SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported: October 6, 1999)
AUTOWEB.COM, INC.
(Exact name of registrant as specified in this charter)
Delaware
(State or Other Jurisdiction of Incorporation)
000-25577 77-0412737
(Commission File Number) (I.R.S. Employer Identification Number)
3270 Jay Street, Building 6, Santa Clara, California 95054
(Address of Principal Executive Offices) (Zip Code)
(408) 554-9552
(Registrant's Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
ITEM 2. ACQUISITION OF ASSETS
On October 21, 1999, Autoweb.com, Inc. (the "Company") filed a Form 8-K
to report its acquisition of the Automotive Information Center, a division of
The Gale Group, Inc., for $16.0 million in cash and 363,636 shares of the
Company's common stock. Pursuant to Item 7 of such Form 8-K, the Company
indicated that it would file certain financial information no later than the
date required by Item 7 of Form 8-K. This Form 8-K/A is filed to provide the
required financial information.
Item 7 of the Company's Current Report on Form 8-K is amended to read in
its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Automotive Information Center Division Financial Statements
Report of Independent Accountants
Balance Sheets as of December 31, 1998 and September 30, 1999
Statements of Operations for the Year Ended December 31, 1998 and for
the Nine Months Ended September 30, 1999
Statements of Divisional Equity for the Year Ended December 31, 1998
and for the Nine Months Ended September 30, 1999
Statements of Cash Flows for the Year Ended December 31, 1998 and for
the Nine Months Ended September 30, 1999
Notes to Financial Statements
(b) Pro Forma Financial Information
Overview
Unaudited Pro Forma Condensed Balance Sheet as of September 30, 1999
Unaudited Pro Forma Condensed Statement of Operations for the Year
Ended December 31, 1998 and for the Nine Months Ended September 30,
1999
Notes to the Unaudited Pro Forma Condensed Financial Statements
(c) Exhibits
23.1 Consent of Independent Accountants
2
Report of Independent Accountants
The Management of Automotive Information Center, A Division of the Gale Group,
Inc.
In our opinion, the accompanying balance sheets and the related statements of
operations, divisional equity and cash flows present fairly, in all material
respects, the financial position of the Automotive Information Center, a
division of The Gale Group, Inc. ("AIC") at December 31, 1998 and September 30,
1999, and the results of its operations and its cash flows for the year ended
December 31, 1998 and the nine months ended September 30, 1999 in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of AIC's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards, which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion expressed above.
/s/ PricewaterhouseCoopers LLP
San Jose, California
November 5, 1999
3
THE AUTOMOTIVE INFORMATION CENTER, A DIVISION OF THE GALE GROUP, INC.
BALANCE SHEETS
(in thousands)
December 31, September 30,
1998 1999
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents ..................................... $ 296 $ 384
Accounts receivable, net of allowance for doubtful accounts of.. 2,097 1,329
$5 in 1998 and 1999 ...........................................
Other current assets .............................. 27 29
Amounts due from The Gale Group ................................ - 259
---------- ----------
Total current assets .......................................... 2,420 2,001
Property and equipment, net .......................................... 175 234
Goodwill, net.......................................................... 1,753 1,096
---------- ----------
Total assets ...................................................... $ 4,348 $ 3,331
========== ==========
LIABILITIES AND DIVISIONAL EQUITY
Current liabilities:
Accounts payable and other accrued expenses ................... $ 47 $ 27
Accrued payroll and related expenses .......................... 413 388
Deferred revenue .............................................. 761 624
Amounts due to The Gale Group .................................. 881 -
---------- ----------
Total current liabilities ......................................... 2,102 1,039
Commitments (Note 5)
Divisional equity.................................................... 2,246 2,292
---------- ----------
Total liabilities and divisional equity ............................. $ 4,348 $ 3,331
========== ==========
The accompanying notes are an integral part of these financial statements.
4
THE AUTOMOTIVE INFORMATION CENTER, A DIVISION OF THE GALE GROUP, INC.
STATEMENTS OF OPERATIONS
(in thousands)
Nine months
Year ended ended
December 31, September 30,
1998 1999
----------------- ---------------
Net revenues ............................................... $3,924 $3,848
Cost of net revenues ....................................... 1,235 1,756
------ ------
Gross profit ........................................ 2,689 2,092
------ ------
Operating expenses:
Sales and marketing ................................. 479 735
Product development .................................. 263 105
General and administrative ......................... 713 530
Amortization of intangibles ......................... 876 657
------ ------
Total operating expenses .................................. 2,331 2,027
------ ------
Income from operations ..................................... 358 65
Interest and other income (expense), net ................... (27) 23
------ ------
Income before income taxes................................... 331 88
Income tax (expense) benefit................................. (609) (42)
------ ------
Net income (loss)............................................ $ (278) $ 46
====== ======
The accompanying notes are an integral part of these financial statements.
5
THE AUTOMOTIVE INFORMATION CENTER, A DIVISION OF THE GALE GROUP INC.
STATEMENTS OF DIVISIONAL EQUITY
(in thousands)
Partnership Divisional
interest Equity Total
Balance at
January 1, 1998 $(1,069) $ - $(1,069)
Acquisition of
partnership
interest 1,069 2,524 3,593
Net loss - (278) (278)
------- ------ -------
Balance at
December 31, 1998 - 2,246 2,246
Net income - 46 46
------- ------ -------
Balance at
September 30, 1999 $ - $2,292 $ 2,292
======= ====== =======
The accompanying notes are an integral part of these financial statements.
6
THE AUTOMOTIVE INFORMATION CENTER, A DIVISION OF THE GALE GROUP INC.
STATEMENTS OF CASH FLOWS
(in thousands)
Year ended Nine months
December 31, ended September 30,
1998 1999
------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................ $ (278) $ 46
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation .................................................. 90 58
Amortization of intangibles..................................... 876 657
Change in assets and liabilities:
Accounts receivable ......................................... (1,498) 768
Other current assets ........................................ 3 (2)
Accounts payable and other accrued expenses ................. 9 (20)
Accrued payroll and related expenses ........................ (168) (25)
Deferred revenue ............................................ 334 (137)
Due to/from The Gale Group .................................. 967 (1,140)
----------- -----------
Net cash provided by operating activities .............................. 335 205
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of property and equipment ............................ (151) (117)
Cash received from acquisition ................................... 112 -
----------- -----------
Net cash used in investing activities .................................. (39) (117)
----------- -----------
Net increase in cash and cash equivalents ............................... 296 88
Cash and cash equivalents, at the beginning of period ................... - 296
----------- -----------
Cash and cash equivalents, at end of period ............................. $ 296 $ 384
=========== ===========
Supplemental disclosure of noncash investing and financing activities:
Liabilities pushed down in connection with acquisition of AIC:
Fair value of assets pushed down in connection with acquisition .. $ 3,457
Cash received .................................................... 112
Divisional equity ................................................ (2,524)
-----------
Liabilities assumed .......................................... $ 1,045
===========
The accompanying notes are an integral part of these financial statements.
7
CERTAIN OPERATIONS OF THE AUTOMOTIVE INFORMATION CENTER, A DIVISION OF THE GALE
GROUP INC.
NOTES TO FINANCIAL STATEMENTS
1. The Company
Automotive Information Center was founded in 1982 as a sole
proprietorship, was incorporated in November 1985 as Access Dynamics, Inc.,
and was merged into a partnership in July 1993. It was operated as a
partnership until January 1, 1998, when Thomson Company, Inc. acquired the
whole of the partnership interest, and operated the Company as a division of
one of its U. S. subsidiaries, The Gale Group, Inc. The accompanying financial
statements include the operations of the Automotive Information Center
("AIC"), a division of The Gale Group, Inc, for all periods presented. Such
financial statements have been prepared from the separate records maintained
by AIC and may not necessarily be indicative of the conditions that would have
existed or the results of operations if the division had been operated as an
unaffiliated company. Portions of certain expenses represent allocations made
from The Gale Group, Inc. (see Note 2).
AIC primarily develops software database products containing information
about specifications, standard features, optional features, and prices of
new vehicles sold in the US. The Company licenses its database information
to various automobile manufacturers and develops and licenses web based
applications of its data to a variety of customers. The Company also offers
its database information directly to consumers through its own website as
well as through agreements with other web-based companies. The Company
markets and sells its products and services primarily in North America and
operates in one business segment.
2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying financial statements include the operations of AIC (on a
carved out basis as discussed below) through September 30, 1999. The balance
sheets at December 31, 1998 and September 30, 1999 represent the balance sheets
of AIC as part of the Gale Group, Inc. (on a carved out basis as discussed
below). The divisional financial statements have been derived from the
historical books and records of the Gale Group, Inc. The balance sheets at
December 31, 1998 and September 30, 1999 include all assets and liabilities
directly attributable to the division, which are derived from the historical
cost information of the Gale Group, Inc. and which are presented at the carry
over basis of the Gale Group, Inc. The divisional statements of operations
include all revenues and expenses directly incurred for AIC, as well as charges
for shared facilities, functions and services used by the division.
Management believes that the allocated expenses were made on a reasonable
basis and that the level of expenses would not have been materially different if
such services had been provided by third parties.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Concentrations of Credit Risk
Financial instruments that potentially subject AIC to a concentration of
credit risk consist of cash and cash equivalents and accounts receivable. Cash
and cash equivalents are deposited with two high credit quality financial
institutions in the United States. AIC maintains allowances for potential
credit losses and such losses have been within management's
8
expectations. For the year ended December 31, 1998 there were two customers
that accounted for 23% and 17%, respectively, of AIC's 1998 net revenues. For
the nine months ended September 30, 1999, there were two customers that
accounted for 23% and 16%, respectively, of AIC's 1999 net revenues. There
were four and three customers with a balance due to AIC in excess of 10% of
aggregate accounts receivable as of December 31, 1998 and as of September 30,
1999, respectively.
Cash and Cash Equivalents
AIC considers all highly liquid investments purchased with original
maturities of ninety days or less to be cash equivalents. Cash equivalents
consist primarily of deposits in money market funds.
Fair Value of Financial Instruments
Carrying amounts of certain of AIC's financial instruments, including cash
and cash equivalents, accounts receivable, accounts payable and other accrued
liabilities, approximate fair value due to their short maturities.
Property and Equipment
Property and equipment are stated at cost and are depreciated on a
straight-line basis over the estimated useful lives of the assets, generally
three years. Leasehold improvements are amortized on a straight-line basis
over their estimated useful lives or the term of the lease, whichever is
shorter. Maintenance and repairs are charged to expense as incurred. When
assets are sold or retired, the cost and related accumulated depreciation are
removed from the accounts and any resulting gain or loss is included in
operations.
Intangible Assets
Goodwill resulting from acquisitions is recorded based upon the excess of
the purchase price and the net assets acquired and is amortized on a
straight-line basis over the estimated period of benefit, namely three years.
Revenue Recognition
Revenues are derived primarily from license fees for its software database
products, banner advertising and website development and hosting services. The
software database product license revenues are recognized over the period of
the subscription, usually one year. AIC also derives revenue from the sale of
banner advertisements, which is recognized ratably in the period in which the
advertisement is displayed, provided that no significant obligations for AIC
remain and collection of the resulting receivable is probable. To the extent
that minimum guaranteed page deliveries are not met, the Company defers
recognition of the corresponding revenues until the guaranteed page deliveries
are achieved. AIC derives revenue on certain referral contracts based on the
amount of traffic generated through a link from its website to the customer's
website. AIC also derives revenues from website development and hosting
services. Revenue from website development is recognized upon completion and
acceptance of the development work by the customer. Revenue from website
hosting services is recognized ratably over the period in which the hosting
service is provided.
Income Taxes
AIC accounts for income taxes in accordance with SFAS No. 109, "Accounting
for Income Taxes." This statement prescribes the use of the liability method
whereby deferred tax asset and liability account balances are calculated at
the balance sheet date using current tax laws and rates in effect. Valuation
allowances are established when necessary to reduce deferred tax assets where
it is more likely than not that the deferred tax asset will not be realized.
Income taxes have been provided in the AIC 1998 and 1999 statements of
operations as if AIC was a separate taxable entity. Since the division was
not a separate taxable entity but was included in the consolidated income
tax returns of the Gale Group, the current benefit from or provision for
U.S. federal and state income taxes was assumed to be receivable from or
payable to The Gale Group in the period presented.
Segments
AIC conducts its business within one business segment primarily
within North America. Revenues from customers outside of the United States
were less than 10% of net revenues for all periods presented in the
accompanying statements of operations.
Comprehensive Income
Comprehensive income, as defined, includes all changes in equity during a
period from non-owner sources. AIC's total comprehensive income was the same
as its net income for the year ended December 31, 1998, and for the nine
months ended September 30, 1999.
Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 (SFAS 133), "Accounting for Derivative
Instruments and Hedging Activities." Derivatives that are not hedges must be
adjusted to fair value through net income. If the derivative is a hedge,
depending on the nature of the hedge, changes in the fair value of the
derivative are either offset against the change in fair value of assets,
liabilities, or firm commitments through earnings or recognized in other
comprehensive income until the hedged item is recognized in earnings. The
ineffective portion of a derivative's change in fair value will be immediately
recognized in earnings. SFAS 133 is effective for years beginning after June 15,
2000. AIC does not expect this pronouncement to materially impact AIC's results
of operations.
In February 1998, the Accounting Standards Executive Committee ("AcSEC")
issued Statement of Position No. 98-1 (SOP 98-1), "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 establishes
the accounting for costs of software products developed or purchased for
internal use, including when such costs should be capitalized. Adoption of this
pronouncement, which is effective for fiscal 1999, did not materially impact
AIC's results of operations.
In April 1998, the AcSEC issued Statement of Position No. 98-5 (SOP 98-
5), "Reporting on the Costs of Start-Up Activities." SOP 98-5 requires that the
costs of start-up activities, including organizational costs, are expensed as
incurred. Adoption of this pronouncement, which is effective for 1999, did not
materially impact AIC's results of operations.
Software Development Costs
Costs for the development of new software products and substantial
enhancements to existing software products are expensed as incurred until
technological feasibility has been established, at which time any additional
costs would be capitalized in accordance with Statement of Financial
Accounting Standards (SFAS) No. 86, Computer Software To Be Sold, Leased or
Otherwise Marketed. The costs to develop such software have not been
capitalized as AIC believes its current software development process is
essentially completed concurrent with the establishment of technological
feasibility.
Advertising
AIC did not incur any advertising costs for the year ended December 31,
1998 or for the nine months ended September 30, 1999.
3. Acquisitions
Effective January 1, 1998, The Gale Group, Inc., a subsidiary of the
Thomson Company, Inc., acquired the whole of the partnership interest of AIC.
The acquisition has been accounted for using the purchase method of accounting
and accordingly the purchase price has been allocated to tangible and intangible
assets acquired and liabilities assumed on the basis of their respective fair
values on the acquisition date. The allocation of the purchase price is
summarized below (in thousands):
Goodwill $2,629
Property and equipment 113
Net current liabilities assumed (218)
------
Total purchase price $2,524
------
The excess of the purchase price over the fair value of the net tangible
assets acquired has been recorded as goodwill.
In accordance with SAB54, AIC has applied push down accounting for the
acquisition by The Gale Group and has therefore recorded goodwill of $2,629,000
arising from the acquisition in its separate financial statements.
4. Balance Sheet Components
Property and equipment consisted of the following (in thousands):
December 31, September 30,
1998 1999
----------- ------------
Computer equipment and software $ 222 $ 288
Furniture and fixtures 13 48
Leasehold improvements 29 32
--------- ---------
264 368
Less accumulated depreciation and amortization (89) (134)
--------- ---------
$ 175 $ 234
========= =========
Intangible assets consisted of the following (in thousands):
Goodwill $ 2,629 $ 2,629
Less accumulated amortization (876) (1,533)
--------- ---------
$ 1,753 $ 1,096
========= =========
5. Commitments
Operating Lease
AIC leases its Massachusetts headquarters under a lease agreement, which
expires in October 2001. In addition, AIC leases a sales facility in
California under a lease agreement, which expired in October 1999. The
future minimum lease payments under noncancelable operating leases are (in
thousands):
Year ended December 31,
2000 $ 92
2001 108
----
$200
====
Facility rent expense for the year ended December 31, 1998 and the nine months
ended September 30, 1999 was approximately $95,000 and $112,000, respectively.
10
6. Employee Benefit Plans
401(k) Savings Plan. AIC has a savings plan (the "Savings Plan") that
qualifies as a deferred salary arrangement under Section 401(k) of the
Internal Revenue Code. Under the Savings Plan, participating employees may
defer a percentage (not to exceed 25%) of their eligible pretax earnings up
to the Internal Revenue Service's annual contribution limit. All employees
of AIC are eligible to participate in the Savings Plan. AIC is required to
match 50% of employee contributions up to a maximum of 6%. Contributions
made by AIC to the Savings Plan were approximately $33,000 for the year
ended December 31, 1998, and $30,000 for the nine months ended September
30, 1999.
7. Income Taxes
The principal items accounting for the difference between income taxes
computed at the U.S. statutory rate and the provision for income taxes are as
follows:
Year ended Nine months ended
December 31, September 30,
1998 1999
----------- ------------------
U. S. statutory rate 34.0% 34.0%
Amortization of intangible
assets 90.0 253.8
Research and development credit (4.6) (21.8)
State tax 23.6 14.0
Accrued liabilities and reserves 40.8 (232.1)
------ -------
183.8 47.9%
====== =======
AIC's net deferred tax asset is comprised as follows (in thousands):
December 31, September 30,
1998 1999
------------ -------------
Fixed assets $ (9) $ 125
Accrued Liabilities and Reserves 411 (11)
Intangibles (4) (9)
----- ----
$ 398 $105
===== ====
The deferred tax assets have been reclassified to the intercompany
account. The Tax Reform Act of 1986 limits the use of net operating loss and
tax credit carryforwards in certain situations where changes occur in the
stock ownership of a company. AIC may have had an ownership change which will
limit the utilization of these carryforwards.
11
8. Related Party Transactions
Certain management services are provided to AIC by the Gale Group. Such
services include payroll, legal and other support services. AIC was allocated
expenses for the year ended December 31, 1998 and the nine months ended
September 30, 1999 of approximately $274,000 and $238,000, respectively, related
to these services.
Management believes that the allocated expenses were made on a reasonable
basis. Management believes that the level of expenses would not have been
materially different if such services had been provided by third parties.
AIC provided web-site development and hosting services to the Gale Group
and charged approximately $82,000 and $15,000 for those services for the year
ended December 31, 1998 and the nine months ended September 30, 1999,
respectively.
AIC recharged rent totalling approximately $23,000 to the Gale Group during
the year ended December 31, 1998 for shared rent facility expenses.
AIC is not assessed interest by the Gale Group on its outstanding balances.
In accordance with the requirements of SFAS No. 107 "Disclosures about Fair
Value of Financial Instruments", AIC believes that it is not practicable to
estimate the current fair value of the amounts due to the Gale Group because of
the related party nature of the transactions.
9. Subsequent Events
On October 6, 1999, Autoweb.com, Inc. entered into an agreement with The
Gale Group, Inc., a subsidiary of The Thompson Company, Inc., to acquire
certain assets and liabilities of AIC for $16.0 million in cash and
approximately 364,000 shares of Autoweb.com's common stock valued at
approximately $3.3 million. The acquisition has been accounted for by
Autoweb.com using the purchase method of accounting and accordingly the
purchase price has been allocated to the tangible and intangible assets
acquired and liabilities assumed on the basis of their respective fair values
on the acquisition date. The fair value of net assets acquired was determined
by an independent appraiser.
12
AUTOWEB.COM, INC. PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
(b) Pro Forma Financial Information.
The following unaudited pro forma combined balance sheet at September 30,
1999 and statements of operations for the year ended December 31, 1998 and the
nine months ended September 30, 1999 gives effect to the acquisition of
Automotive Information Center by Autoweb.com as if it had occurred at the
start of each period presented by combining the results of operations of
Automotive Information Center with results of operations of Autoweb.com, Inc.
for the respective periods. The unaudited pro forma combined statements of
operations are not necessarily indicative of the operating results that would
have been achieved had the transaction been in effect as of the beginning of
the periods presented and should not be construed as being representative of
future operating results. The unaudited pro forma financial information
presented herein should be read in conjunction with the historical financial
statements and related notes of Autoweb.com, Inc. in Autoweb's Form S-1, filed
in March 1999, the unaudited financial statements and related notes of
Autoweb.com, Inc. in Autoweb's Form 10-Q, filed in November 1999 and AIC's
historical financial statements included elsewhere in this Form 8-K/A.
On October 6, 1999, Autoweb.com, Inc. entered into an agreement with The
Gale Group, Inc., a subsidiary of The Thompson Company, Inc., to acquire
certain assets and liabilities of the Automotive Information Center, a division
of The Gale Group, Inc. for $16.0 million in cash and approximately 364,000
shares of Autoweb.com's common stock valued at approximately $3.3 million. The
acquisition has been accounted for using the purchase method of accounting and
accordingly the purchase price has been allocated to the tangible and
intangible assets acquired and liabilities assumed on the basis of their
respective fair values on the acquisition date. The fair value of net assets
acquired was determined by an independent appraiser. The allocation of the
purchase price is summarized below (in thousands):
Intangibles $ 9,037
Goodwill 9,738
Accounts receivable 1,329
Property and equipment 234
Other current assets 29
Current liabilities (1,039)
-------
Total purchase price $19,328
=======
AUTOWEB.COM INC.
PRO FORMA COMBINED BALANCE SHEET
(UNAUDITED)
(in thousands)
Pro Forma Pro Forma
At September 30, 1999 Autoweb.com, Inc. AIC adjustments combined
------------------- -------------- -------------------- --------------
ASSETS
Current assets: (A)
Cash and cash equivalents......................... $ 31,665 $ 384 $(16,384) $ 15,665
Short term investments............................ 28,582 -- -- 28,582
Accounts receivable, net.......................... 5,269 1,329 -- 6,598
Prepaid expenses and other current assets......... 6,447 29 -- 6,476
Amounts due from The Gale Group................... -- 259 (259)
-------- -------- -------- --------
Total current assets........................... 71,963 2,001 (16,643) 57,321
Property and equipment, net....................... 1,753 234 -- 1,987
Purchased technology and other intangible
assets........................................... 1,496 9,037 10,533
Goodwill.......................................... 0 1,096 8,642 9,738
-------- -------- -------- --------
Total assets.................................... $ 75,212 $ 3,331 $ 1,036 $ 79,579
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS/DIVISIONAL EQUITY
Accounts payable and other accrued expenses....... $ 6,818 $ 27 $ -- $ 6,845
Accrued payroll and related expenses.............. 1,979 388 -- 2,367
Deferred revenue.................................. 591 624 -- 1,215
Current portion of notes and capital lease
obligations payable.............................. 334 -- -- 334
-------- -------- -------- --------
Total current liabilities...................... 9,722 1,039 -- 10,761
Notes and capital lease obligations
payable, net of current portion.................. 430 -- -- 430
-------- -------- -------- --------
Total liabilities.............................. 10,152 1,039 -- 11,191
-------- -------- -------- --------
Stockholders'/divisional equity
Common stock...................................... 18 -- 1 19
Divisional equity................................. -- 2,292 (2,292) --
Additional paid in capital........................ 99,222 -- 3,327 102,549
Unearned stock based compensation................. (6,808) -- -- (6,808)
Accumulated deficit............................... (27,372) -- -- (27,372)
-------- -------- -------- --------
Total stockholders'/divisional equity.......... 65,060 2,292 1,036 68,388
-------- -------- -------- --------
Total liabilities and stockholders'/divisional
equity........................................ $ 75,212 $ 3,331 $ 1,036 $ 79,579
======== ======== ======== ========
13
PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Year ended December 31, 1998 Automotive Pro Forma Pro Forma
Autoweb.com, Inc. Information Center adjustments combined
------------------ ------------------- -------------------- ----------
(A)
Net revenues ..................................... $ 13,041 $3,924 $ 16,965
Cost of net revenues ............................. 842 1,235 2,077
-------- ------ --------
Gross profit .............................. 12,199 2,689 14,888
-------- ------ --------
Operating expenses:
Sales and marketing ....................... 13,619 479 14,098
Product development ....................... 586 263 849
General and administrative ................ 3,818 713 4,531
Stock-based compensation .................. 5,601 0 5,601
Amortization of intangibles................. 0 876 $ 5,194 6,070
-------- ------ ------- --------
Total operating expenses .......................... 23,624 2,331 5,194 31,149
-------- ------ ------- --------
Income (loss) from operations .................... (11,425) 358 (5,194) (16,261)
Interest and other (expense), net ................ (59) (27) (86)
-------- ------ ------- --------
Income (loss) before taxes......................... (11,484) 331 (5,194) (16,347)
Income tax expense................................. 0 (609) 609 0
-------- ------ ------- --------
Net loss........................................... (11,484) (278) (4,585) (16,347)
Accretion of mandatorily redeemable convertible
preferred stock to redemption value............... (890) -- (890)
-------- ------ ------- --------
Net loss ttributable to common
stockholders...................................... $(12,374) $ (278) $(4,585) $(17,237)
======== ======= ======= ========
Pro forma net loss per share:
Basic and diluted ............................... $ (2.10)
========
Weighted average shares--pro forma basic and
diluted ........................................ 8,214 (B)
========
14
Nine months ended September 30, 1999 Automotive
Information Pro Forma
Autoweb.com, Inc. Center adjustments Pro Forma combined
------------------ ---------------- ------------------ -------------------
(A)
Net revenues ................................. $ 21,187 $3,848 $ 25,035
Cost of net revenues ......................... 2,141 1,756 3,897
-------- ------ --------
Gross profit .......................... 19,046 2,092 21,138
-------- ------ --------
Operating expenses:
Sales and marketing ................... 21,071 735 21,806
Product development ................... 2,843 105 2,948
General and administrative ............ 4,856 530 5,386
Stock-based compensation .............. 1,654 0 1,654
Amortization of intangibles............. 0 657 $ 3,896 4,553
-------- ------ ------- --------
Total operating expenses....................... 30,424 2,027 3,896 36,347
-------- ------ ------- --------
Income (loss) from operations ................ (11,378) 65 (3,896) (15,209)
Interest and other income (expense), net ..... 1,634 23 1,657
-------- ------ ------- --------
Income (loss) before taxes..................... (9,744) 88 (3,896) (13,552)
Income tax expense............................. 0 (42) 42 --
-------- ------ ------- --------
Net income (loss).............................. $ (9,744) $ 46 $(3,854) $(13,552)
======== ====== ======= ========
Proforma net loss per share:
Basic and diluted ........................... $ (0.67)
========
Weighted average shares--proforma basic and
diluted .................................... 20,236 (B)
========
NOTES TO PRO FORMA COMBINED STATEMENT OF OPERATIONS (UNAUDITED)
The following adjustments were applied to Autoweb.com, historical financial
statements and those of Automotive Information Center to arrive at the pro forma
financial information.
(A) The pro forma Autoweb.com, Inc. and Automotive Information Center
historical financial information for 1998 and 1999 were adjusted to reflect
the cash consideration paid for the acquisition and to record the
amortization of goodwill and other intangible assets related to the
acquisition of Automotive Information Center by Autoweb.com as if the
transaction occurred at the beginning of each period presented as follows
(in thousands):
Amortization Expense
-----------------------------
Nine Months
Year Ended Ended
Amortization December 31, September 30,
Amount Period 1998 1999
------------ ------------ ------------ -------------
Acquired Technology/database..... $1,102 3 years $ 367 $ 275
Tradename........................ 480 4 years 120 90
Workforce........................ 1,728 4 years 432 324
Customer base.................... 5,727 3 years 1,909 1,432
Goodwill......................... 9,738 3 years 3,242 2,432
----------- ------------
$ 6,070 $ 4,553
=========== ============
(B) The pro forma adjustment to the weighted average shares outstanding assumes
the issuance of 363,636 shares, the stock portion of the purchase price, at
the beginning of each period presented.
15
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.
Dated: December 21, 1999 Autoweb.com, Inc.
By: /s/ Thomas L. Stone
-------------------
Thomas L. Stone
Chief Financial Officer