8-K 1 b47264ade8vk.txt ATLANTIC DATA SERVICES, INC. UNITED STATES 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 22, 2003 ATLANTIC DATA SERVICES, INC. (Exact Name of Registrant as Specified in Charter) MASSACHUSETTS 000-24193 04-2696393 (State or Other (Commission File (I.R.S. Employer Jurisdiction Number) Identification No.) of Incorporation) ONE BATTERYMARCH PARK QUINCY, MASSACHUSETTS 02169 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (617) 770-3333 ITEM 5: OTHER EVENTS AND REQUIRED FD DISCLOSURE On July 22, 2003, Atlantic Data Services, Inc., a Massachusetts corporation ("ADS"), announced in a press release that it entered into an agreement and plan of merger (the "Merger Agreement") with ADS Acquisition Company LLC, a wholly-owned subsidiary of ADS Parent Acquisition LLC ("Acquisition Parent"). The sole members of Acquisition Parent (the "Principals") are Robert W. Howe, Chairman and Chief Executive Officer of ADS, William H. Gallagher, President and Chief Operating Officer (and a director) of ADS, Lee M. Kennedy, a director of ADS, and affiliates of General Atlantic Partners, LLC, a global private equity firm that is a major stockholder of ADS. Under the Merger Agreement, each share of ADS common stock outstanding at the time of the Merger (other than 3,400,000 shares held by the Principals), will be converted into the right to receive $3.25 per share in cash or approximately $32.3 million in the aggregate. The preceding is qualified in its entirety by reference to the Merger Agreement, a copy of which is attached hereto as Exhibit 2.1 and incorporated herein by reference. A copy of the form of voting agreement that ADS entered into with each of the Principals is filed herewith as Exhibit 4.1 and is incorporated herein by reference. In addition, a copy of the press release regarding the Merger Agreement is incorporated herein by reference. ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) Exhibits. 2.1 Agreement and Plan of Merger, dated as of July 21, 2003, by and among ADS Parent Acquisition LLC, a Massachusetts limited liability company, ADS Acquisition Company LLC, a Massachusetts limited liability company, and Atlantic Data Services, Inc., a Massachusetts corporation 4.1 Form of Voting Agreement, dated as of July 21, 2003, by and between Atlantic Data Services, Inc., a Massachusetts corporation, and Stockholder 99.1 Press Release of Atlantic Data Services, Inc. dated July 22, 2003 (incorporated by reference to the press release filed by Atlantic Data Services, Inc. with the Securities and Exchange Commission on July 22, 2003 under cover of Schedule 14A) - 2 - SIGNATURES Pursuant to the requirement 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. ATLANTIC DATA SERVICES, INC. Date: July 22, 2003 By: /s/ Paul K. McGrath ----------------------- Paul K. McGrath Senior Vice President and Chief Financial Officer - 3 - EXHIBIT INDEX Exhibit No. ----------- Exhibit 2.1 Agreement and Plan of Merger, dated as of July 21, 2003, by and among ADS Parent Acquisition LLC, a Massachusetts limited liability company, ADS Acquisition Company LLC, a Massachusetts limited liability company, and Atlantic Data Services, Inc., a Massachusetts corporation Exhibit 4.1 Form of Voting Agreement, dated as of July 21, 2003, by and between Atlantic Data Services, Inc., a Massachusetts corporation, and Stockholder Exhibit 99.1 Press Release of Atlantic Data Services, Inc. dated July 22, 2003 (incorporated by reference to the press release filed by Atlantic Data Services, Inc. with the Securities and Exchange Commission on July 22, 2003 under cover of Schedule 14A) - 4 -

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): MARCH 26, 2002

ATLANTIC DATA SERVICES, INC. (Exact Name of Registrant as Specified in Charter)

MASSACHUSETTS		000-24193		04-2696393
(State or Other Jurisdiction of Incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

ONE BATTERYMARCH PARK QUINCY, MASSACHUSETTS 02169 (Address of Principal Executive Offices) (Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 770-3333

INTRODUCTORY NOTE

On June 29, 2001, Atlantic Data Services, Inc. (the “Company”) acquired substantially all the assets of Cool Springs Associates, Inc. d/b/a EarningsInsights, a Delaware corporation (“EI”) for $2 million in cash and the issuance to EI of a warrant to purchase 300,000 shares of the Company’s common stock at an exercise price of $5.08 per share. The Company was also required to make additional cash payments to EI based on the net income recognized by the Company attributable to the former business of EI.

Item 2: Disposition of a Business to be Accounted For as a Discontinued Operation

2.1 Description of the Transaction

On March 26, 2002, the Board of Directors of Atlantic Data Services, Inc. voted to abandon the operations of EI effective March 29, 2002. The Company expects to take a pre-tax charge from the discontinued operation of up to $2.7 million in its fourth quarter ended March 31, 2002. See the accompanying press release attached as Exhibit 99.1 to this Form 8-K.

The assets of EI abandoned by the Company consist of all intangible property, including without limitation all rights under certain contracts, agreements and licenses specifically related to the EI business, including but not limited to, all intellectual proprietary rights of EI, certain business, marketing and technical records related to EI, and all goodwill associated with the business.

Item 7: Financial Statements, Pro Forma Financial Information and Exhibits

(b) Pro Forma Financial Information

The following unaudited pro forma financial statements give effect to the disposition of EI to be accounted for as a discontinued operation. The unaudited pro forma condensed balance sheet assumes the disposition of EI on December 31, 2001. Such pro forma information is based upon the historical balance sheet data of the Company and EI as of that date. The unaudited pro forma condensed statement of operations gives effect to the disposition of EI for the nine months ended December 31, 2001 as if the disposition occurred on April 1, 2001. No pro forma statements of operations were presented for the year ended March 31, 2001 because the acquisition of EI occurred after that time period. These unaudited pro forma condensed financial statements should be read in conjunction with the historical financial statements and notes thereto of the Company.

	(c)		Exhibits
			99.1* Press release dated March 29, 2002, “ADS Financial Services Solutions Discontinues Operations of EarningsInsights”
			*Filed herewith

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UNAUDITED PRO FORMA BALANCE SHEET AS OF DECEMBER 31, 2001 (in thousands, except share data)

			Atlantic Data			Pro Forma
			Services, Inc.			Adjustments			Pro Forma
ASSETS Current assets:
	Cash and cash equivalents		$	20,349			—		$	20,349
	Short-term investments			12,608			—			12,608
	Accounts receivable, net			1,473			(8	) (A)		1,465
	Prepaid expenses			177			(9	) (A)		168
	Deferred taxes			—			—			—
		Total current assets		34,607			17			34,590
Property and equipment, net				756			(368	) (A)		388
Goodwill				1,291			(1,291	) (A)		—
Intangibles, net				917			(917	) (A)		—
Other assets				339			(9	) (A)		330
Total assets			$	37,910		$	(2,602	)	$	35,308
LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities:
	Accounts payable		$	446		$	(39	) (A)	$	407
	Accrued expenses and other liabilities			1,563			(30	) (A)		1,533
	Billings in excess of costs and estimated earnings			613			—			613
		Total current liabilities		2,622			(69	)		2,553
Stockholders’ equity:
	Preferred stock, $.01 par value			—			—			—
	Common stock, $.01 par value			131			—			131
	Additional paid-in capital			27,554			—			27,554
	Retained earnings			7,628			(2,533	) (B)		5,095
	Treasury stock			(25	)		—			(25	)
		Total stockholders’ equity		35,288			(2,533	)		32,755
Total liabilities and stockholders’ equity			$	37,910		$	(2,602	)	$	35,308

See accompanying notes to unaudited pro forma condensed financial statements.

ATLANTIC DATA SERVICES, INC.

UNAUDITED PRO FORMA CONDENSED STATEMENTS OF OPERATIONS FOR THE NINE MONTHS ENDED DECEMBER 31, 2001 (in thousands, except per share data)

				Atlantic Data			Pro Forma
				Services, Inc.			Adjustments			Pro Forma
Services				$	14,683		$	(45	) (C)	$	14,638
Cost of revenues					10,501			(229	) (C)		10,272
Gross profit					4,182			184			4,366
Operating expenses:
	Sales and marketing				2,728			(187	) (C)		2,541
	General and administrative				4,542			(334	) (C)		4,025
								(183	) (D)
		Restructuring expense			925			—			925
			Total operating expenses		8,195			(704	)		7,491
Income (loss) from operations					(4,013	)		(888	) (C)		(3,125	)
Interest income, net					868			1	(C)		869
Write-down of investment					(3,000	)		—			(3,000	)
Income (loss) before provision for income taxes					(6,145	)		(889	)		(5,256	)
Provision for income taxes					386			—			386
			Net income	$	(6,531	)	$	(889	)	$	(5,642	)
Basic earnings (loss) per share				$	(0.50	)				$	(0.43	)
Diluted earnings (loss) per share				$	(0.50	)				$	(0.43	)
Shares used in computing earnings per share (basic)					13,026						13,026
Shares used in computing earnings per share (diluted)					13,026						13,026

See accompanying notes to unaudited pro forma condensed financial statements.

NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL STATEMENTS

The transaction to purchase EI was accounted for under the purchase method of accounting. Accordingly, the purchase price was allocated to the tangible and intangible assets purchased, based upon their respective fair values.

Pro forma adjustments to reflect the disposition of EI as a discontinued operation give effect to the following:

(A) To eliminate the net intangibles, goodwill and other assets and liabilities related to EI.

(B) To adjust retained earnings relating to the disposition of EI.

(D) To reduce general and administrative expenses for the amortization of intangibles relating to EI.

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.

ATLANTIC DATA SERVICES, INC.

Date: April 10, 2002 By: /s/ Robert W. Howe ———————————————— Robert W. Howe Chairman and Chief Executive Office

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EXHIBIT INDEX

99.1 Press Release Dated March 29, 2002, “ADS Financial Services Solutions Discontinues Operations of EarningsInsights”

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