock held by Purchaser.
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SIGNATURE
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.
ITC Learning Corporation
(Registrant)
By: /s/ Christopher E. Mack
-----------------------
Christopher E. Mack
Vice President of Finance and
Administration and Treasurer
Date: December 8, 1997
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INDEX OF EXHIBITS
Exhibit No. Exhibit Description
2.1 Stock Purchase Agreement dated November 20, 1997 by and
between ITC Learning Corporation, a Maryland corporation and
the Registrant and Anderson Holdings, Inc., an Illinois
corporation. (A list of exhibits and schedules to the Stock
Purchase Agreement is set forth therein. The Registrant agrees
to furnish to the Commission, upon request, a copy of any such
exhibits or schedules not otherwise filed herewith.)
99.1 Press Release of the Registrant dated November 20, 1997.
8