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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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): July 31, 1996
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BBN CORPORATION
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(Exact name of registrant as specified in its charter)
Massachusetts 1-6435 04-2164398
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(State or other jurisdiction Commission File (I.R.S. Employer
of incorporation) Number) Identification No.
150 CambridgePark Drive, Cambridge, MA 02140
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (617) 873-2000
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Item 2. Acquisition or Disposition of Assets.
On June 29, 1996 ABS Capital Partners, L.P., ABS Capital Partners II, L.P.,
St. Paul Fire and Marine Insurance Company, and FSC Corporation (together the
"Investors"), the Registrant, and BBN Domain Corporation (then, a wholly-owned
subsidiary of Registrant) entered into a Stock Purchase Agreement the
("Agreement") pursuant to which BBN Domain Corporation ("Domain") was to be
recapitalized, the Investors were to purchase all of the shares of two new
series of preferred stock of Domain (one series of which was redeemable
convertible (voting) preferred and the other series of which was redeemable
(non-voting) preferred) in exchange for $36,000,000, and the majority of the
common stock of Domain owned by Registrant was to be redeemed from Registrant in
exchange for $36,000,000. Registrant was to retain common stock which
constitutes, on a fully diluted basis, approximately 15% of the voting stock of
Domain. The closing of the transaction occurred on July 31, 1996 consistent with
the terms of the Agreement. In connection with the closing, the name of Domain
was changed to Domain Solutions Corporation.
The consideration paid by the Investors for the preferred stock of Domain,
and the consideration paid to Registrant in the redemption of shares of common
stock of Domain, was determined in arm's-length negotiations.
A copy of the Agreement is attached hereto as Exhibit I and the foregoing
statements with respect to the terms of the Agreement are qualified in their
entirety by reference to the attached Exhibit 1.
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Item 7. Financial Statements and Exhibits
b. Pro Forma Financial Information.
For purposes of this presentation, pro forma adjustments have been made to
the results of operations and balance sheets of Registrant to provide
information as to how the disposition of a majority interest of BBN Domain
Corporation might have affected the statement of operations and financial
position of Registrant. The unaudited pro forma consolidated balance sheet of
Registrant was prepared as if the disposition had occurred on June 30, 1996. The
unaudited pro forma consolidated statement of operations of Registrant was
prepared as if the disposition had occurred on July 1, 1995. This unaudited pro
forma information does not purport to be indicative of the results of operations
of Registrant that would have been obtained if the disposition had occurred on
July 1, 1995, and is not intended to be a projection of future results.
The following pro forma information is provided herewith:
1. Unaudited Pro Forma Consolidated Balance Sheet of Registrant as of
June 30, 1996
2. Unaudited Pro Forma Consolidated Statement of Operations of Registrant
for the Year Ended June 30, 1996
3. Unaudited Explanatory Notes to the Pro Forma Consolidated Financial
Statements
c. Exhibits.
1. Stock Purchase Agreement dated as of June 29, 1996 among BBN Corporation,
BBN Domain Corporation, ABS Capital Partners, L.P., ABS Capital Partners
II, L.P., St. Paul Fire and Marine Insurance Company, and FSC Corporation.
The exhibits to the Stock Purchase Agreement (except for Exhibits A, B,
C-1, and C- 2, which are filed herewith) are not being filed herewith.
Except to the extent covered by an application for an order pursuant to
Rule 24b-2 under the Securities Exchange Act of 1934, granting confidential
treatment of certain contractual provisions, which application may be filed
in the future, a copy of any other exhibit will be furnished supplementary
to the Commission, upon request. A description of the exhibits identifying
the contents of such exhibits is contained in the Stock Purchase Agreement,
and a listing of the exhibits is contained in the Table of Contents to the
Stock Purchase Agreement.
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BBN Corporation
Pro Forma Consolidated Balance Sheet
As of June 30, 1996
(in thousands)
(unaudited)
6/30/96 Pro Forma 6/30/96
Actual Adjustments Pro Forma
------ ----------- ---------
Assets:
- -------
Current assets:
Cash and cash equivalents (includes restricted $ 79,533 $36,000 $115,533
cash of $4,711 at June 30, 1996 and $12,134
at June 30, 1995)
Short-term investments 40,742 40,742
Accounts receivable, net 60,825 60,825
Other current assets 10,314 10,314
Net assets of discontinued operations 8,082 (8,082)
-------- ------- --------
Total current assets 199,496 27,918 227,414
Property, plant & equipment, net 48,069 48,069
Other assets 1,772 1,772
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$249,337 $27,918 $277,255
======== ======= ========
Liabilities and Shareholders' Equity:
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Current liabilities:
Payables and other liabilities $ 52,380 $ 7,918 $ 60,298
Accrued restructuring 7,352 7,352
Short-term capital lease obligation 4,110 4,110
Deferred revenue 15,369 15,369
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Total current liabilities 79,211 7,918 87,129
6% convertible subordinated debentures due 2012 73,170 73,170
Capital lease obligation 8,866 8,866
Commitment and contingencies
Minority interest 754 754
Redeemable convertible preferred stock of subsidiary 8,000 8,000
Shareholders' equity 79,336 20,000 99,336
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$249,337 $27,918 $277,255
======== ======= ========
The accompanying explanatory notes are an integral part of the pro forma
consolidated financial statements
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BBN Corporation
Pro Forma Consolidated Statement of Operations
For the Year Ended June 30, 1996
(in thousands except per-share amounts)
(unaudited)
6/30/96 Pro Forma 6/30/96
Actual Adjustments Pro Forma
------ ----------- ---------
Revenue:
Services $ 216,551 $ $ 216,551
Products 17,788 17,788
----------- ----------- -----------
234,339 234,339
----------- ----------- -----------
Costs and expenses:
Costs of services 170,521 170,521
Costs of products 11,489 11,489
Research and development expenses 12,929 12,929
Selling, general and administrative expenses 75,064 75,064
Goodwill write-off and other charges 20,718 20,718
----------- ----------- -----------
290,721 290,721
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Loss from operations (56,382) (56,382)
Interest income 4,649 4,649
Interest expense (4,697) (4,697)
Minority interest (110) (110)
Other income, net 38 38
----------- ----------- -----------
Loss from continuing operations before income taxes (56,502) (56,502)
Benefit for income taxes (6,600) (6,600)
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Loss from continuing operations (49,902) (49,902)
Income (loss) from discontinued operations, net of tax (6,740) 20,000 13,260
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Net income (loss) $ (56,642) $ 20,000 $ (36,642)
=========== =========== ===========
Per-share amounts:
Loss from continuing operations $ (2.80) $ $ (2.80)
Income (loss) from discontinued operations, net of tax (0.38) 1.12 0.74
----------- ----------- -----------
Net income (loss) $ (3.18) $ 1.12 $ (2.06)
=========== =========== ===========
Shares used in per-share calculations 17,818,000 17,818,000 17,818,000
The accompanying explanatory notes are an integral part of the pro forma
consolidated financial statements
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BBN CORPORATION
Explanatory Notes to the Pro Forma Consolidated Financial Statements
(unaudited)
A. Basis of Presentation
On July 31, 1996, the Registrant finalized the divestiture of a majority
interest in its BBN Domain Corporation subsidiary as described in Item 2.
of this Form 8-K. These pro forma consolidated financial statements reflect
the impact this divestiture would have had on Registrant's consolidated
historical financial statements provided herein.
B. Pro Forma Adjustments to Consolidated Balance Sheet
The consolidated balance sheet as of June 30, 1996 presents as net assets
of discontinued operations the following:
Assets:
Cash and cash equivalents $ 2,334
Accounts receivable, net 12,373
Property, plant & equipment, net 5,135
Other assets 2,832
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Total assets $22,674
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Liabilities:
Payables and other liabilities $ 5,943
Deferred revenue 8,649
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Total liabilities $14,592
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Net assets $ 8,082
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The pro forma adjustments reflect the $36,000,00 cash consideration
received. The gain from the sale is currently estimated to be approximately
$20,000,000 after considering estimated costs of approximately $8,000,000
including facilities, employee-related and other costs to be incurred in
connection with the divestiture.
C. Pro Forma Adjustments to Consolidated Statement of Operations
The consolidated statement of operations includes the following revenue and
expenses associated with BBN Domain Corporation:
Revenue $41,322
Costs and expenses:
Cost of revenue 10,238
Research and development expenses 11,561
Selling, general and administrative expenses 26,356
--------
48,155
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Loss from operations (6,833)
Other income, net 93
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Net loss $(6,740)
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The other adjustments include the estimated $20,000,000 net gain to be
recorded.
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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.
BBN Corporation
By: /s/ Paul F. Brauneis
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Paul F. Brauneis
Vice President and Corporate Controller
Date: August 14, 1996
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EXHIBIT INDEX
Exhibit
Number Description of Exhibits
1. Stock Purchase Agreement dated as of June 29, 1996 among
BBN Corporation, BBN Domain Corporation, ABS Capital
Partners, L.P., ABS Capital Partners II, L.P., St. Paul Fire and
Marine Insurance Company, and FSC Corporation, and exhibits
A, B, C-1 and C-2.