-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vkg/+BeZmNMD3t2yyErOCUDDw4uc9M3xdbE8oCGQePbdeJLSc/cIdhj1g7SVaaPj Q2XyoiYR2GNHULdVNz+CgA== 0000950135-98-002016.txt : 19980331 0000950135-98-002016.hdr.sgml : 19980331 ACCESSION NUMBER: 0000950135-98-002016 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980330 SROS: NYSE SROS: PCX FILER: COMPANY DATA: COMPANY CONFORMED NAME: PRIMARK CORP CENTRAL INDEX KEY: 0000356064 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 382383282 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: SEC FILE NUMBER: 001-08260 FILM NUMBER: 98578914 BUSINESS ADDRESS: STREET 1: 1000 WINTER ST STE 4300N CITY: WALTHAM STATE: MA ZIP: 02154 BUSINESS PHONE: 6174666611 MAIL ADDRESS: STREET 1: 1000 WINTER ST STREET 2: STE 4300 NORTH CITY: WALTHAM STATE: MA ZIP: 02154 10-K405 1 PRIMARK CORPORATION 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-8260 PRIMARK CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) MICHIGAN 38-2383282 (STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.) 1000 WINTER STREET, SUITE 4300N, 02154 WALTHAM, MA (ZIP CODE) (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE): (781) 466-6611 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------------------- ----------------------- Common stock, without par value New York Stock Exchange Pacific Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes X No __ Indicate by check mark whether the 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 the 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 aggregate market value of the registrant's common stock held by non-affiliates as of February 27, 1998 was $1,158,493,633, based on the closing price on that day (New York Stock Exchange -- Composite Transactions). The number of shares outstanding of the registrant's common stock without par value on February 27, 1998 was 26,979,358. DOCUMENTS INCORPORATED BY REFERENCE Portions of Primark's 1997 Annual Report are incorporated by reference in Part I, Item 1, and Part II, Items 5,6,7 and 8. Portions of Primark's 1998 Proxy Statement for its 1998 Annual Meeting of Shareholders, which will be filed within 120 days of December 31, 1997, are incorporated by reference in Part III, Items 10,11,12 and 13. Exhibit Index appears on page 13. 2 TABLE OF CONTENTS
PAGE ---- Cover Page.................................................. i Index....................................................... ii PART I Item 1. Business.................................................... 1 Item 2. Properties.................................................. 9 Item 3. Legal Proceedings........................................... 10 Item 4. Submission of Matters to a Vote of Security Holders......... 10 PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters....................................... 10 Item 6. Selected Financial Data..................................... 11 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 11 Item 8. Financial Statements and Supplementary Data................. 11 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................. 11 PART III Item 10. Directors and Executive Officers of the Registrant.......... 11 Item 11. Executive Compensation...................................... 12 Item 12. Security Ownership of Certain Beneficial Owners and Management................................................ 12 Item 13. Certain Relationships and Related Transactions.............. 12 PART IV Item 14. Exhibits, Financial Statements, Schedules and Reports on Form 8-K.................................................. 12 Signatures.................................................. 17
ii 3 PART I ITEM 1. BUSINESS GENERAL Primark Corporation and its subsidiaries (the "Company" or "Primark") is a Michigan corporation organized in 1981 engaged in the information services industry. The businesses consist of the operations of Baseline Financial Services, Inc. ("Baseline"), Datastream International Limited and affiliates ("Datastream"), Disclosure Incorporated ("Disclosure"), Groupe DAFSA S.A. ("DAFSA"), I/B/E/S International, Inc. ("I/B/E/S"), ICV Limited, ("ICV"), Vestek Systems, Inc. ("Vestek"), WEFA Holdings, Inc. ("WEFA"), Yankee Group Research, Inc. (the "Yankee Group") and an 80% investment in Worldscope/Disclosure LLC ("Worldscope"). Primark also has an equity interest in Primark Decision Economics ("PDE"). Primark develops and markets "value-added" databases that it combines with proprietary analytical software to create a series of products used for the analysis and presentation of financial, economic and market research information. Customers include investment managers, investment bankers, financial market traders, analysts, accounting and legal professionals, corporate managers, government officials and information and reference service providers. Commencing in 1991, the Company embarked on a strategy of combining proprietary data content within technologically advanced applications to serve the increasing information requirements of its customers with value-added products. In connection with that strategy, the Company acquired Datastream in 1992 and Vestek in 1994, while divesting certain of its non-core operations. In 1995, Primark expanded its domestic presence in information services through the acquisition of Disclosure and I/B/E/S. In 1996 and 1997, the Company continued to expand its information business by pursuing a strategy of focusing the Company's operations solely on its information services businesses. In connection with that strategy, the Company discontinued its operating segment of applied technology which was previously recorded as part of the information services industry segment, as well as its transportation services industry segment, and its financial services industry segment. During 1996, Primark acquired DAFSA, ICV, Yankee, a controlling interest in Worldscope and formed a joint venture, PDE. During 1997, Primark acquired Baseline and WEFA. Information regarding the revenues, operating results and identifiable assets of the Company and its subsidiaries, by geographical region, is incorporated by reference herein from Note 12 to the Consolidated Financial Statements entitled "Segment and Geographic Information" in the Company's 1997 Annual Report. Acquisitions On January 6, 1997, the Company purchased all of the outstanding stock of Baseline for $41.0 million in cash. Baseline provides institutional investors with valuation graphics that portray financial market information to customer accounts throughout the U.S. and Canada. On February 7, 1997, the Company acquired all of the outstanding stock of WEFA Holdings, Inc. ("WEFA") for $45.0 million in cash. WEFA is an international provider of value-added economic information, software and consulting services to Fortune 500 companies, governments, universities and financial institutions. Information regarding the Company's acquisitions is incorporated by reference herein from Note 2 to the Consolidated Financial Statements entitled "Acquisitions" in the 1997 Annual Report. Discontinued Operations In June 1997, the Company adopted a formal plan to sell its transportation services segment consisting of Triad International Maintenance Corporation ("TIMCO"). The Company anticipates that the sale of TIMCO will be completed by June 30, 1998. On December 8, 1997, the Company entered into a stock purchase agreement to sell its subsidiary, TASC and certain of its affiliates, subject to shareholder approval. On March 30, 1998, the shareholders of Primark approved the terms of this agreement. The results of both 4 TASC and TIMCO's operations have been reported as a component of discontinued operations. Prior year consolidated financial statements have been restated to present these businesses, as well as Primark Storage Leasing Company which was sold in 1996, as discontinued operations. Information regarding the Company's discontinued operations is incorporated herein from Note 3 to the Consolidated Financial Statements entitled "Discontinued Operations and Dispositions" in the 1997 Annual Report. BUSINESSES AND PRODUCTS DATASTREAM/ICV Datastream Datastream provides global historical economic and financial information to customers worldwide and through its division, Primark Investment Management Services, Limited, is a leading provider of computer-based accounting and other investment fund services in the United Kingdom. The core of Datastream's products is its centralized data system which maintains a series of linked databases of extensive international economic and financial data collected from wire services, official publications of national agencies, stock, options and futures exchanges, other information vendors, brokers, dealers, banks and issuers. Customers have online access to Datastream's databases through personal computers, networks or workstations. Datastream's products and services enable customers to perform extensive investment research and analysis, investment administration and portfolio valuations on securities in all major markets, and to produce graphics, statistics, time series analysis and perform other analytical functions. Datastream's products and services fall into two principal categories - investment research and fund management services. Investment research services accounted for approximately 85% of Datastream's total revenues for each of the fiscal years ended December 31, 1997, 1996, and November 30, 1995, respectively. These services consist of a set of software programs to manipulate, analyze and present financial and economic information obtained from Datastream's databases. The software is designed to facilitate the customers' access to data from any of Datastream's databases and to manipulate this data in a variety of pre-programmed and pre-formatted ways such as graphs, regressions, and tables. Fund management services accounted for approximately 15% of Datastream's total revenues for each of the fiscal years ended December 31, 1997, 1996 and November 30, 1995, respectively. Fund management services, available through Primark Investment Management Services (PIMS), provide investment accounting, portfolio valuation and performance measurement activities. A critical component of Datastream's business is the data itself. Datastream's principal supply requirements are for raw financial data, which are acquired from numerous data suppliers worldwide and developed internally. Once acquired, the data sets are edited and stored in Datastream's databases for access and manipulation through Datastream's applications and value-added software programs. Data suppliers generally retain ownership of the raw data, but allow Datastream and its customers the use of such data. Datastream places great importance on the quality of its data and has developed a program to continuously review its data sources to ensure quality, control and continuity. Wherever possible, Datastream develops multiple sources of data to provide backup and cross checking. Data relating to equities include pricing information for earnings and dividends on approximately 50,000 stocks from 64 countries, including all major markets and a number of emerging markets. This data includes historical earnings and dividend data, as well as forecast data supplied by market specialists. Data relating to bonds include maturity and yield on approximately 83,000 corporate and government bonds from 32 countries, all Eurobonds and related indices. Data relating to futures and options includes current prices, previously traded prices, trading volume and intra-day high and low values from the international options and futures exchanges, including LIFFE (London), MONEP and MATIF (Paris), SOFFEX (Switzerland), EOE (Amsterdam), DTB (Germany), Chicago and Philadelphia. 2 5 Datastream has included databases from I/B/E/S, Disclosure and Worldscope as an integral part of its investment research services. Consequently, it has helped these companies gain additional customers, as well as customers new to Datastream. Datastream has also installed the full Disclosure index on its online system and offers index searches and electronic ordering of hard copy documents to Datastream users. Vestek is also developing investment management software products that will be marketed and supported by Datastream's European sales and service personnel. ICV ICV provides real-time on-line prices, news and research on the U.K. equities market as well as systems for order entry and trade reporting. The company's software combines real-time prices with news and other data in a unique format which has become the standard presentation for U.K. equity data. ICV has incorporated Datastream's historical information as an add on to its major product, TOPIC, and is continuing to integrate both Primark Company data and third party data into its major products. The core of ICV products is its central systems that take real-time data from several exchanges and combine the prices with news. The information is then broadcast to a customer base of nearly 9,000 terminals using the datacast bandwidth on terrestrial television, leased telecommunication circuits or via satellite. The data is broadcast to customers' systems, provided by ICV, where the signal is decoded, stored on a local database and presented on user screens utilizing software designed and maintained by ICV. Timeliness and reliability are critical aspects of ICV's services. ICV's central systems are designed to provide state-of-the-art timeliness by handling incoming data within a few milliseconds by utilizing program code that resides in memory. Reliability is provided through several back-up sites. The investment in trading systems has allowed for the set up of a U.K. wide interactive network which can be used to link customers' offices and provide a future conduit to any new data sources ICV may acquire or develop in the future. ICV's two principal products are TOPIC and MARKET-EYE. TOPIC services accounted for 53%, 47%, and 45% of ICV's total revenue for the fiscal years ended December 31, 1997, 1996 and 1995, respectively. TOPIC services provide real-time data on prices and comparative quotes from market makers with historical charts and research from brokers. During 1997, the London Stock Exchange moved to an order driven market. In connection with this event, ICV was able to meet its customers' requirements for an interactive trade reporting system through its TOPIC product. The TOPIC services are used by traders and fund managers, stockbrokers, U.K. clearing banks and major publicly traded corporations. MARKET-EYE services accounted for 12%, 11% and 11% of ICV's revenue for the fiscal years ended December 31, 1997, 1996 and 1995 respectively. MARKET-EYE is aimed predominantly at the private investor and is accessable via the Internet. The data include prices and news and may be combined with analytical and charting packages supplied by third parties. Stock exchange fees accounted for 29%, 35% and 36% of ICV's revenues for the fiscal years ended December 31, 1997, 1996, and 1995, respectively. Exchange fees are revenues collected by ICV and remitted to the Stock Exchanges to permit customer use of exchange data feeds. Consequently, the exchange fee business is a low margin business. ICV has leveraged its existing technology through alliances with other information companies, providing access to new markets. During 1996, ICV entered a joint venture with Merrill Lynch to leverage its technology with Merrill Lynch's expertise in live trading systems. Also during 1996, Primark entered a joint venture with Dow Jones & Company, Inc. and its subsidiary Dow Jones Markets to develop an international equity trading information product by combining ICV's technology, Datastream's historical databases, the global news capability of Dow Jones and the real time data capability of Dow Jones Markets. On March 17, 1998, Dow Jones & Company Inc. reported that it has agreed to sell its wholly owned subsidiary, Dow Jones Markets to Bridge Information Systems, Inc. While Dow Jones & Company and Dow Jones Markets are both contractually obligated to provide news and financial information for the Primark/Dow Jones product, this business relationship is under review and may be continued, altered or terminated. 3 6 DISCLOSURE/WORLDSCOPE Disclosure is a leading provider of "as reported" and abstracted financial information in the U.S. market, distributing information on over 16,000 U.S. companies and 13,000 foreign companies, derived from a variety of government and third-party sources. Disclosure's proprietary content is provided on a subscription and per use basis through electronic media such as online services and compact laser discs, as well as through printed products. Disclosure's financial information products and services are based upon a wide spectrum of Securities and Exchange Commission ("SEC") documents such as Forms 10-K and 10-Q, proxy statements, registration statements and material event reports, and increasingly non-SEC documents such as foreign company financial filings, news, economic data, pricing information and U.S. and foreign annual reports. The information included in Disclosure's products is obtained through contractual relationships with the SEC and major stock exchanges, from other Primark Companies and through commercial acquisition of the information. Once acquired, Disclosure indexes, tags, abstracts and formats the information to allow for ease in navigation, searches and analysis. Primark considers Disclosure's electronic media business, comprised of Global Access, Worldscope, compact discs and revenues from third party distributors of its value-added database products, as representing Disclosure's next generation of product offerings. These products represented approximately 40% of Disclosure's overall revenues at the end of 1997, up from 20% in 1996. Disclosure's image-based services are delivered through the Global Access and Laser D products as well as through Info Centers. Global Access is a web-based front end that offers online and real-time access to Disclosure's proprietary electronic index of public company documents; online delivery of Disclosure's value-added EDGAR database; access to over ten years of data on 29,000 companies in the Worldscope and SEC databases; institutional and corporate ownership data; and links to third-party content such as I/B/E/S and industry news. Global Access provides real-time broadcast alert functionality as well as desktop full text and field searching and screening of company and industry information with direct downloading to spreadsheets and word processors. Laser D is a multi-disc CD-ROM document database that provides a desktop library of information to high volume document users who require instant access to documents filed with the SEC, banking agencies and U.S. and foreign stock exchanges. The Info Centers are staffed by research specialists who assist customers in locating requested information and produce alert services for customers who want early identification of specified documents. Approximately 82%, 81% and 81% of Disclosure's total revenues were derived from document services for the twelve months ended December 31, 1997, 1996, and 1995, respectively. Disclosure's database segment provides products that can be machine read and manipulated by the end users. Disclosure's Global Researcher and Compact D products provide access to perform sophisticated searching of financial and text information on over 29,000 companies. These products also provide reporting and graphing functionality. Proprietary Disclosure databases include EdgarPlus (SEC filings with value-added navigational and style tags), the SEC 34 Act database (over 11,000 U.S. Company profiles and financial statement abstracts dating back over 10 years) and other databases on institutional and corporate insider transactions. These proprietary databases are offered by third-party vendors which target both the commercial and consumer markets, enhancing Disclosure's product through their hardware, software, and market focus. Such vendors include Bridge, Dow Jones, Factset, Lexis, MAID, UMI and West. Approximately 18%, 19% and 19% of Disclosure's total revenues were derived from database services for the years ended December 31, 1997, 1996 and 1995, respectively. Worldscope contains a collection of descriptive profiles and standardized financial statements on over 11,900 companies in 45 countries. The Worldscope database is standardized, indexed and organized for cross-border screening and searching. In addition to its global database, Worldscope offers an emerging market database. Worldscope products are delivered via third-party distributors, CD-ROM and online platforms. In October 1996, Primark acquired an additional 30% ownership in Worldscope, giving Primark an 80% controlling interest. 4 7 FINANCIAL ANALYTICS I/B/E/S I/B/E/S is a leading source of global earnings expectational information for investors, financial institutions and portfolio managers worldwide. I/B/E/S collects and processes earnings per share estimates provided by over 7,000 individual securities analysts, representing approximately 800 firms on over 18,000 companies globally. The estimates and related data are delivered through third-party distributors, I/B/E/S Express (a proprietary software delivery system) and in printed publications. Many I/B/E/S products permit the customer to perform analytical functions and are enhanced by reports and graphics. Approximately 40%, 38% and 30% of I/B/E/S' revenues were generated from the I/B/E/S Express product for the years ended December 31, 1997, 1996 and 1995, respectively. I/B/E/S has expanded its product line by launching I/B/E/S Trapeze, a real-time, electronic brokerage research distribution system. This state-of-the-art technology delivers brokerage reports to managers' desks in New York, London and other financial centers within a few moments, complete with color graphics, audio and video capabilities. Baseline Baseline provides portfolio managers at investment companies, banks, investment consulting firms, and other institutional investors with online valuation graphics that portray critical financial information on more than 7,000 U.S. companies. The Baseline product consists of data and software that manipulates, analyzes and graphically presents company financial information to end users through personal computers, typically linked by computer networks. Baseline's principal supply requirements are for raw financial data which is acquired from numerous data suppliers including other Primark companies. Once acquired, the data is verified, manipulated and stored in Baseline's database for manipulation through Baseline's applications and daily transmission to customers. Baseline places great importance on the quality of its data and has developed a program to continuously review its data sources to assure quality control and continuity. Wherever possible, Baseline develops multiple sources of data to provide backup and cross checking. Vestek Vestek develops, markets and supports investment information services and application software used to manage, analyze, and optimize institutional portfolios of equity, fixed income and other financial instruments. Vestek also provides consulting services for investment managers and plan sponsors. Through its international sales force, Vestek currently serves over 250 clients in nine countries. WEFA Founded by Nobel Laureate Economist Lawrence R. Klein, who remains active in the business, WEFA is a leading provider of international value-added economic information, software and consulting services to companies, governments, universities and financial institutions. WEFA provides analysis and forecasts for 60 industries across 60 countries through its Global Industrial Outlook Service, its electronic database and a semi-annual publication. WEFA recently introduced the World Market Monitor, a desktop application for tracking and analyzing global economic conditions. Targeted to financial institutions and corporations, the product provides users with economic, demographic and financial information on 175 countries. DAFSA DAFSA supplies company account information on most listed companies in France and produces over 250 sector analysis and reports annually. During 1997, Primark restructured the operations of DAFSA, resulting in the company accounts business being integrated with Disclosure and the sector analysis business being managed by WEFA. Future filings will discuss the operations of DAFSA as part of the Disclosure and WEFA businesses. 5 8 PRIMARK DECISION ECONOMICS On August 5, 1996, Primark announced the formation of a joint venture with noted economist Dr. Allen Sinai. The new company is called Primark Decision Economics, Inc. and Dr. Sinai has been named its Chief Executive Officer and Chief Global Economist. The purpose of this venture is to disseminate timely value-added economic forecasts, analysis and commentaries covering the world's major economies and markets, and to support real-time and longer-term decision-making by financial institutions, corporations, individuals, and governments engaged in trading, investing and planning. YANKEE GROUP RESEARCH, INC. The Yankee Group consists of a global team of highly skilled technology and market experts that focuses on identifying current trends and future directions in the communications and computer industries for business and consumer markets. The company markets these insights by providing strategic planning, technology forecasting, consulting and market research to clients worldwide, including vendors and users of major computer and communications systems and services. The Yankee Group's products and services fall into three principal categories -- Planning Services, Custom Consulting Engagements, and Seminars and Conferences. Planning Services accounted for 66% and 71% of the total revenues for the years ended December 31, 1997 and 1996, respectively. An annually renewable Planning Service subscription provides a customer with consultation time with a research analyst, quarterly audio conferences, access to the Yankee Group's published research reports and whitepapers in both an electronic and paper format, and discounts on seminars. The Yankee Group currently offers 24 Planning Service packages. Custom Consulting Engagements accounted for 20% and 20% of the total revenues for the years ended December 31, 1997 and 1996, respectively. Custom Consulting Engagements often result from an extension of Planning Services when an inquiry or a study is more extensive than that offered through a Planning Service subscription. Custom Consulting contracts are also entered into with external parties where the company considers the study to be of strategic importance. Seminars and Conferences accounted for 14% and 12% of the company's total revenues for the years ended December 31, 1997 and 1996, respectively. The Yankee Group holds an average of fifteen to twenty seminars and/or conferences a year, often in conjunction with industry publication houses. CUSTOMERS Datastream/ICV's customers include approximately 5,000 financial organizations in 52 countries, including investment bankers, brokers, investors, fund managers, insurance companies and market makers that use financial and economic information. Other users include publishers of financial journals and daily newspapers, business schools and universities. The company's customers are based predominantly in the U.K. and typically subscribe through annual contracts. These contracts are automatically renewed unless notice of cancellation is given two to three months before the annual renewal date. Renewal rates have historically exceeded 85%. Disclosure's customer base includes the majority of U.S. investment banks, money managers, law and accounting firms, together with other institutions and individuals performing financial research. Disclosure also distributes its information through over 50 third party vendors. Subscription services accounted for 53%, 53% and 51% of Disclosure/Worldscope's revenues for the fiscal years ended December 31, 1997, 1996 and 1995, respectively. Disclosure/Worldscope has experienced renewal rates for its subscription services in excess of 90%. I/B/E/S directly serves over 2,250 customers worldwide and thousands more through its distribution networks. I/B/E/S's customers are represented by financial institutions and portfolio managers worldwide, with particular interest by the quantitative analysts who access and download information directly into analytic models. I/B/E/S products are also sold to end users, such as management consultants and traditional investment analysts who utilize I/B/E/S for general research. Approximately 97% of I/B/E/S's 1997 6 9 revenues were derived through annual subscription contracts of which 12% were through soft dollar arrangements. Baseline has nearly 600 customers including investment companies, banks, investment consulting firms, and other institutional investors located throughout the United States and Canada who typically subscribe through bi-annual and annual contracts. These contracts are automatically renewed unless notice of cancellation is given before the renewal date. Baseline has experienced renewal rates for its subscription services in excess of 90%. Vestek's clients include major banks, plan sponsors, consultants, insurers and investment managers. The majority of Vestek's revenues are derived from online subscription services. WEFA has approximately 1,600 customers operating in corporations, financial services, governments, utilities and other businesses. The company performs consulting and planning services to best analyze the potential impact of various economic alternatives faced by its customers. The Yankee Group's customers consist primarily of both suppliers and users of computer and communication technology. Yankee's customer base includes major consulting firms, telecommunications companies, computer hardware manufacturers, software companies, research analysts and the information technology departments of major corporations. No single customer of the information businesses accounts for more than 2% of the Company's consolidated revenues. MARKETING The products and services of Primark's information companies are marketed worldwide. Increasingly, the individual Primark companies are offering each other's data through their own delivery platforms. Datastream is located in London, England and has sales and support offices located in Germany, France, Italy, Spain, Switzerland, the Netherlands, Belgium, Luxembourg, Sweden, Japan, Hong Kong, Singapore, Australia, Korea, Thailand, Canada and the United States. ICV is located in London, England and has sales and support offices throughout the U.K. Datastream/ICV sells both Disclosure and I/B/E/S data through their platforms. Disclosure and Worldscope market and distribute their products predominately in the United States. In addition to employing a domestic and international sales force, Disclosure extends its sales and marketing reach with Info Centers strategically located in the major financial centers including ten major U.S. cities and several international locations including London, Frankfurt, Madrid, Paris, Milan, Hong Kong, Mexico City and Tokyo. Disclosure also incorporates I/B/E/S data and WEFA data in its Global Access Platform. I/B/E/S, headquartered in New York City with offices in London, Hong Kong and Tokyo, delivers its products directly to customers via state-of-the-art electronic delivery media. I/B/E/S Express, the fastest growing delivery mechanism, is a PC-based proprietary software, database management and communications package. The I/B/E/S Express platform separately provides portions of the data from Disclosure, WEFA and Vestek. I/B/E/S also offers its products through a network of more than 30 electronic third-party distributors including Bloomberg, Bridge, Datastream/ICV, FactSet, FAME, OneSource, Reuters, S & P Compustat and Vestek. These third-party distributors offer I/B/E/S a mechanism to reach new markets and link I/B/E/S data to other databases and applications software. Baseline's product is targeted primarily toward portfolio managers of domestic equities and carries portions of Disclosure's data as part of its product offering. Baseline delivers its product directly to customers via an online advanced electronic delivery platform. Baseline markets its product through its own domestic sales force. Headquartered in San Francisco, Vestek's products are marketed through its sales force located in New York, Los Angeles, London and Japan. Vestek includes data from I/B/E/S, Worldscope and Datastream in portions of its product line. 7 10 WEFA markets its product through its international sales force. WEFA delivers its data online through I/B/E/S and Disclosure as well as through its own electronic distribution platform. WEFA believes its historical association with the Wharton School of Business and with Nobel Laureate Lawrence R. Klein gives it a distinct advantage in the marketplace. The Yankee Group markets its services internationally primarily through its own sales force. The Company considers its historic record of accurately forecasting the general direction of communication and computing technology together with its focus on customer support as its greatest competitive advantages. Yankee's industry analysts are the company's critical resource. These individuals have significant expertise in their areas of concentration, gained through industry experience, constant study of the technology market and ongoing dialogue with vendors and consumers in the industry. COMPETITION The global information industry is highly competitive. There are many large and successful companies in the information services industry that supply financial economic and market research data competitive to products and services provided by Primark's information businesses. The advancement of electronic delivery via online vendors and the Internet has further impacted the competitive environment in the information market. Principal competitive factors include the quality, reliability and comprehensiveness of the analytical services and data provided, flexibility in tailoring services to client needs, experience, innovation, the capability of technical and client service personnel, data processing and decision support software, reputation, price and geographic coverage. Primark distinguishes its products through its broad international coverage, wide range of databases, accuracy of the data, proprietary software applications, reputation, experience and quality of customer support provided. Primark's ability to remain competitive in the information market will depend largely upon its ability to maintain and develop new products and access new markets in a cost efficient manner, as well as the integration of all its information products and services. There can be no assurance that Primark will continue to maintain its market share in the future. TECHNOLOGICAL CHANGES The Company operates principally in the information services industry which changes rapidly and is highly competitive. Even if the Company remains abreast of the latest developments and available technology, technological advances and/or the introduction of new products and services in the information services industry could adversely affect the Company. There are many large and successful companies in the information services industry, many of which have greater resources than the Company. The Company's future success will depend significantly on its ability to develop and deliver technologically advanced quality products and services. The cost of developing such products and services could adversely affect the Company's future results of operations. The Company has a formal plan and task force assigned to make all of its financial systems, product offerings and related databases year 2000 compliant. In 1997, the Company spent $1.5 million of resources on this endeavor and anticipates that it will be required to spend an additional $2.7 million and $2.6 million in 1998 and 1999, respectively, to be year 2000 compliant. The majority of the remaining year 2000 work will be performed at Datastream/ICV. To the extent the Company is unable to become fully year 2000 compliant, it may have a materially adverse effect on the Company. FOREIGN OPERATING RISKS Since not all of the Company's revenues and expenses incurred are in U.S. dollars, the Company's operations have been and may continue to be affected by fluctuations in currency exchange rates. For the year ended 1997, international revenues and operating income of the Company's Continuing operations represented 56% and 56%, respectively, of total consolidated revenues and operating income. 8 11 Consequently, the Company is exposed to certain risks associated with an international business, particularly with respect to foreign currency exchange rate movements. International business is also subject to the customary risks associated with international transactions, including political risks, local laws and taxes, the potential imposition of trade or currency exchange restrictions, tariff increases and difficulties or delays in collecting accounts receivable. Weak foreign economies and/or a weakening of foreign currencies in certain countries against the U.S. dollar would adversely affect the Company's overall future operating results and cash flows. The Company engages in hedging activities, including foreign currency options and forward contracts, in order to minimize the ongoing exposure to foreign currency exchange risk with respect to its foreign operating income and cash flows. In 1997, the Company recorded a $1.9 million gain before income taxes for foreign currency transactions. In addition, the Company typically maintains foreign currency hedges for its significant foreign currency exposures. TRADEMARKS Primark's information companies hold numerous trademarks worldwide that are subject to continuous renewal. These trademarks are significant to the Company's business, and are registered in all of the Company's major markets to ensure recognition among its many global trading customers. EMPLOYEES At December 31, 1997, the Company and its subsidiaries employed 2,328 persons. The Company sponsors a number of employee benefit plans including a 401(k) savings deferral plan and certain foreign defined benefit plans. The Company believes its relationship with its employees to be satisfactory. ITEM 2. PROPERTIES The Company currently occupies its principal executive offices, comprised of approximately 17,848 square feet, in Waltham, Massachusetts under lease agreements that expire in July 2001 with provision for two five-year renewal options. Baseline occupies 23,000 square feet of space at its New York headquarters. Baseline also has an office in Philadelphia. Datastream's two principal office facilities are located in London, England. Comprised of an aggregate total of 100,995 square feet, these facilities are occupied under lease agreements that expire in 2005 and 2018. Through its affiliates, Datastream also occupies under short-term leases an aggregate total of approximately 55,000 square feet of office space, principally located in Australia, Canada, France, Germany, Hong Kong, Italy, Japan, the Netherlands, Singapore, Sweden, Switzerland, Thailand and the United States. Disclosure's headquarters, comprised of approximately 99,640 square feet, is located in Bethesda, Maryland. The property is occupied under lease agreements that expire in 2006. Disclosure's regional offices occupy approximately 63,900 square feet of office space under lease terms that expire through 2004. These offices are located in California, Georgia, Illinois, Massachusetts, New York, Texas and Washington, D.C. I/B/E/S occupies 39,800 square feet of space at its New York City headquarters under a lease agreement that expires in 2007. Additional office space totaling 10,950 square feet is located in England, Hong Kong and Japan with lease terms through 2007. ICV's facilities occupy approximately 25,000 square feet of space located primarily in London, England. Vestek occupies approximately 13,555 square feet of space at its San Francisco headquarters under a lease agreement that expires in 1999 with provision for one five-year renewal option. WEFA occupies 45,550 square feet of space at its Pennsylvania headquarters under a lease agreement that expires in 2005. Additional office space of approximately 29,700 square feet is leased in Canada, Europe and South Africa expiring through 2005. 9 12 The Yankee Group occupies approximately 23,600 square feet of space at its Boston headquarters under a lease agreement that expires in 2003. The company also has international offices located in London and Tokyo. ITEM 3. LEGAL PROCEEDINGS On June 24, 1994, a jury in a civil case in Massachusetts Superior Court (the "Court") returned an unfavorable verdict against the two founders of TASC, Inc., ("TASC") and against TASC itself. The suit was brought by a former employee regarding a TASC stock transaction which took place in 1976, prior to Primark's acquisition of TASC in 1991. The defendants in the Bradley litigation, the two founders of TASC, have settled the lawsuit for $4,000,000 plus an amount of up to $8,500,000 that was conditioned on the outcome and reasoning of a then-pending motion for a directed verdict and a new trial. TASC has been advised that the founders are disputing with the plaintiff whether any additional amount is owing under the terms of the settlement, and it appears that those parties will proceed to arbitration of that dispute. Also, the founders settled a related claim for $600,000. The founders have demanded that TASC indemnify them for amounts paid in such settlements, totaling up to $13.1 million, and associated expenses. TASC has advised counsel for the founders that their settlement agreements do not appear to satisfy by-law requirements (including prior company approval) and has requested clarification of the basis for the founders' indemnification claims. Neither Primark, nor any of its directors or officers, was a party to the Bradley litigation. Assuming the sale to Litton Industries, Inc. of all of the outstanding common stock of TASC, Inc. is consummated, Litton has agreed to indemnify and hold harmless, to the fullest extent permitted by law, Primark and its directors and officers, from and against all liability and charges resulting from the Bradley litigation. The Company and its subsidiaries are involved in other administrative proceedings and matters concerning issues arising in the ordinary course of business. Management cannot predict the final disposition of such issues, but believes that adequate provision has been made for the probable losses and the ultimate resolution of these proceedings will not have a material adverse effect on the Company's financial condition, results of operations or financial liquidity. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On March 30, 1998, the Company held a special meeting of its shareholders for the purpose of obtaining a vote related to the sale of TASC as described in the Company's definitive proxy statement dated February 26, 1998. Proxies for the meeting were solicited pursuant to Section 14(a) of the Securities Exchange Act of 1934. There was no solicitation in opposition to management's solicitations. THE SALE OF TASC WAS APPROVED BY THE FOLLOWING VOTE: - --------------------------------------------------------------------------------
DESCRIPTION NUMBER OF SHARES PERCENTAGE OF SHARES - ------------------------------------------------------------------------------------------------------------ Shares voted "For" 19,648,920 72.87% - ------------------------------------------------------------------------------------------------------------ Shares voted "Against" 75,642 .28% - ------------------------------------------------------------------------------------------------------------ Shares "Abstaining" 53,916 .20% - ------------------------------------------------------------------------------------------------------------ Shares not voted 7,185,102 26.65% - ------------------------------------------------------------------------------------------------------------
PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS The Company's common stock is listed and traded on the New York Stock Exchange and the Pacific Stock Exchange. Other information set forth in the section entitled "Supplementary Information-Quarterly Data" on page 39 of the Company's 1997 Annual Report is incorporated by reference herein. 10 13 Since 1988, the Company has not paid cash dividends on common stock to its shareholders in order to reinvest available cash in the Company's operations. Information regarding restrictions on the Company's ability to pay cash dividends on its common stock is incorporated by reference herein from Note 6 to the Consolidated Financial Statements entitled "Short-Term and Long-Term Debt" on page 26 of the Company's 1997 Annual Report. ITEM 6. SELECTED FINANCIAL DATA The information set forth in the section entitled "Selected Financial Information -- Five Year Data" on page 38 of the Company's 1997 Annual Report is incorporated by reference herein. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION The information set forth in the section entitled "Management's Discussion and Analysis of Results of Operations and Financial Condition" on pages 35 through 37 of the Company's 1997 Annual Report is incorporated by reference herein. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Consolidated Financial Statements and the related notes thereto and the Report of Independent Certified Public Accountants, as contained on pages 18 through 34 of the Company's 1997 Annual Report, and the "Supplementary Financial Information -- Quarterly Data," as contained on page 39 of the Company's 1997 Annual Report, are incorporated by reference herein. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information set forth in the section entitled "Election of Directors" in the Company's 1998 Proxy Statement for its May 1998 Annual Meeting of Shareholders is incorporated by reference herein. Information with respect to the executive officers of the Company as of February 28, 1998 is set forth below. The Company's Board of Directors elect officers generally for one-year terms expiring at the next organizational meeting to be held in May 1998. The terms for Mr. Kasputys and Mr. Herenstein are governed by their respective employment agreements. Under these agreements, Mr. Kasputys is employed as the Chairman, President and Chief Executive Officer of Primark through December 31, 2001; and Mr. Herenstein is employed as Senior Vice President of Marketing through June 30, 1998. Joseph E. Kasputys, age 61, has served as Chairman, President and Chief Executive Officer of the Company since May 1988. Mr. Kasputys has been a director of the Company since 1987. John C. Holt, age 57, served as the President and Chief Executive Officer of TASC and Executive Vice President of the Company from April 1994 through March 31, 1998. From April 1, 1998 until December 31, 1998, Mr. Holt will serve as a consultant to TASC. From 1982 until January 1994, Mr. Holt held the position of Executive Vice President of The Dun & Bradstreet Corporation ("D&B"), an information services company, and served as a director of that company from 1985 until 1994. In addition, Mr. Holt is the former Chairman, President and Chief Executive Officer of the A.C. Nielsen Company, a marketing information business and an affiliate of D&B. Mr. Holt has been a director of the Company since 1985. Stephen H. Curran, age 50, has served as Senior Vice President and Chief Financial Officer of the Company since 1988. In 1997 he was elected Executive Vice President and Chief Financial Officer. Ira Herenstein, age 60, has served as Senior Vice President of Marketing of the Company since December 1996. From June 1995 to November 1996, Mr. Herenstein was Managing Director of Datastream 11 14 International, Inc. From March of 1994 to June of 1995, he was president of Datastream's North American operations. From 1992 until March of 1994, Mr. Herenstein was an independent consultant in the information services industry. In addition, Mr. Herenstein was with the McGraw-Hill Corporation for 28 years, during which time he held the positions of President of Standard & Poor's Corporation and Executive Vice President of the Computer and Communications Information Group. Michael R. Kargula, age 50, has served as Senior Vice President, General Counsel and Secretary of the Company since 1988. In 1997 he was elected Executive Vice President, General Counsel and Secretary. Patrick G. Richmond, age 48, has served as Vice President of Corporate Development of the Company since May 1989. In 1997 he was elected Executive Vice President of Corporate Development. William J. Swift III, age 46, has served as Vice President and Tax Counsel of the Company since 1988. In 1998 he was elected Senior Vice President and Tax Counsel. ITEM 11. EXECUTIVE COMPENSATION The information set forth in the sections entitled "Directors' Compensation," "Executive Compensation," "Compensation Committee Report," "Employment Agreements and Other Arrangements," and "Compensation Committee Interlocks and Insider Participation" of the Company's 1998 Proxy Statement for its May 1998 Annual Meeting of Shareholders is incorporated by reference herein. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information set forth in the sections entitled "Security Ownership of Certain Beneficial Owners" and "Security Ownership of Management" of the Company's 1998 Proxy Statement for its May 1998 Annual Meeting of Shareholders is incorporated by reference herein. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information set forth in the sections entitled "Executive Compensation," "Compensation Committee Interlocks and Insider Participation" and "Employment Agreements and Other Arrangements" of the Company's 1998 Proxy Statement for its May 1998 Annual Meeting of Shareholders is incorporated by reference herein. PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) LIST OF DOCUMENTS FILED AS PART OF FORM 10-K 1. The following Financial Statements are contained in Primark's 1997 Annual Report filed as Exhibit 13.1 to this report: - Consolidated Statements of Financial Position as of December 31, 1997 and 1996. - Consolidated Statements of Income for each of the three years in the period ended December 31, 1997. - Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 1997. - Consolidated Statements of Common Shareholders' Equity for each of the three years in the period ended December 31, 1997. - Notes to the Consolidated Financial Statements. - Management's Discussion and Analysis of Results of Operations and Financial Condition. - Report of Independent Certified Public Accountants. 12 15 - Supplementary Financial Information-Quarterly Data. 2. The following financial statement schedule is filed as part of this report and are located on the following pages: Schedule II Valuation and Qualifying Accounts on page 19. 3. The Exhibits filed as part of this Annual Report on Form 10-K are listed in the Index to Exhibits on pages 13 to 16, and are incorporated by reference herein. (b) REPORTS ON FORM 8-K On December 9, 1997, the Company filed a report on Form 8-K under Item 2, related to the disposition of TASC. On December 10, 1997, the Company filed an amendment to Item 7 of the Form 8-K filed December 9, 1997, related to the sale of TASC. On March 3, 1998, the Company filed a report on Form 8-K under Item 5 related to its unaudited results for the year ended December 31, 1997. On March 6, 1998, the Company filed a report on Form 8-K under Item 5 describing an underwriting agreement related to the February 26, 1998 registration of equity securities. On March 20, 1998, the Company filed a report on Form 8-K under Item 9 related to "Sales of Equity Securities Pursuant to Regulation S." EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession 2.1 Purchase Agreement dated as of June 18, 1996, between Datastream International (France) SA and Talisman Management LTD (Exhibit 2.1 to the Company's June 20, 1996 Form 10-Q). 2.2 Stock Purchase Agreement between the Company and Howard Anderson dated as of August 9, 1996 (Exhibit 2.1 to the Company's August 15, 1996 Form 8-K). 2.3 Stock Purchase and Sale Agreement dated as of September 30, 1996, between the Company and American Natural Resources Company (Exhibit 2.3 to the Company's September 30, 1996 Form 10-Q). 2.4 Agreement for sale/purchase of the issued share capital of ICV Limited, between D. Taylor Esq. and others, Primark Information Services UK Limited and Primark Corporation dated October 24, 1996 (Exhibit 2.1 to the Company's Form 8-K dated November 13, 1996). 2.5 Amended and Restated Partnership Agreement for Worldscope/ Disclosure International Partners; Irish Partnership Interest Purchase and Sale Agreement; and Partnership Interest Purchase and Sale Agreement; dated as of October 15, 1996 (Exhibit 2.5 to the Company's 1996 Form 10-K). 2.6 Stock Purchase Agreement dated as of November 24, 1996, between the Company, Bowne & Co., Inc., and Robert G. Patterson (Exhibit 2.6 to the Company's 1996 Form 10-K). 2.7 Stock Purchase Agreement dated as of January 16, 1997, between the Company, WEFA Holdings, Inc., and the stockholders of WEFA Holdings, Inc., (Exhibit 2.7 to the Company's 1996 Form 10-K). 2.8 Stock Purchase Agreement between Primark Corporation and VNU International B.V. dated as of May 26, 1995 (Exhibit 2.1 to the Company's Form 8-K dated June 2, 1995); Amendment to Agreement dated as of June 29, 1995 (Exhibit 2.1 to the Company's Form 8-K dated July 3, 1995).
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EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 2.9 Stock Purchase Agreement by and among Primark Corporation, Primark Information Services UK Limited and Litton Industries, Inc. and Litton U.K. Limited dated as of December 8, 1997 (Exhibit 2.1 to the Company's Form 8-K filed December 10, 1997). 2.10 Information Technology Services Agreement by and among Primark Corporation, TASC, Inc. and Litton Industries, Inc. (Exhibit 2.2 to the Company's Form 8-K filed December 10, 1997). Articles of Incorporation and By-Laws 3.1 Articles of Incorporation of the Company (Exhibit 3.1 to the Company's Registration Statement No. 2-74688); Amendment to the Articles of Incorporation (Exhibit 3.1 to the Company's 1985 Form 10-K); Amendment dated June 16, 1988 (Exhibit 3.1 to the Company's 1988 Form 10-K); Amendment dated August 8, 1991 (Exhibit 3 (a) to the Company's Form 8-K dated August 9, 1991); Amendment dated May 27, 1992 (Exhibit 3.1 to the Company's June 30, 1992 Form 10-Q); Amendment dated May 28, 1997 (Exhibit 3.1 to the Company's June 30, 1997 Form 10-Q). 3.2 By-Laws of the Company, as amended (Exhibit 3.1 to the Company's September 30, 1990 Form 10-Q). Instruments defining the rights of security holders, including indentures. Instruments Defining the Rights of Security Holders, Including Indentures 4.1 Rights Agreement dated May 29, 1997 between Primark Corporation and Bank Boston, N.A., as Rights Agent, which includes, as Exhibit A, the Rights Certificate and as Exhibit B, the Summary of Rights to Purchase Common Stock (Exhibit 4.1 to the Company's Form 8-A dated June 19, 1997). 4.2 Indenture dated as of October 18, 1993 by and among the Company and The First National Bank of Boston, as Trustee (Exhibit 4.1 to the Company's September 30, 1993 Form 10-Q). 4.3 Registration Rights Agreement dated January 7, 1997, between the Company and Joseph E. Kasputys (Exhibit 4.1 to the Company's 1996 Form 10-K). Material Contracts 10.1 Primark Corporation 1992 Stock Option Plan dated March 2, 1992 (Exhibit 10.26 to the Company's 1991 Form 10-K); Amendment dated September 28, 1995 (Exhibit 10.22 to the Company's 1995 Form 10-K) 10.2 Primark Corporation Stock Option Plan for Non-Employee Directors, as amended, dated January 12, 1988 (Exhibit 10.57 to the Company's 1987 Form 10-K); Amendment dated February 21, 1992 (Exhibit 10.24 to the Company's 1991 Form 10-K); Amendment dated September 28, 1992 (Exhibit 28.3 to the Company's September 30, 1992 Form 10-Q); Amendment dated September 22, 1995 (Exhibit 10.2 to the Company's 1996 Form 10-K). 10.3 Primark Corporation Executive Share Option Scheme (Exhibit 10.26 to the Company's 1992 Form 10-K); Amendment dated September 28, 1995. (Exhibit 10.24 to the Company's 1995 Form 10-K). 10.4 Primark Corporation Savings and Stock Ownership Plan, as amended and restated, effective January 1, 1997; (filed as Exhibit 4.4 to the Company's Registration Statement on Form S-8 dated December 10, 1996). 10.5 Primark Corporation 1992 Employee Stock Purchase Plan dated March 2, 1992 (Exhibit 10.27 to the Company's 1991 Form 10-K); Amended and Restated Stock Purchase Plan and related Prospectus as filed under the Securities Act of 1933 (Exhibit 10.27 to the Company's 1993 Form 10-K); Amendment dated October 4, 1995 (Exhibit 10.26 to the Company's 1995 Form 10-K). 10.6 Management Incentive Plan adopted by Board of Directors on January 12, 1988 (Exhibit 10.64 to the Company's 1987 Form 10-K); Amendment dated February 21, 1992 (Exhibit 10.33 to the Company's 1991 Form 10-K). 10.7 Promissory notes dated September 30, 1988, issued to the Company by executive officers (Exhibit 10.1 to the Company's September 30, 1988 Form 10-Q). 10.8 Restricted Stock Award Agreements and Stock Option Agreements (Exhibit 4 (b) to the Company's Registration Statement No. 2-3876).
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EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 10.9 Employment and related agreements between the Company and Joseph E. Kasputys dated February 21, 1992 (Exhibit 10.32 to the Company's 1991 Form 10-K). 10.10 Employment and Option agreements between the Company and Joseph E. Kasputys dated January 7, 1997 (Exhibit 10.11 to the Company's 1996 Form 10-K). 10.11 Employment and related agreements between The Analytic Sciences Corporation, the Company and John C. Holt dated February 28, 1994 (Exhibit 10.32 to the Company's 1993 Form 10-K); Amendment dated February 29, 1996 (Exhibit 10.12 to the Company's 1996 Form 10-K). 10.12 Employment Agreement between the Company and Ira Herenstein dated December 3, 1996 (Exhibit 10.13 to the Company's 1996 Form 10-K). 10.13 Supplemental Death Benefit and Retirement Income Plan Agreement, as amended and restated, dated March 25 1986 (Exhibit 19.1 to the Company's March 31, 1985 Form 10-Q); Certified Copy of Resolution amending the Supplemental Death Benefit and Retirement Income Plan Agreement (Exhibit 10.17 to the Company's 1991 Form 10-K; Amendment dated September 28, 1992 (Exhibit 29.4 to the Company's September 30, 1992 Form 10-Q.) 10.14 Supplemental Medical Reimbursement Insurance Plan (Exhibit 10.15 to the Company's 1996 Form 10-K). 10.15 Form of Change of Control Compensation Agreement entered into between the Company and selected executive officers (Exhibit 10.60 to the Company's 1996 Form 10-K); Form of Amendments dated September 29, 1997 (filed as Exhibit 10.3 to the Company's September 30, 1997 Form 10-Q). 10.16* Refinancing Agreements (Revolving Credit Agreement, Term Loan Agreement, Pledge Agreement, Collateral Agency Agreement, and Note Backup Agreement) dated as of February 7, 1997, by and among Primark Corporation, Lenders Parties, Mellon Bank, N.A. and other related documents (Exhibit 10.17 to the Company's 1996 Form 10-K); Amendment dated May 1, 1997 (Exhibit 10.1 to the Company's June 30, 1997 Form 10-Q); Amendment dated June 30, 1997 (Exhibit 10.2 to the Company's June 30, 1997 Form 10-Q); Amendment dated December 1, 1997 (filed herein as Exhibit 10.16.1); Amendment dated March 6, 1998 (filed herein as Exhibit 10.16.2). 10.17 Form of variable rate unsecured loan notes dated October 24, 1996 between the Company and the former shareholders of ICV, Ltd. (Exhibit 10.18 to the Company's 1996 Form 10-K). 10.18 Credit Agreement dated October 23, 1996, by and among the Company, Lenders Parties and Mellon Bank, N.A.; (Exhibit 10.1 to the Company's Form 8-K dated November 13, 1996); Amendment dated October 23, 1996 (Exhibit 10.20 to the Company's 1996 Form 10-K); Amendment dated December 18, 1996 (Exhibit 10.21 to the Company's 1996 Form 10-K); Amendment dated January 9, 1997 (Exhibit 10.19 to the Company's 1996 Form 10-K); as amended by the Note Backup Agreement dated February 7, 1997 (Exhibit 10.17 to the Company's 1996 Form 10-K). 10.19 Revolving Credit Agreement dated as of June 29, 1995, between Primark Corporation, Lenders Parties, Mellon Bank, N.A. and The First National Bank of Boston and other related documents (Exhibit 10.1 to the Company's Form 8-K dated July 3, 1995); Amendment dated October 23, 1996 (Exhibit 10.20 to the Company's 1996 Form 10-K); Amendment dated December 18, 1996 (Exhibit 10.21 to the Company's 1996 Form 10-K); Amendment dated January 9, 1997 (Exhibit 10.19 to the Company's 1996 Form 10-K). 10.20 Term Loan Agreement dated as of June 29, 1995, between Primark Corporation, Lenders Parties, Mellon Bank, N.A. and The First National Bank of Boston and other related documents (Exhibit 10.2 to the Company's Form 8-K dated July 3, 1995); Amendment dated October 23, 1996 (Exhibit 10.20 to the Company's 1996 Form 10-K); Amendment dated December 18, 1996 (Exhibit 10.21 to the Company's 1996 Form 10-K); Amendment dated January 9, 1997 (Exhibit 10.19 to the Company's 1996 Form 10-K). 10.21 Loan Agreement dated as of June 29, 1995, between TASC, Inc. and Mellon Bank, N.A. (Exhibit 10.1 to the Company's Form 8-K dated July 3, 1995).
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EXHIBIT NUMBER DESCRIPTION OF DOCUMENT - ------- ----------------------- 10.22 Guaranty Agreement dated November 1, 1989, between Triad International Maintenance Corporation and Piedmont Triad Airport Authority (Exhibit 10.30 to the Company's 1989 Form 10-K). 10.23 Reimbursement Agreement dated October 1, 1989, between Triad International Maintenance Corporation and Mellon Bank, N.A. (Exhibit 10.31 to the Company's 1989 Form 10-K); Amendment dated September 25, 1992 and other related documents (Exhibit 28-4 to the Company's Form 8-K dated October 7, 1992); Amendments to Agreement and other related documents dated February 1, 1993 (Exhibit 10.43 to the Company's 1993 From 10-K). 10.24 Underwriting Agreement dated March 4, 1998, by and among Primark Corporation and BT Alex. Brown Incorporated (Exhibit 1.1 to the Company's Form 8-K dated March 6, 1998). 10.25 Underwriting Agreement dated November 29, 1995, by and among Primark Corporation and Paine Webber Incorporated (Exhibit 1.1 to the Company's November 7, 1995 Form S-3 Amendment No.1). 10.26 International Underwriting Agreement dated December 5, 1995, by and among Primark Corporation and Paine Webber Incorporated (Exhibit 1.2 to the Company's November 7, 1995 Form S-3 Amendment No. 1). Annual Report to Security Holders 13.1* Primark Corporation 1997 Annual Report (which is not deemed to be "filed" except to the extent that portions thereof are expressly incorporated by reference in this Annual Report on Form 10-K). Subsidiaries of Registrant 21.1* Subsidiaries of Primark Corporation. Consents of Experts and Counsel 23.1* Consent of Independent Certified Public Accountants. 24.1* Powers of Attorney (Included herein from Signature Page). 27.1* Financial Data Schedule for the year ended December 31, 1997. 27.2* Financial Data Schedule for the quarters ended March 31, 1997, June 30, 1997 and September 30, 1997. 27.3* Financial Data Schedule for the years ended December 31, 1996 and December 31, 1995. 27.4* Financial Data Schedule for the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996.
- --------------- * Indicates document filed herewith. For the Company's documents incorporated by reference, references are to File No. 1-8260. 16 19 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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 on the 30th day of March, 1998. PRIMARK CORPORATION -------------------------------------- (Registrant) By: /s/ STEPHEN H. CURRAN ------------------------------------ STEPHEN H. CURRAN EXECUTIVE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER The undersigned directors and officers of Primark Corporation, a Michigan corporation, hereby severally constitute and appoint Joseph E. Kasputys, Stephen H. Curran and Michael R. Kargula, and each of them, his or her true and lawful attorneys-in-fact and agents, each with full power and authority (acting alone and without the others) to execute in the name of and on behalf of the undersigned as such Director or Officer, an Annual Report on Form 10-K, for the year ended December 31, 1997, under the Securities and Exchange act of 1934, of said Corporation, and all amendments to such Annual Report on Form 10-K; hereby granting to such attorney and agents, and each of them full power of substitution and revocation in the premises; and hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- /s/ JOSEPH E. KASPUTYS Chairman, President and Chief January 5, 1998 - ------------------------------------------------ Executive Officer (Principal Joseph E. Kasputys Executive Officer) /s/ STEPHEN H. CURRAN Executive Vice President and January 7, 1998 - ------------------------------------------------ Chief Financial Officer Stephen H. Curran (Principal Financial and Accounting Officer) /s/ JOHN C. HOLT Director and Executive Vice January 7, 1998 - ------------------------------------------------ President John C. Holt /s/ KEVIN J. BRADLEY Director January 4, 1998 - ------------------------------------------------ Kevin J. Bradley /s/ STEVEN LAZARUS Director January 7, 1998 - ------------------------------------------------ Steven Lazarus /s/ PATRICIA MCGINNIS Director January 4, 1998 - ------------------------------------------------ Patricia McGinnis
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SIGNATURE TITLE DATE --------- ----- ---- /s/ JONATHAN NEWCOMB Director January 7, 1998 - ------------------------------------------------ Jonathan Newcomb /s/ CONSTANCE K. WEAVER Director January 7, 1998 - ------------------------------------------------ Constance K. Weaver /s/ IRA HERENSTEIN Senior Vice President of January 5, 1998 - ------------------------------------------------ Marketing Ira Herenstein /s/ MICHAEL R. KARGULA Executive Vice President, January 7, 1998 - ------------------------------------------------ General Counsel and Secretary Michael R. Kargula /s/ PATRICK G. RICHMOND Executive Vice President of January 15, 1998 - ------------------------------------------------ Corporate Development Patrick G. Richmond /s/ WILLIAM J. SWIFT III Senior Vice President and Tax January 2, 1998 - ------------------------------------------------ Counsel William J. Swift III By: /s/ STEPHEN H. CURRAN - ----------------------------------------------- Stephen H. Curran Attorney-in-fact
18 21 SCHEDULE II PRIMARK CORPORATION AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS OF CONTINUING OPERATIONS
ADDITIONS BALANCE AT ----------------------- DEDUCTIONS BALANCE AT BEGINNING OF CHARGED TO CHARGED TO FROM END OF PERIOD INCOME OTHER(1) RESERVES(2) PERIOD ------------ ---------- ---------- ----------- ---------- (IN THOUSANDS) Reserves deducted from assets to which they apply: Allowance for doubtful accounts: Year ended December 31, 1995.......... 180 232 1,993 (675) 1,730 Year ended December 31, 1996.......... 1,730 650 293 (439) 2,234 Year ended December 31, 1997.......... 2,234 836 7 (321) 2,756 Inventory: Year ended December 31, 1995.......... -- 200 (16) 184 Year ended December 31, 1996.......... 184 31 -- -- 215 Year ended December 31, 1997.......... 215 -- (215) -- --
- --------------- (1) Recovery of accounts previously written off. (2) Accounts written off. 19 EX-10.16.1 2 AMENDMENT TO TRANSACTION DOCUMENTS 1 Exhibit 10.16.1 AMENDMENT TO TRANSACTION DOCUMENTS THIS AMENDMENT, dated as of December 1, 1997, by and among PRIMARK CORPORATION, a Michigan corporation (the "Borrower"), the Lenders party to the Revolving Credit Agreement referred to below, the Lenders party to the Term Loan Agreement referred to below, the Lenders party to the Note Backup Agreement referred to below (such agreements being referred to collectively as the "Credit Facilities"), and MELLON BANK, N.A., a national banking association, as Agent under each such Credit Facility. RECITALS: A. The Borrower has entered into (a) a Revolving Credit Agreement (as amended, the "Revolving Credit Agreement") dated as of February 7, 1997 among Primark Corporation (the "Borrower"), the Lenders parties thereto from time to time, the Issuing Banks referred to therein, and Mellon Bank, N.A., as Agent, (b) a Term Loan Agreement (as amended, the "Term Loan Agreement") dated as of February 7, 1997 among the Borrower, the Lenders parties thereto from time to time, and Mellon Bank, N.A., as Agent, (c) a Note Backup Agreement (as amended, the "Note Backup Agreement") dated as of February 7, 1997 among the Borrower, the Lenders parties thereto from time to time, the Issuing Bank referred to therein, and Mellon Bank, N.A., as Agent. The Credit Facilities have been amended by a letter agreement dated February 21, 1997, an Amendment to Transactions Documents dated as of May 1, 1997, and an Amendment to Transaction Documents dated as of June 30, 1997. B. The parties hereto desire to amend further the Credit Facilities as set forth herein. NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: SECTION 1. AMENDMENTS (a) AMENDMENT TO COVENANT RELATING TO MERGERS, ETC. Section 7.08 of each Credit Facility is hereby amended by deleting clause (a) thereof and replacing it with the following new clause (a): (a) A Subsidiary of the Borrower may (i) merge with or into or consolidate with, or liquidate or dissolve into, any other Subsidiary of the Borrower, or (ii) merge into, or liquidate or dissolve into, the Borrower, provided that the surviving entity is the Borrower, or (iii) in the case of a Wholly Owned Subsidiary of the Borrower, acquire a substantial portion of the properties of the Borrower, or acquire all or a substantial portion of the properties of any other Subsidiary of the Borrower, or (iv) in the case of a Wholly Owned Subsidiary of the Borrower, acquire from the Borrower or any other Subsidiary of the Borrower any Shares of Capital Stock or other equity interest owned by the Borrower or such other Subsidiary (it being understood that, subject to the other provisions of the Loan Documents, in the event that a wholly Owned Subsidiary thus acquires from the Borrower Shares of Capital Stock which constitute Collateral Agent to release such Shares of Capital Stock from the Lien in favor of the Collateral Agent); and (b) AMENDMENT RELATING TO OPTIONAL PREPAYMENTS UNDER THE NOTE BACKUP AGREEMENT. Section 3.12 of the Note Backup Agreement is hereby amended by deleting the final sentence thereof and replacing it with the following: "Any such prepayment shall be made in accordance with Section 3.11 hereof; provided, that with the consent of the Agent (which the Agent may grant or withhold in its sole 2 discretion from time to time), any such prepayment may be made in a principal amount other than a principal amount permitted under Section 3.11. Section 2. Effectiveness and Effect, etc. (a) Effectiveness. This Amendment shall become effective, with effect as of the date hereof, when Mellon Bank, N.A., as Agent under each Credit Facility, shall have received counterparts hereof duly executed by the Borrower and by the "Required Lenders" and the "Agent" under each Credit Facility. (b) Effect. The Revolving Credit Agreement, the Term Loan Agreement and the Note Backup Agreement, as amended by the letter agreement dated February 21, 1997, the Amendment to Transaction Documents dated as of May 1, 1997 and the Amendment to Transaction Documents dated as of June 30, 1997, and as further amended hereby, are and shall continue to be in full force and effect and are hereby in all respects ratified and confirmed. Except to the extent expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy under any Credit Facility or constitute a waiver of any provision of any Credit Facility. Section 3. Miscellaneous. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same document. Section and other headings herein are for reference purposes only and shall not affect the interpretation of this Amendment in any respect. This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to choice of law rules. This Amendment is a requested amendment within the meaning of Section 10.06(a) of each Credit Facility. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. PRIMARK CORPORATION By: \s\ STEPHEN H. CUPRAN ------------------------------------ Name: Stephen H. Cupran Title: CFO MELLON BANK, N.A., individually and as Agent under each Credit Facility By: \s\ JANE WESTRICH ------------------------------------ R. Jane Westrich Vice President -2- 3 CONSENTED AND AGREED: BankBoston, N.A. THE FIRST NATIONAL BANK OF BOSTON By: \s\ ELLEN H. ALLEN ---------------------------------- Name: Ellen H. Allen Title: Director NATIONSBANK By: \s\ MARTY V. MITCHELL ---------------------------------- Name: Marty V. Mitchell Title: Vice President MORGAN GUARANTY TRUST COMPANY OF NEW YORK By: \s\ ROBERT BOTTAMEDI ---------------------------------- Name: Robert Bottamedi Title: Vice President THE ROYAL BANK OF SCOTLAND, PLC By: \s\ DEREK BONNAR ---------------------------------- Name: Derek Bonnar Title: Vice President THE CHASE MANHATTAN BANK By: \s\ ---------------------------------- Name: Title: -3- 4 BANK OF TOKYO - MITSUBISHI TRUST COMPANY By: \s\ ---------------------------------- Name: Title: FIRST AMERICAN NATIONAL BANK By: \s\ ANDREW S. ZIMBERG ---------------------------------- Name: Andrew S. Zimberg Title: Vice President THE FUJI BANK, LIMITED By: \s\ ---------------------------------- Name: Title: WACHOVIA BANK OF GEORGIA, N.A. By: \s\ JOHN P. RAFFERTY ---------------------------------- Name: John P. Rafferty Title: Vice President -4- EX-10.16.2 3 AMENDMENT TO REFINANCING AGREEMENT 1 Exhibit 10.16.2 AGREEMENT THIS AGREEMENT (referred to herein as this "Amendment"), dated as of March 6, 1998, by and among PRIMARK CORPORATION, a Michigan corporation (the "Borrower"), the Lenders party to the Revolving Credit Agreement referred to below, the Lenders party to the Term Loan Agreement referred to below, the Lenders party to the Note Backup Agreement referred to below (such agreements being referred to collectively as the "Credit Facilities"), and MELLON BANK, N.A., a national banking association, as Agent under each such Credit Facility. RECITALS: A. The Borrower has entered into (a) a Revolving Credit Agreement (as amended, the "Revolving Credit Agreement") dated as of February 7, 1997 among Primark Corporation (the "Borrower"), the Lenders parties thereto from time to time, the Issuing Banks referred to therein, and Mellon Bank, N.A., as Agent, (b) a Term Loan Agreement (as amended, the "Term Loan Agreement") dated as of February 7, 1997 among the Borrower, the Lenders parties thereto from time to time, and Mellon Bank, N.A., as Agent, and (c) a Note Backup Agreement (as amended, the "Note Backup Agreement") dated as of February 7, 1997 among the Borrower, the Lenders parties thereto from time to time, the Issuing Bank referred to therein, and Mellon Bank, N.A., as Agent. The Credit Facilities have been amended by a letter agreement dated February 21, 1997, an Amendment to Transactions Documents dated as of May 1, 1997, an Amendment to Transaction Documents dated as of June 30, 1997, and an Amendment to Transaction Documents dated as of December 1, 1997. B. The parties hereto desire to amend further the Credit Facilities as set forth herein, and to amend the Collateral Agency Agreement referred to in each of the Credit Facilities (the "Collateral Agency Agreement") and the Borrower Pledge Agreement referred to in the Collateral Agency Agreement (the "Borrower Pledge Agreement"). In addition, for convenience, the parties hereto desire to cumulate in this Amendment all prior amendments to the Credit Facilities. Accordingly, references in this Amendment to the Credit Facilities, the Collateral Agency Agreement and the Borrower Pledge Agreement are to such agreements in the forms originally executed. Capitalized terms used herein and not otherwise defined shall have the meanings given them in, or by reference in, the Collateral Agency Agreement. NOW THEREFORE, the parties hereto, intending to be legally bound, hereby agree as follows: SECTION 1. CERTAIN AMENDMENTS TO THE FINANCIAL TERMS OF THE REVOLVING CREDIT AGREEMENT. (a) Revolving Credit Agreement, Section 2.01(a), is amended to read as follows: (a) REVOLVING CREDIT COMMITMENTS. Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender, severally and not jointly, agrees (such agreement being herein called such Lender's "Revolving Credit Commitment") to make loans (the "Revolving Credit Loans") to the Borrower at any time or from time to time on or after the date hereof and to but not including the Revolving Credit Maturity Date. A Lender shall have no obligation to make any Revolving Credit Loan to the extent that such Lender's Revolving Credit Exposure at any time would exceed such Lender's Revolving Credit Committed Amount at such time. Each Lender's "Revolving Credit Committed Amount" at any time shall be equal to the amount set forth as its "Initial Revolving Credit Committed Amount" below its name on the signature pages hereof, as such amount may have been reduced under Section 2.01(f) hereof at such time, and subject to transfer to another Lender as provided in 2 Section 10.14 hereof; provided, that upon the occurrence of the Extension Date, each Lender's "Revolving Credit Committed Amount shall be automatically increased by an amount equal to such Lender's Pro Rata share of $150,000,000. The sum of the Revolving Credit Committed Amounts of the Lenders shall not exceed $75,000,000 at any time before the Extension Date or $225,000,000 at any time on or after the Extension Date. (b) Revolving Credit Agreement, Section 2.01(c), is amended by deleting the period at the end thereof and replacing it with the following: "; provided, that Revolving Credit Notes issued pursuant to Section 5.03 in connection with the Extension Date shall be dated the Extension Date and shall be in the face amount equal to such Lender's Revolving Credit Committed Amount on the Extension Date after giving effect to the increase in the Revolving Credit Committed Amounts on such date." (c) Revolving Credit Agreement, Section 2.01(e), is amended by adding the following line (ignoring the caption, which is set forth below only for reference purposes): If the Applicable Margin for Then the Revolving Credit such day is to be determined Commitment Fee Percentage for in accordance with such day is ------------------ ----------- Level V Performance Margins 0.20% (d) The following new Sections 2.01(g) and 2.01(h) are added to the Revolving Credit Agreement: (g) AUTOMATIC REDUCTION OF THE REVOLVING CREDIT COMMITTED AMOUNTS. The aggregate Revolving Credit Committed Amounts of the Lenders shall be reduced automatically by the following amounts on the following dates: Date of Reduction Amount of Reduction ----------------- ------------------- December 31, 1998 $5,000,000 June 30, 1999 $5,000,000 December 31, 1999 $10,000,000 June 30, 2000 $10,000,000 December 31, 2000 $10,000,000 June 30, 2001 $15,000,000 December 31, 2001 $140,000,000 June 30, 2002 $15,000,000 December 31, 2002 $15,000,000 To the extent any such reduction amount exceeds the aggregate Revolving Credit Committed Amounts of the Lenders on such date, the excess shall be ignored. Each such automatic reduction of the Revolving Credit Committed Amounts shall be applied Pro Rata to the Revolving Credit Committed Amounts of the Lenders. After the date of such reduction the Revolving Credit Commitment Fee shall be calculated upon the Revolving Credit Committed Amounts as so reduced. (h) CERTAIN ADDITIONAL FEES IN CERTAIN CIRCUMSTANCES. (i) In consideration of the Lenders entering into the Agreement dated as of March 6, 1998, three Business Days after such Agreement becomes effective in accordance with its terms the Borrower shall pay, in addition to all other amounts payable hereunder (A) to the Agent for the account of each Lender a fee equal to such Lender's Pro Rata share of $75,000, and (B) to the Agent, for its own account, a -2- 3 structuring fee in the amount agreed by the Borrower and the Agent. The obligations of the Borrower under this Section 2.01(h)(i) shall survive any termination of this Agreement. (ii) In the event that at any time before the first anniversary of the effective date of the Agreement dated as of March 6, 1998 (or, if the Extension Date occurs, at any time before the first anniversary of the Extension Date) any of the following events or conditions shall have occurred: (A) an event or condition referred to in Section 8.01(m) hereof shall have occurred, (B) the Borrower shall have consolidated or merged with or into any other Person, (C) the Borrower shall have liquidated, commenced a Wind-up, dissolved or divided, or (D) the Borrower shall have sold, leased or otherwise transferred all or substantially all of its assets to any other Person or Person, voluntarily or involuntarily, then, and in any such event (whether or not consented to or waived by the Lenders), in addition to all other amounts payable under this Agreement and the other Loan Documents, the Borrower shall pay to the Agent, for the account of each of the Lenders, on the third Business Day following the occurrence of such event, a fee equal to such Lender's Pro Rata share of $150,000. The obligations of the Borrower under this Section 2.01(h)(ii) shall survive any termination of this Agreement. (e) Section 2.03(b) of the Revolving Credit Agreement and Section 3.09(b) of the Note Backup Agreement each are amended as follows: (i) the first sentence is amended by deleting the term "or 'Level IV Performance Margins,'" and replacing it with the phrase "'Level IV Performance Margins,' or 'Level V Performance Margins,'", (ii) the first and second sentences each are amended by deleting the phrase "or Financial Test IV," and replacing it with the phrase ", Financial Test IV or Financial Test V,", and (iii) the final sentence before the table defining the various Performance Margins is amended by deleting the phrase "or Level IV Performance Margins do not apply on a particular day," and replacing it with the phrase ", Level IV Performance Margins or Level V Performance Margins do not apply on a particular day,". In addition, the definition of "Financial Test IV" is deleted and replaced with the following: "Financial Test IV" means that, as of the end of the relevant fiscal quarter, the Consolidated Funded Debt Ratio (Adjusted) for the period of four consecutive fiscal quarters ending on the last day of such fiscal quarter, considered as a single accounting period, is (x) less than 2.50, if the last day of such fiscal quarter is on or before the Extension Date, or (y) less than 2.50 and greater than or equal than 2.00, if the last day of such fiscal quarter is after the Extension Date. In addition, the following new entry is added to the table of Performance Margins following the table entry for "Level IV Performance Margins": LEVEL V PERFORMANCE MARGINS: Interest Rate Option Applicable Margin -------------------- ----------------- Base Rate Option Zero Euro-Rate Option 0.375% Level V Performance Margins shall apply in the event that Financial Test V is satisfied and the other conditions set forth above are met. "Financial Test V" means that as of the end of the relevant fiscal quarter, the Consolidated Funded Debt Ratio (Adjusted) for the period of four consecutive fiscal quarters ending on the last day of such fiscal quarter, considered as a single accounting period, is less than 2.00; provided, that Financial Text V shall not be deemed to be satisfied in any event unless the last day of such fiscal quarter is after the Extension Date. (f) Revolving Credit Agreement, Section 2.07(b)(i), first sentence, is deleted and replaced with the following: "The Borrower shall be required from time to time to reduce the aggregate Revolving Credit -3- 4 Committed Amounts by an amount not less than the Recapture Asset Amount from each Recapture Asset Disposition which occurs on or before the Extension Date." (g) Revolving Credit Agreement, Section 2.07(b)(iii)(B), is amended to read as follows: (B) any event or condition (other than the TASC Disposition) which would (but for the requirement hereunder to reduce the Revolving Credit Committed Amounts and prepay the Revolving Credit Exposures, and any requirement under the Term Loan Agreement to prepay the Indebtedness outstanding thereunder) give rise to any "Excess Proceeds" as defined in the Senior Note Indenture (taking into account the periods specified in the Senior Note Indenture which must elapse before amounts constitute "Excess Proceeds") (Recapture Asset Dispositions described in this clause (B) being sometimes referred to herein as being of "Type B"). (h) Revolving Credit Agreement, Section 5.02(e), is amended to read as follows: (e) NO MATERIAL ADVERSE CHANGE. There shall not have occurred, or be threatened, a material adverse change in the business, operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiaries taken as a whole since September 30, 1997 (it being understood that the TASC Disposition shall not in itself be deemed to constitute such a material adverse change). (i) The following new Section 5.03 is added to the Revolving Credit Agreement: 5.03. CONDITIONS TO OCCURRENCE OF THE EXTENSION DATE. The "Extension Date" shall occur upon the date designated by the Borrower in the certificate referred to below, provided that the following conditions precedent shall have been satisfied on such date: (a) TASC DISPOSITION. The TASC Disposition shall have occurred not later than April 30, 1998. (b) SENIOR NOTE REDEMPTION NOTICE. The Borrower shall have given notice to the trustee under the Senior Note Indenture of redemption of all of the outstanding Senior Notes, specifying as the "Redemption Date" a date not later than 60 days after the TASC Disposition. (c) REPAYMENT OF THE TERM LOAN; TERMINATION OF THE COLLATERAL AGENCY AGREEMENT AS TO THE TERM LOAN AGREEMENT. The Borrower shall have indefeasibly paid in full in cash all Term Loan Obligations (other than Contingent Indemnification Obligations), as such terms are defined in the Collateral Agency Agreement. Such payment shall have been made on the Extension Date. The Borrower shall have given a written notice pursuant to the final sentence of Section 2.05 of the Collateral Agency Agreement to the Term Loan Agent requesting the Term Loan Agent to give to the Collateral Agent the notice contemplated by Section 2.05(b) of the Collateral Agency Agreement. (d) REPLACEMENT REVOLVING CREDIT NOTES. The Agent shall have received, with a copy for each Lender, new Revolving Credit Notes conforming to the requirements of Section 2.01(c) hereof, duly executed on behalf of the Borrower. (e) OFFICER'S CERTIFICATE. The Agent shall have received a certificate in substantially the form attached hereto as Exhibit D, duly executed by a Responsible Officer of the Borrower, dated the Extension Date. (f) OPINION OF GENERAL COUNSEL OF THE BORROWER. The Agent shall have received an opinion of the General Counsel of the Borrower in substantially the form attached hereto as Exhibit E. -4- 5 (g) NO DEFAULTS; NO REDUCTION OF THE REVOLVING CREDIT COMMITMENTS. No Event of Default or Potential Default shall have occurred and be continuing or exist on the Extension Date or will occur or exist after giving effect to the Extension Date. The aggregate Revolving Credit Committed Amounts of the Lenders on the Extension Date, before giving effect to the increase in the Revolving Credit Committed Amounts occurring on the Extension Date, shall not be less than $75,000,000. (h) CORPORATE PROCEEDINGS. The Agent shall have received certificates by the Secretary or Assistant Secretary of the Borrower dated as of the Extension Date as to (i) true copies of the articles of incorporation and by-laws (or other constituent documents) of the Borrower in effect on such date, (ii) true copies of all corporate action taken by the Borrower relative to this Agreement and the other Loan Documents, as amended (including without limitation the Agreement dated as of March 6, 1998, and the replacement Revolving Credit Notes referred to in Section 5.03(d)), (iii) the incumbency and signature of the respective officers of the Borrower executing the Agreement dated as of March 6, 1998 and the replacement Revolving Credit Notes referred to in Section 5.03(d), together with satisfactory evidence of the incumbency of such Secretary or Assistant Secretary. The Agent shall have received certificates from the appropriate Secretary of State or other applicable Governmental Authorities dated not more than 30 days before the Extension Date showing the good standing of the Borrower in its state of incorporation. (i) ADDITIONAL MATTERS. All corporate and other proceedings, and all documents, instruments and other matters in connection with the transactions contemplated by this Section 5.03 shall be satisfactory in form and substance to the Agent. The Agent shall have received such other documents, instruments and other items as the Agent may reasonably request. In the event that the Extension Date occurs, the Agent shall promptly notify each of the Lenders of such fact and shall promptly distribute to each Lender its new Revolving Credit Note. Promptly following its receipt of such new Revolving Credit Note, each Lender shall promptly return its predecessor Revolving Credit Note to the Agent, who shall mark them "exchanged" and deliver them to the Borrower. (j) Revolving Credit Agreement, Section 9.12, is amended by deleting the phrase "$50,000 per annum" and replacing it with the phrase "$50,000 per annum (or, if the Extension Date occurs, $100,000 per annum, so that if the Extension Date occurs, each subsequent semiannual payment on each subsequent June 29 and December 29 as hereinafter provided shall be in the amount of $50,000)". (k) Revolving Credit Agreement, Annex A, Section 1.01, is amended by deleting the definition of "Revolving Credit Maturity Date" and replacing it with the following definition, and by adding the following additional defined term, each in their appropriate places in alphabetical order: "Extension Date" shall have the meaning given that term in Section 5.03 hereof. "Revolving Credit Maturity Date" shall mean the earlier to occur of October 15, 2000 or the date of the TASC Disposition; provided, that in the event that the Extension Date occurs, the Revolving Credit Maturity Date automatically shall be extended to December 31, 2002. (l) Exhibits D and E to this Amendment are appended to the Revolving Credit Agreement as Exhibits D and E thereto. SECTION 2. AMENDMENT TO THE FINANCIAL TERMS OF THE TERM LOAN AGREEMENT. Term Loan Agreement, Section 2.01(d), is amended by adding the following new sentence to the end thereof: "In -5- 6 addition, to the extent not due and payable earlier, the Term Loans shall be due and payable on the date of the TASC Disposition." SECTION 3. CERTAIN AMENDMENTS TO THE FINANCIAL TERMS OF THE NOTE BACKUP AGREEMENT. (a) Note Backup Agreement, Section 3.01(c), final sentence, is amended to read as follows: "The 'Letter of Credit Fee Rate' for any day shall mean the Applicable Margin applicable under the Euro-Rate Option on such day (whether or not the Extension Date has occurred and, accordingly, whether or not the Euro-Rate Option is actually available to the Borrower on such day)." (b) Note Backup Agreement, Section 3.04(a), is amended to read as follows: (a) BORROWER'S REIMBURSEMENT OBLIGATION. The Borrower hereby agrees to reimburse the Issuing Bank, by making payment to the Agent for the account of the Issuing Bank in accordance with Section 3.15(b) hereof, in the amount of each Letter of Credit Unreimbursed Draw, which reimbursement shall be due at the following times: (x) if the Extension Date has not occurred, on October 16, 2000 (the "Reimbursement Target Date") and thereafter ON DEMAND, (y) if the Extension Date has occurred, ON DEMAND; provided, that if any unpaid amount of any Letter of Credit Unreimbursed Draw is subject to a Euro-Rate Funding Period beginning before the Extension Date and ending after the Extension Date, reimbursement of such unpaid amount shall, subject to the other provisions of this Agreement and the other Loan Documents, be payable on the last day of such Euro-Rate Funding Period. Such reimbursement shall also be due at such earlier times as are provided elsewhere in this Agreement and the other Loan Documents. (c) Note Backup Agreement, Section 3.09(a), is amended to read as follows: (a) INTEREST RATE OPTIONS. Interest on the unpaid amount of Letter of Credit Unreimbursed Draws shall bear interest for each day until due on one or more bases selected by the Borrower from among the interest rate Options set forth below. Subject to the provisions of this Agreement, during any period before an unpaid amount of a Letter of Credit Unreimbursed Draw is due, such unpaid amount shall bear interest at the Base Rate Option, unless and until converted to the Euro-Rate Option in accordance with the provisions of this Agreement. Subject to the provisions of this Agreement, during any period before an unpaid amount of a Letter of Credit Unreimbursed Draw is due, the Borrower may select different Options to apply simultaneously to different Portions of such unpaid amount and may select different Funding Segments to apply simultaneously to different parts of the Euro-Rate Portion of such unpaid amount. The interest rate Options applicable to unpaid amounts of Letter of Credit Unreimbursed Draws before such unpaid amounts become due are as follows: (i) BASE RATE OPTION: A rate per annum (computed on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed) for each day equal to the Base Rate for such day plus the Applicable Margin for such day. (ii) EURO-RATE OPTION: A rate per annum (based on a year of 360 days and actual days elapsed) for each day equal to the Euro-Rate for such day plus the Applicable Margin for such day. -6- 7 From and after the date reimbursement of any unpaid amount of Letter of Credit Unreimbursed Draw is due, such unpaid amount shall bear interest in accordance with Section 3.15(c) hereof. For the avoidance of doubt, for all purposes of this Agreement and the other Loan Documents, any unpaid amount of any Letter of Credit Unreimbursed Draw which is payable on demand shall be deemed due, whether or not any demand for payment has been made. (d) Note Backup Agreement, Section 3.09(b), is amended as provided in Section 1(e) of this Amendment. In addition, in the table of Applicable Margins, the Applicable Margins for the Euro-Rate Options are amended as follows: (i) under Level I Performance Margins, "1.25%" is amended to read "1.25% or, after the Extension Date, 1.00%", (ii) under Level II Performance Margins, "1.00%" is amended to read "1.00% or, after the Extension Date, 0.75%", (iii) under Level III Performance Margins, "0.875%" is amended to read "0.875% or, after the Extension Date, 0.625%", and (iv) under Level IV Performance Margins, "0.75%" is amended to read "0.75% or, after the Extension Date, 0.50%". In addition, the following additional paragraph is added following the end of the table of Performance Margins (after the table entry relating to Level V Performance Margins): Notwithstanding the foregoing, if the Extension Date has occurred and if any unpaid amount of any Letter of Credit Unreimbursed Draw is subject to a Euro-Rate Funding Period beginning before the Extension Date and ending after the Extension Date, the Applicable Margin applicable to calculation of interest on such unpaid amount for each day from and after the Extension Date shall not be affected by the occurrence of such Extension Date and shall be determined as if the Extension Date had not occurred. (e) Note Backup Agreement, Section 3.09(c)(ii), is amended to read as follows: (ii) The Borrower may not select a Funding Period that would end after the Reimbursement Target Date or, if the Extension Date has occurred, after the Extension Date; and (f) Section 3.12 of the Note Backup Agreement is amended by deleting the final sentence thereof and replacing it with the following: "Any such prepayment shall be made in accordance with Section 3.11 hereof; provided, that with the consent of the Agent (which the Agent may grant or withhold in its sole discretion from time to time), any such prepayment may be made in a principal amount other than a principal amount permitted under Section 3.11." (g) Note Backup Agreement, Annex A, Section 1.01, is amended by adding the following new definition in its appropriate place in alphabetical order: "Extension Date" shall have the meaning given that term in the Revolving Credit Agreement. -7- 8 SECTION 4. CERTAIN OTHER AMENDMENTS TO THE CREDIT FACILITIES. (a) Section 2.03(b) of the Revolving Credit Agreement, Section 2.03(b)(ii) of the Term Loan Agreement, and Section 3.09(b) of the Note Backup Agreement, is amended by deleting the term "September 30, 1997" and replacing it with the term "June 30, 1997". (b) Section 7.01(a) of each Credit Facility is amended by deleting the table contained therein and replacing it with the following table:
Consolidated Net Worth (Adjusted) From and including To and including shall not be less than ------------------ ---------------- ---------------------- December 31, 1996 June 29, 1998 $425,000,000 June 30, 1998 December 30, 1998 $450,000,000 December 31, 1998 December 30, 1999 $475,000,000 December 31, 1999 December 30, 2000 $500,000,000 December 31, 2000 December 30, 2001 $525,000,000 December 31, 2001 December 30, 2002 $550,000,000 December 31, 2002 December 30, 2003 $575,000,000 Thereafter $600,000,000
For convenience of comparison between this Agreement and the other Credit Facilities, the above table may refer to periods after the final scheduled maturity date of the credit facility under this Agreement, but such reference shall not be construed to extend such final scheduled maturity date. (c) Section 7.01(c) of each Credit Facility is amended by deleting the table contained therein and replacing it with the following table:
Fiscal quarter ending on Consolidated Funded Debt Ratio (Adjusted) a date in the following for the four fiscal quarters ending period (inclusive) on such date shall not be greater than ------------------ -------------------------------------- December 31, 1996 through June 29, 1997 5.50 June 30, 1997 through September 29, 1997 6.35 September 30, 1997 through December 30, 1997 6.00 December 31, 1997 through December 30, 1998 5.00 December 31, 1998 though December 30, 1999 4.00 Thereafter 3.00
(d) Section 7.03(a) of each of the Term Loan Agreement and the Note Backup Agreement is amended to read as follows: (a) Indebtedness of the Borrower under the Revolving Credit Agreement, in aggregate principal amount not to exceed $75,000,000 or, from and after the Extension Date, $225,000,000 (including any extension, renewal or refinancing thereof made in compliance with Section 7.11(b) hereof); (e) Section 7.03(b) of each of the Revolving Credit Agreement and the Note Backup Agreement is amended to read as follows: (b) Indebtedness of the Borrower under the Term Loan Agreement, in aggregate principal amount not to exceed $225,000,000 (but not any extensions, renewals or refinancings of any thereof); provided, -8- 9 that this clause (b) shall cease to be in effect from and after the fourth Business Day after the TASC Disposition; (f) Section 7.03(d) of each Credit Facility is amended to read as follows: (d) Indebtedness of the Borrower under the Senior Notes, in aggregate principal amount not to exceed $112,000,000 (but not any extensions, renewals or refinancings of any thereof); provided, that this clause (d) shall cease to be in effect from and after the 61st day after the TASC Disposition (except that after such 61st day this clause (d) shall remain in effect as to any Senior Notes which have not been tendered for redemption, provided that (x) the Borrower shall have called all of the Senior Notes for redemption in accordance with the terms thereof, (y) the Borrower's obligations under the Senior Notes and the Senior Note Indenture shall have terminated pursuant to Section 8.1 of the Senior Note Indenture, and (z) pursuant to Section 2.8 of the Senior Note Indenture none of the Senior Notes shall remain outstanding); (g) Section 7.05(l) of each Credit Facility is amended to read as follows: (l) Cash Equivalent Investments and, after the Extension Date, Intermediate Term Investments; provided, that aggregate investments in Intermediate Term Investments shall not at any time exceed the lesser of (x) 66% of aggregate investments in Cash Equivalent Investments or (y) $40,000,000. (h) Section 7.06(a)(i) of each Credit Facility is amended to read as follows: (i) Repurchases under this Section 7.06(a) shall not exceed (x) if the Extension Date has not occurred, $50,000,000 in the aggregate from and after February 7, 1997, or (y) if the Extension Date has occurred, $100,000,000 in the aggregate from and after the Extension Date; (i) Section 7.06(a)(iii) of each Credit Facility is amended to read as follows: (iii) The Borrower would have been in compliance with Sections 7.01(a) and 7.01(c) on the last day of the fiscal quarter ending most recently before such repurchase, after giving effect on a pro forma basis to such repurchase and to any incurrence or acquisition of Indebtedness after such day, as if such repurchase and such incurrence or acquisition of Indebtedness had occurred on such day; provided, that for the purpose of determining pro forma compliance with Section 7.01(c), Section 7.01(c) shall be applied as if it required the Consolidated Funded Debt Ratio (Adjusted) for the four fiscal quarters ending on June 30, 1997 to be no greater than 5.75 and the Consolidated Funded Debt Ratio (Adjusted) for the four fiscal quarters ending on September 30, 1997 to be no greater than 5.50); and further provided, that in the event that the TASC Disposition has occurred and the Borrower desires to make a repurchase before the end of the fiscal quarter in which the TASC Disposition occurred, then (x) for the purpose of determining pro forma compliance with Section 7.01(a) with respect to such repurchase, pro forma effect shall be given to the TASC Disposition, as if the TASC Disposition had occurred on the last day of the fiscal quarter ending most recently before such repurchase; and (y) for the purpose of determining pro forma compliance with Section 7.01(c) with respect to such repurchase, (i) Consolidated EBITDA Less Capital Expenditures of TASC and its Subsidiaries shall be excluded for the four fiscal quarters ending on the last day of the fiscal quarter ending most recently before such repurchase, and (ii) pro forma -9- 10 effect shall be given to any repayment of Indebtedness from cash proceeds received by the Borrower from the TASC Disposition before such repurchase, as if such repayment had occurred on the last day of the fiscal quarter ending most recently before such repurchase (and for this purpose only, the Senior Notes shall be treated as if they had been redeemed on the date on or after consummation of the TASC Disposition on which the Borrower gives notice of redemption in full of the Senior Notes in accordance with the Senior Note Indenture), (j) Section 7.08(a) of each Credit Facility is amended to read as follows: (a) A Subsidiary of the Borrower may (i) merge with or into or consolidate with, or liquidate or dissolve into, any other Subsidiary of the Borrower, provided, that the surviving or new entity is a Wholly Owned Subsidiary of the Borrower, or (ii) merge into, or liquidate or dissolve into, the Borrower, provided, that the surviving entity is the Borrower, or (iii) in the case of a Wholly Owned Subsidiary of the Borrower, acquire a substantial portion of the properties of the Borrower, or acquire all or a substantial portion of the properties of any other Subsidiary of the Borrower, or (iv) in the case of a Wholly Owned Subsidiary of the Borrower, acquire from the Borrower or any other Subsidiary of the Borrower any Shares of Capital Stock or other equity interest owned by the Borrower or such other Subsidiary (it being understood that, subject to the other provisions of the Loan Documents, in the event that a Wholly Owned Subsidiary thus acquires from the Borrower Shares of Capital Stock which constitute Collateral, the Borrower may, pursuant to Section 2.04 of the Borrower Pledge Agreement, request the Collateral Agent to release such Shares of Capital Stock from the Lien in favor of the Collateral Agent); and (k) Section 7.08(b) of each Credit Facility is amended by replacing the period at the end thereof with "; and" and by appending thereto the following (which is part of Section 7.08(b) but is further indented and spaced for ease of readability): further provided, that in the case of each such acquisition as to which the Adjusted Acquisition Consideration exceeds $12,000,000, the Borrower would have been in compliance with Section 7.01(c) on the last day of the fiscal quarter ending most recently before such acquisition, after giving effect on a pro forma basis to any incurrence or acquisition of Indebtedness after such day, as if such incurrence or acquisition of Indebtedness had occurred on such day; and further provided, that in the event that the TASC Disposition has occurred and the Borrower desires to make an acquisition before the end of the fiscal quarter in which the TASC Disposition occurred, then for the purpose of determining pro forma compliance with Section 7.01(c) with respect to such acquisition, (x) Consolidated EBITDA Less Capital Expenditures of TASC and its Subsidiaries shall be excluded for the four fiscal quarters ending on the last day of the fiscal quarter ending most recently before such acquisition, and (y) pro forma effect shall be given to any repayment of Indebtedness from cash proceeds received by the Borrower from the TASC Disposition before such acquisition, as if such repayment had occurred on the last day of the fiscal quarter ending most recently before such acquisition (and for this purpose only, the Senior Notes shall be treated as if they had been redeemed on the date on or after consummation of the TASC Disposition on which the Borrower gives notice of redemption in full of the Senior Notes in accordance with the Senior Note Indenture); and further provided, that the Borrower shall provide the Agent, with a copy for each Lender, not later than the Business Day after any acquisition as to which the Adjusted Acquisition Consideration exceeds $12,000,000, a certificate signed by a Responsible Officer of the Borrower, dated the date of such acquisition, describing such acquisition, certifying that such acquisition is in compliance with the provisions of this Section 7.08(b), and including a statement in reasonable -10- 11 detail of the information and calculations necessary to establish compliance with this Section 7.08(b). (l) Section 7.09 of each Credit Facility is amended by: (i) deleting the semicolon at the end of subsection (b) and appending thereto the phrase ", all in the ordinary course of business;", (ii) deleting the word "and" at the end of subsection (e), (iii) redesignating existing subsection (f) to be subsection (g), and (iv) inserting the following new subsection (f) immediately before such subsection (g): (f) The TASC Disposition; provided, that the TASC Disposition shall have occurred not later than April 30, 1998; and further provided, that the Borrower shall immediately notify the Agent upon the consummation of the TASC Disposition; and further provided, that the Borrower shall apply the proceeds of the TASC Disposition to redemption of all of the Senior Notes as promptly as practicable following the TASC Disposition and to payment in full of all Indebtedness under the Term Loan Agreement in accordance with the terms of the Term Loan Agreement (and pending such redemption or payment, shall hold an amount at least equal to the amount necessary to make such redemptions and payments in Cash Equivalent Investments), any balance of proceeds being available for general corporate purposes; and". (m) Section 7.12 of each Credit Facility is amended by deleting the word "and" preceding clause (y), and by deleting the period at the end thereof and appending the following: ", and (z) redeem the Senior Notes following the TASC Disposition and repayment of all Indebtedness under the Term Loan Agreement." (n) Section 8.01(l) of each Credit Facility is amended by deleting the parenthetical at the end thereof and replacing it with the following: "(except for principal payments and redemptions permitted by clause (x) or clause (z) of Section 7.12 hereof)". (o) Section 8.01(m) is amended by adding ")" after the term "Closing Date". (p) Revolving Credit Agreement, Section 10.14 (c)(ii), is amended to read as follows (ii) if a Lender makes such an assignment of less than all of its then remaining rights and obligations under this Agreement and the other Loan Documents, such transferor Lender shall retain, after such assignment, a minimum principal amount of $5,000,000 of the Commitments, and after giving effect to such assignment the transferee Lender shall have a minimum aggregate principal amount of $5,000,000 of the Commitments, (q) Term Loan Agreement, Section 10.14(c)(ii), is amended to read as follows: (ii) if a Lender makes such an assignment of less than all of its then remaining rights and obligations under this Agreement and the other Loan Documents and under the Note Backup Agreement, such transferor Lender shall retain, after such assignment (and any concurrent assignment under the Note Backup Agreement), a minimum principal amount of $5,000,000 under this Agreement and the Note Backup Agreement in the aggregate, and after giving effect to such assignment (and any concurrent assignment under the Note Backup Agreement) the transferee Lender shall have a minimum principal amount of $5,000,000 under this Agreement and the Note Backup Agreement in the aggregate, (r) Note Backup Agreement, Section 10.14(c)(ii), is amended to read as follows: (ii) if a Lender makes such an assignment of less than all of its then remaining rights and obligations under this Agreement and the other Loan Documents and under the Term Loan Agreement, such transferor Lender shall retain, after such assignment (and any concurrent assignment under the Term Loan Agreement), a minimum principal amount of $5,000,000 under this Agreement and the Term Loan -11- 12 Agreement in the aggregate, and after giving effect to such assignment (and any concurrent assignment under the Term Loan Agreement) the transferee Lender shall have a minimum principal amount of $5,000,000 under this Agreement and the Term Loan Agreement in the aggregate, (s) In Annex A, Section 1.01 of each of the Credit Facilities, the definition of "Consolidated Net Worth" is amended by deleting the phrase "(other than Cash Equivalent Investments)" and replacing it with the phrase "(other than Cash Equivalent Investments and Intermediate Term Investments)". In addition, the definitions of "Consolidated Fixed Charge Coverage Ratio," "Consolidated Fixed Charges," "Consolidated Funded Debt Ratio (Adjusted)" and "Consolidated Net Worth (Adjusted)" are amended to read as follows, and the following new definitions of "Intermediate Term Investment" and "TASC Disposition" are added in their appropriate places in alphabetical order: "Consolidated Fixed Charge Coverage Ratio" for any period shall mean the ratio of the Consolidated EBITDA Less Capital Expenditures for such period to the Consolidated Fixed Charges for such period. For purposes of determining the Consolidated Fixed Charge Coverage Ratio, Consolidated EBITDA Less Capital Expenditures of TASC and its Subsidiaries shall be included for each fiscal quarter during which TASC is a wholly-owned Subsidiary of the Borrower (notwithstanding that the Borrower may have classified TASC as a discontinued operation for such fiscal quarter as a consequence of the proposed TASC Disposition). "Consolidated Fixed Charges" for any period shall mean the sum of (a) Consolidated Cash Interest Expense for such period, plus (b) principal payments made by the Borrower and its Subsidiaries during such period with respect to any outstanding Indebtedness (excluding (i) payments of Indebtedness under the Revolving Credit Agreement, (ii) prepayments made at the option of the Borrower of Indebtedness under the Term Loan Agreement, to the extent the amounts so prepaid are not otherwise due during such period, and (iii) payments of the Senior Notes at the scheduled maturity thereof and payments of the Senior Notes following the TASC Disposition), all as determined on a consolidated basis in accordance with GAAP, plus (c) the sum of all scheduled reductions of the "Revolving Credit Committed Amounts" pursuant to Section 2.01(g) of the Revolving Credit Agreement during such period (but if any such scheduled reduction is greater than $15,000,000, then for purposes of this clause (c) such scheduled reduction shall instead be deemed to be $15,000,000). "Consolidated Funded Debt Ratio (Adjusted)" for any period shall mean the following ratio: (a) the amount, not less than zero, determined as of the last day of such period, equal to (i) Consolidated Funded Indebtedness, minus (ii) the amount, not less than zero, equal to (A) the amount of cash and Cash Equivalent Investments owned by the Borrower and its Subsidiaries, valued at the lower of cost or market, minus (B) $10,000,000, divided by (b) Consolidated EBITDA Less Capital Expenditures for such period. For purposes of determining the Consolidated Funded Debt Ratio (Adjusted) (x) on any date before the date on which the TASC Disposition occurs, the Consolidated EBITDA Less Capital Expenditures of TASC and its Subsidiaries shall be included for each complete fiscal quarter during which TASC is a wholly-owned Subsidiary of the Borrower (notwithstanding that the Borrower may have classified TASC as a discontinued operation for such fiscal quarter as a consequence of the proposed TASC Disposition), and (y) on any date on or after the date on which the TASC Disposition occurs, Consolidated EBITDA Less Capital Expenditures of TASC and its Subsidiaries shall be excluded for all periods, whether before or after the date on which the TASC Disposition occurs. "Consolidated Net Worth (Adjusted)" at any time shall mean Consolidated Net Worth at such time plus the lesser of (a) $50,000,000 (or, if the TASC Disposition has occurred before such time, $330,000,000), or (b) the sum of aggregate writeoffs of goodwill or other intangible assets on or after January 1, 1997 in accordance with GAAP. -12- 13 "Intermediate Term Investments" shall mean any of the following U.S. dollar denominated investments, to the extent acquired for investment and not with a view to achieving trading profits: (a) obligations fully backed by the full faith and credit of the United States of America maturing not in excess of three years from the date of acquisition, (b) the following obligations of any commercial bank or trust company organized under the laws of the United States or any state thereof having capital, surplus and undivided profits aggregating in excess of $250,000,000, the long-term unsecured debt of which (or, if such bank does not have an unsecured debt rating by Standard & Poor's Ratings Group or Moody's Investors Service, Inc., the long-term unsecured debt of such bank's parent holding company) is rated "BBB+" or better by Standard & Poor's Ratings Group or "Baa1" or better by Moody's Investors Service, Inc.: (i) time deposits, certificates of deposit and acceptances maturing not in excess of three years from the date of acquisition, or (ii) fully secured overnight repurchase obligations for underlying securities of the type referred to in clause (a) above, (c) freely tradeable and readily marketable corporate bonds, notes or other debt securities rated "BBB+" or better by Standard & Poor's Ratings Group or "Baa1" or better by Moody's Investors Service, Inc., in each case maturing not later than three years from the date of acquisition, (d) freely tradeable and readily marketable preferred stock rated "BBB+" or better by Standard & Poor's Ratings Group or "Baa1" or better by Moody's Investor Services, Inc., and (e) investments in mutual funds whose investment guidelines restrict substantially all of such funds' investments to those satisfying the criteria set forth in the foregoing clauses (a) through (d) and in the definition of "Cash Equivalent Investment." In no event shall any investment as to which the Borrower or any Subsidiary of the Borrower is an issuer or a direct or indirect obligor be deemed an Intermediate Term Investment. "TASC Disposition" means the sale by the Borrower of TASC and its Subsidiaries for a cash purchase price not less than $430,000,000 (subject to closing adjustment as provided in the Stock Purchase Agreement by and among Primark Corporation, Primark Holding Corporation, Primark Information Services UK Limited, Litton Industries and Litton U.K. Limited, dated as of December 8, 1997), and otherwise on substantially the terms and conditions heretofore disclosed by the Borrower to the Lenders;. (t) Revolving Credit Agreement, Annex A, Section 1.01, definition of "Closing Date", is amended to read as follows: "Closing Date" shall mean February 7, 1997. SECTION 5. AMENDMENTS TO THE COLLATERAL AGENCY AGREEMENT. (a) Collateral Agency Agreement, Section 1.01, definition of "Cash Equivalent Investments," is amended to read as follows: "Cash Equivalent Investments" shall mean any of the following, to the extent acquired for investment and not with a view to achieving trading profits: (a) obligations fully backed by the full faith and credit of the United States of America or sterling denominated debt securities issued or guaranteed by the government of the United Kingdom, in each case maturing not in excess of one year from the date of acquisition, (b) commercial paper maturing not in excess of 180 days from the date of acquisition and rated "P-1" by Moody's Investors Service or "A-1" by Standard & Poor's Corporation on the date of acquisition, (c) the following obligations of any commercial bank or trust company having capital, surplus and undivided profits aggregating in excess of $250,000,000 (or the equivalent thereof in foreign currency), the long-term unsecured debt of which (or, if such bank does not have an unsecured debt rating by Standard & Poor's Ratings Group or Moody's Investors Service, Inc., the long-term unsecured debt of such bank's parent holding company) is rated "A" or better by Standard & Poor's Ratings Group or "A" or better by Moody's Investors Service, Inc.: (i) time deposits, certificates of deposit and acceptances maturing not in excess of 180 days from the date of acquisition, or (ii) fully secured overnight repurchase obligations for underlying securities of the type referred to in clause (a) above, (d) freely tradeable and readily marketable money market preferred stock which, pursuant to its terms, has a yield reset not less frequently than every 60 days and rated "AA" or better by Standard & Poor's Ratings Group or "Aa" or better by Moody's -13- 14 Investors Service, Inc., (e) obligations issued or guaranteed by any state, commonwealth or territory of the United States, or by any political subdivision thereof, in each case maturing not in excess of six months from the date of acquisition, and rated "A" or better by Standard & Poor's Ratings Group or "A" or better by Moody's Investors Service, Inc., (f) investments in mutual funds whose investment guidelines restrict substantially all of such funds' investments to those satisfying the criteria set forth in the foregoing clauses (a) through (e), and (g) other investments designated in writing by the Collateral Agent as being "Cash Equivalent Investments" for purposes of this Agreement (it being understood that any such designation shall be revocable by the Collateral Agent upon 60 days' notice to the Borrower). In no event shall any investment as to which the Borrower or any Subsidiary of the Borrower is an issuer or a direct or indirect obligor be deemed a Cash Equivalent Investment. (b) Collateral Agency Agreement, Section 1.01, definition of "Revolving Credit Agreement," is amended by deleting the term "$75,000,000" and replacing it with the term "$75,000,000 or, from and after the Extension Date, $225,000,000". (c) Collateral Agency Agreement, Section 1.01, is amended by adding the following new definition in its appropriate place in alphabetical order: "Extension Date" shall have the meaning given that term in the Revolving Credit Agreement. SECTION 6. BORROWER PLEDGE AGREEMENT. (a) For the avoidance of doubt, effective the instant immediately before consummation of the TASC Disposition, any and all liens and security interests in favor of the Collateral Agent under the Borrower Pledge Agreement in any and all of the following shall, automatically and without further action on the part of the Collateral Agent, be released: (i) all Shares of Capital Stock of TASC, The Analytic Sciences Corporation Limited and their respective Subsidiaries, and (ii) all property and assets of any kind or nature (including without limitation all patents, copyrights, trademarks and other intellectual property) of TASC, The Analytic Sciences Corporation Limited and their respective Subsidiaries. (b) Section 4.05(a) of the Borrower Pledge Agreement is amended by deleting the phrase "(other than Cash Equivalent Investments)" and replacing it with the phrase "(other than Cash Equivalent Investments and Intermediate Term Investments)". SECTION 7. EFFECTIVENESS AND EFFECT, ETC. (a) This Amendment shall become effective when Mellon Bank, N.A., as Agent under each Credit Facility and as Collateral Agent, shall have received counterparts hereof duly executed by the Borrower, by each of the "Lenders" and the "Agent" under each Credit Facility, and by the Collateral Agent. (b) The Revolving Credit Agreement, the Term Loan Agreement, the Note Backup Agreement, the Collateral Agency Agreement and the Borrower Pledge Agreement, in the forms initially executed and as amended hereby, are and shall continue to be in full force and effect, and are hereby in all respects ratified and confirmed. Except to the extent expressly set forth herein, the execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy under any of the foregoing agreements and instruments or constitute a waiver of any provision of any of the foregoing agreements and instruments. This Amendment is a cumulative amendment and, upon its effectiveness, shall supersede the letter agreement dated February 21, 1997, the Amendment to Transaction Documents dated as of May 1, 1997, the Amendment to Transaction Documents dated as of June 30, 1997, and the -14- 15 Amendment to Transaction Documents dated as of December 1, 1997, which shall be of no further force or effect. SECTION 8. MISCELLANEOUS. This Amendment may be executed in any number of counterparts and by the different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed to be an original and all of which taken together shall constitute but one and the same document. Section and other headings herein are for reference purposes only and shall not affect the interpretation of this Amendment in any respect. This Amendment shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to choice of law rules. This Amendment is a requested amendment within the meaning of Section 10.06(a) of each Credit Facility. IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized, as of the date first above written. PRIMARK CORPORATION By ------------------------------- Name: Title: MELLON BANK, N.A., individually and as Agent under each Credit Facility By ------------------------------- R. Jane Westrich Vice President CONSENTED AND AGREED: BANKBOSTON, N.A. By - ------------------------------ Name: Title: NATIONSBANK, N.A. By - ------------------------------ Name: Title: -15- 16 MORGAN GUARANTY TRUST COMPANY OF NEW YORK By - ------------------------------- Name: Title: THE ROYAL BANK OF SCOTLAND, PLC By - ------------------------------- Name: Title: THE CHASE MANHATTAN BANK By - ------------------------------- Name: Title: BANK OF TOKYO - MITSUBISHI TRUST COMPANY By - ------------------------------- Name: Title: FIRST AMERICAN NATIONAL BANK By - ------------------------------- Name: Title: -16- 17 THE FUJI BANK, LIMITED By - ------------------------------- Name: Title: WACHOVIA BANK, N.A. By - ------------------------------- Name: Title: -17- 18 EXHIBIT D TO REVOLVING CREDIT AGREEMENT (EXTENSION DATE) PRIMARK CORPORATION OFFICER'S CERTIFICATE The undersigned, an officer of Primark Corporation, a Michigan corporation (the "Borrower"), hereby certifies on behalf of the Borrower as follows: 1. This certificate is delivered to Mellon Bank, N.A., as Agent, pursuant to Section 5.03 of the Revolving Credit Agreement dated as of February 7, 1997 (as amended, modified or supplemented from time to time, the "Revolving Credit Agreement") by and among the Borrower, the Lenders from time to time parties thereto, the Issuing Banks referred to therein, and Mellon Bank, N.A., as Agent. Capitalized terms used herein and not otherwise defined have the meanings as ascribed to them in the Revolving Credit Agreement. 2. The Borrower desires the Extension Date to occur on the date of this certificate. 3. On the date hereof, all of the conditions set forth in Section 5.03 of the Credit Agreement have been satisfied. Without limiting the generality of the foregoing: (a) The TASC Disposition occurred on ___________, 1998. (b) The Borrower has given notice to the trustee under the Senior Note Indenture of redemption of all of the outstanding Senior Notes, specifying as the "Redemption Date" a date not later than 60 days after the TASC Disposition. (c) The Borrower has indefeasibly paid in full in cash all Term Loan Obligations (other than Contingent Indemnification Obligations), as such terms are defined in the Collateral Agency Agreement. Such payment was made on the date of this certificate. The Borrower has given a written notice pursuant to the final sentence of Section 2.05 of the Collateral Agency Agreement to the Term Loan Agent requesting the Term Loan Agent to give to the Collateral Agent the notice contemplated by Section 2.05(b) of the Collateral Agency Agreement. (d) No Event of Default or Potential Default has occurred and is continuing or exists on the date hereof or will occur or exist after giving effect to the Extension Date. The aggregate Revolving Credit Committed Amounts of the Lenders on the date hereof, before giving effect to the increase in the Revolving Credit Committed Amounts occurring on the Extension Date, is not less than $75,000,000. Executed this_______________day of_________________, 1998. PRIMARK CORPORATION By: __________________________ Name: __________________________ Title: __________________________ 19 EXHIBIT E TO REVOLVING CREDIT AGREEMENT FORM OF OPINION OF COUNSEL TO THE BORROWER (EXTENSION DATE) [Extension Date] To the Lenders, Issuing Banks and Agent party to the Revolving Credit Agreement referred to below, The Lenders and Agent party to the Term Loan Agreement referred to below, The Lenders, Issuing Bank and Agent party to the Note Backup Agreement referred to below, and Mellon Bank, N.A., as Collateral Agent Ladies and Gentlemen: I am the Executive Vice President, General Counsel and Secretary of Primark Corporation, a Michigan corporation, (the "Borrower") and have represented the Borrower in connection with: (a) the Revolving Credit Agreement (the "Revolving Credit Agreement"), dated as of February 7, 1997, by and among the Borrower, the Lenders parties thereto from time to time, the Issuing Banks referred to therein and Mellon Bank, N.A., as Agent, (b) the Term Loan Agreement (the "Term Loan Agreement"), dated as of February 7, 1997, by and among the Borrower, the Lenders parties thereto from time to time, and Mellon Bank, N.A., as Agent, (c) the Note Backup Agreement (the "Note Backup Agreement") dated as of February 7, 1997, by and among the Borrower, the Lenders parties thereto from time to time, the Issuing Bank referred to therein and Mellon Bank, N.A., as Agent, and (d) the Collateral Agency Agreement (the "Collateral Agency Agreement"), dated as of February 7, 1997, among the Borrower, certain Revolving Credit Parties, certain Term Loan Parties, certain Note Backup Parties and Mellon Bank, N.A., as Collateral Agent, (e) the Pledge Agreement (the "Borrower Pledge Agreement"), dated as of February 7, 1997, made by the Borrower in favor of Mellon Bank, N.A., as Collateral Agent, and (f) the Agreement (the "Cumulative Amendment"), dated as of March 6, 1998, by and among the Borrower, the Lenders party to the Revolving Credit Agreement, the Lenders party to the Term Loan Agreement, the Lenders party to the Note Backup Agreement, and Mellon Bank, N.A., as Agent under such Revolving Credit Agreement, as Agent under such Term Loan Agreement, as Agent under such Note Backup Agreement, and as Collateral Agent under the Collateral Agency Agreement. Capitalized terms used herein and not otherwise defined shall have the same meanings as in the Collateral Agency Agreement, as amended by the Cumulative Amendment. This opinion is being delivered pursuant to Section 5.03 of the Revolving Credit Agreement, as amended by the Cumulative Amendment. In connection with this opinion, I have examined originals or copies, certified or otherwise identified to my satisfaction, of the following: (i) the Revolving Credit Agreement, in the form initially executed; (ii) the Term Loan Agreement, in the form initially executed; -19- 20 (iii) the Note Backup Agreement, in the form initially executed; (iv) the Collateral Agency Agreement, in the form initially executed; (v) the Borrower Pledge Agreement, in the form initially executed; (vi) the following amendments to the Revolving Credit Agreement, the Term Loan Agreement, the Note Backup Agreement, the Collateral Agency Agreement, and/or the Borrower Pledge Agreement (collectively, the "Prior Amendments"): (A) the letter agreement dated February 21, 1997; (B) the Amendment to Transaction Documents dated as of May 1, 1997; (C) the Amendment to Transaction Documents dated as of June 30, 1997; and (D) the Amendment to Transaction Documents dated as of December 1, 1997; (vii) the Revolving Credit Notes dated the date hereof and issued to the Lenders under the Revolving Credit Agreement on the date hereof pursuant to Section 5.03 of the Revolving Credit Agreement, as amended by the Cumulative Amendment (the "Replacement Revolving Credit Notes"); (viii) all material agreements and instruments to which the Borrower or any Subsidiary of the Borrower is a party or by which any of their respective properties may be subject or bound; and (ix) such other documents and matters as I have deemed necessary or appropriate to render the opinions set forth herein. The Revolving Credit Agreement, the Term Loan Agreement, the Note Backup Agreement, the Collateral Agency Agreement, and the Borrower Pledge Agreement, each as amended by the Cumulative Amendment, and the Replacement Revolving Credit Notes and the Cumulative Amendment, are collectively referred to herein as the "Specified Documents". In my examination I have assumed the genuineness of all signatures (other than those on behalf of the Borrower), the legal capacity of natural persons, the authenticity of all documents submitted to me as originals, the conformity to original documents of all documents submitted to me as certified or photostatic copies and the authenticity of the originals of such copies. As to any facts material to the opinions expressed below which I did not independently establish or verify, I have relied upon the statements and representations of officers and other representatives of the Borrower and of public officials. I am admitted to the Bar of the State of Michigan, and I do not express any opinion as to the laws of any jurisdiction other than the State of Michigan and the federal laws of the United States of America. -20- 21 The opinions set forth below are subject to the following qualifications: (a) enforcement of the Specified Documents may be limited by applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws affecting creditors' rights generally and by general principles of equity (regardless of whether enforcement is sought in equity or at law); (b) certain of the remedial provisions including waivers, with respect to the exercise of remedies against the collateral contained in the Borrower Pledge Agreement, as amended, may be unenforceable in whole or in part, but the inclusion of such provisions does not affect the validity of the Shared Security Documents, taken as a whole, and the Shared Security Documents, taken as a whole, together with applicable law, contains adequate provisions for the practical realization of the benefits of the security created thereby; (c) I express no opinion as to the effect on the opinions expressed herein of (i) the compliance or non-compliance of the Collateral Agent, the Agent, any of the Lenders or any of the other Secured Parties with any state, federal or other laws or regulations applicable to them or (ii) the legal or regulatory status or the nature of the business of the Collateral Agent, the Agent, any of the Lenders or any of the other Secured Parties; (d) I express no opinion as to the enforceability of any rights to contribution or indemnification provided for in the Specified Documents which are violative of the public policy underlying any law, rule or regulation (including any federal or state securities law, rule or regulation); (e) I express no opinion as to the enforceability of (i) any provision of any Specified Document to the extent it authorizes or permits any party to any Specified Document or any purchaser of a participation interest from any such party to set-off or apply any deposit, property or indebtedness with respect to any participation interest or (ii) any provision of any Specified Document to the extent it purports to waive any objection a Person may have that a suit, action or proceeding has been brought in an inconvenient forum; (f) enforcement of the Shared Security Documents against the rights of the Borrower in instruments, leases or contracts may be subject to the terms of such instruments, leases or contracts or other arrangements between the Borrower and the other parties to such agreements, the rights of such other parties and any claims or defenses of such other parties against the Borrower arising under or outside such instruments, leases or contracts or other agreements; and (g) I have assumed that the Specified Documents are the legal, valid and binding obligations of each party thereto other than the Borrower, enforceable against each such party thereto in accordance with its terms. Based upon and subject to the foregoing, I am of the opinion that: -21- 22 1. The Borrower is a corporation duly organized, validly existing and in good standing under the laws of the State of Michigan. The Borrower has corporate power and authority to own its property and to transact the business in which it is engaged or presently proposes to engage. The Borrower is duly qualified to do business as a foreign corporation and is in good standing in the Commonwealths of Massachusetts and Virginia. 2. The Borrower has corporate power and authority to execute, deliver, perform, and take all actions contemplated by, the Specified Documents, and all such action has been duly and validly authorized by all necessary corporate proceedings on its part. Without limitation of the foregoing, the Borrower has the corporate power and authority to borrow and request Letters of Credit (as defined in the Specified Documents) to be issued pursuant to the Specified Documents to the fullest extent permitted thereby from time to time, and has taken all necessary corporate action to authorize such borrowings and requests for issuance of Letters of Credit. 3. Each of the Specified Documents has been duly and validly executed and delivered by the Borrower. 4. No Federal or Michigan Governmental Action is or will be necessary in connection with execution and delivery of the Specified Documents, performance of or compliance with the terms of the Specified Documents, or to ensure the legality, validity, binding effect, enforceability or admissibility in evidence of the Specified Documents, except for the matters set forth in Section 4.04 of each of the Revolving Credit Agreement, the Term Loan Agreement and the Note Backup Agreement, as the same have been respectively amended by the Cumulative Amendment. 5. Neither the execution and delivery of the Specified Documents, nor performance of or compliance with the terms and conditions of the Specified Documents by the Borrower, does or will (a) violate or conflict with any Federal or Michigan Law, or (b) violate or conflict with, or constitute a default under, or result in (or give rise to any right, contingent or other, of any Person to cause) any termination, cancellation, prepayment or acceleration of performance of, or result in the creation or imposition of (or give rise to any obligation, contingent or other, to create or impose) any Lien upon any property of the Borrower or any Subsidiary of the Borrower (except for any Lien in favor of the Collateral Agent securing the Obligations) pursuant to, (i) the articles of incorporation or by-laws (or other constitutional documents) of the Borrower or any Subsidiary of the Borrower, or (ii) any judicial or administrative order, judgment, injunction or decree, any material agreement or instrument (including without limitation the Senior Note Indenture), or to my knowledge after due inquiry any other agreement or instrument, to which the Borrower or any Subsidiary of the Borrower is a party or by which any of their respective properties may be subject or bound. 6. To the best of my knowledge, there is no pending or threatened action, suit, proceeding or investigation by or before any Governmental Authority against or affecting the Borrower or any Subsidiary of the Borrower, except for matters that if adversely decided, individually or in the aggregate, do not, and would not be likely to, have a Material Adverse Effect (as defined in the Specified Documents). 7. In the event that a Michigan court were to apply the substantive laws of the State of Michigan, notwithstanding the choice of law of the parties set forth in the Specified Documents and the -22- 23 limited nature of contacts within the State of Michigan, each of the Specified Documents constitutes a valid and binding obligation of the Borrower, enforceable against the Borrower in accordance with its terms. I call to your attention that the Specified Documents are governed by the laws of the Commonwealth of Pennsylvania, and I express no opinion as to whether a Michigan court would apply the substantive laws of the State of Michigan to such documents. 8. The Borrower is not an "investment company" under the Investment Company Act of 1940, as amended. 9. The Borrower is not a "holding company," or a "public utility company" within the meaning of the Public Utility Holding Company Act of 1935, as amended. This opinion is being furnished to you and is solely for your benefit in connection with the Specified Documents and the transactions contemplated by the foregoing, except that it may be relied upon by any person which becomes a Participant or Secured Party as if it were addressed to such person and delivered on the date hereof. Very truly yours, -23- EX-13.1 4 1997 ANNUAL REPORT 1 Exhibit 13.1 CONSOLIDATED STATEMENTS OF INCOME
In Thousands Except Per Share Amounts For Years Ended December 31 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------- OPERATING REVENUES $ 397,875 $ 277,063 $ 184,779 - ---------------------------------------------------------------------------------------------------------------- OPERATING EXPENSES Cost of services 157,327 104,479 66,063 Selling, general and administrative 151,559 111,463 71,921 Depreciation 17,371 12,318 8,176 Amortization of goodwill 15,805 10,616 6,803 Amortization of other intangible assets 17,029 10,348 10,930 Restructuring charge (Note 4) 6,800 -- -- - ---------------------------------------------------------------------------------------------------------------- Total operating expenses 365,891 249,224 163,893 - ---------------------------------------------------------------------------------------------------------------- OPERATING INCOME 31,984 27,839 20,886 - ---------------------------------------------------------------------------------------------------------------- OTHER INCOME AND (DEDUCTIONS) Investment income 1,085 2,675 967 Interest expense (15,986) (12,468) (8,377) Foreign currency gain (loss) 1,831 1,836 (2,620) Other 1,039 66 (845) - ---------------------------------------------------------------------------------------------------------------- Total other income and (deductions) (12,031) (7,891) (10,875) - ---------------------------------------------------------------------------------------------------------------- Income From Continuing Operations Before Income Taxes 19,953 19,948 10,011 Income Tax Expense 12,963 7,432 4,630 - ---------------------------------------------------------------------------------------------------------------- Income From Continuing Operations 6,990 12,516 5,381 - ---------------------------------------------------------------------------------------------------------------- DISCONTINUED OPERATIONS (NOTE 3) Discontinued operations, net of income tax expense of $11,988, $14,005 and $10,482, respectively 14,680 16,192 13,469 Gain on disposal of discontinued operations, net of income tax expense of $5,407 -- 8,400 -- - ---------------------------------------------------------------------------------------------------------------- Total Discontinued Operations 14,680 24,592 13,469 - ---------------------------------------------------------------------------------------------------------------- Income Before Extraordinary Loss 21,670 37,108 18,850 Extraordinary Loss On Early Extinguishment Of Debt (Note 6), net of income tax benefit of $1,379 in 1997 and $288 in 1995 (1,955) -- (534) - ---------------------------------------------------------------------------------------------------------------- Net Income 19,715 37,108 18,316 Dividends On Preferred Stock -- (359) (1,434) - ---------------------------------------------------------------------------------------------------------------- Net Income Applicable To Common Stock $ 19,715 $ 36,749 $ 16,882 ================================================================================================================ BASIC EARNINGS PER COMMON SHARE (NOTE 8) Income from continuing operations $ 0.26 $ 0.49 $ 0.21 Discontinued operations 0.56 0.99 0.70 Extraordinary loss (0.07) -- (0.03) - ---------------------------------------------------------------------------------------------------------------- Net income $ 0.75 $ 1.48 $ 0.88 ================================================================================================================ EARNINGS PER COMMON SHARE - ASSUMING DILUTION (NOTE 8) Income from continuing operations $ 0.25 $ 0.46 $ 0.19 Discontinued operations 0.53 0.92 0.65 Extraordinary loss (0.07) -- (0.02) - ---------------------------------------------------------------------------------------------------------------- Net income $ 0.71 $ 1.38 $ 0.82 ================================================================================================================
The accompanying notes to the consolidated financial statements are an integral part of these statements. PRIMARK CORPORATION AND SUBSIDIARIES 2 CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands For Years Ended December 31 1997 1996 1995 - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 19,715 $ 37,108 $ 18,316 Adjustments to reconcile net income to net cash flows from operating activities: Discontinued operations (14,680) (24,592) (13,469) Extraordinary loss on early extinguishment of debt 3,334 -- 822 Cash provided by discontinued operations 21,244 13,915 10,735 Depreciation and amortization 50,205 33,282 25,909 Deferred income taxes (3,310) 1,174 (835) Other charges and credits - net (9,161) 11,268 1,674 Changes in operating working capital, excluding the effect of acquisitions: (Increase) decrease in billed, unbilled and other receivables - net (5,366) (27,531) 8,155 Decrease in other current assets 1,743 303 717 Decrease in accounts payable (2,896) (1,954) (4,210) Increase in accrued payroll and benefits 2,515 3,310 5,023 (Decrease) increase in income and other taxes payable - net (5,506) 5,056 (516) (Decrease) increase in deferred income (1,787) 10,848 (6,459) Increase in other current liabilities 1,974 3,520 3,443 - ---------------------------------------------------------------------------------------------------------------------------------- Net change in operating working capital (9,323) (6,448) 6,153 - ---------------------------------------------------------------------------------------------------------------------------------- Net cash provided from operating activities 58,024 65,707 49,305 - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES Issuance of short-term notes payable 225,304 2,598 318,601 Repayment of short-term notes payable (197,702) (2,598) (318,601) Issuance of long-term debt 100,000 -- 125,000 Repayment of long-term debt (5,000) -- -- Common stock repurchased and retired (56,238) -- -- Common stock issuance 12,235 8,264 106,528 Debt issue costs and other (3,853) (711) (7,073) Financing activities of discontinued operations -- (2,804) (4,100) - ---------------------------------------------------------------------------------------------------------------------------------- Net cash provided from financing activities 74,746 4,749 220,355 - ---------------------------------------------------------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (23,965) (19,412) (9,803) Capitalized software (19,971) (16,916) (5,704) Purchase of subsidiaries - net of acquired cash (88,089) (71,084) (199,734) Proceeds from sale of subsidiary 3,494 14,300 -- Other - net (4,514) (8,503) (2,465) Investing activities of discontinued operations (11,459) (4,374) (9,002) - ---------------------------------------------------------------------------------------------------------------------------------- Net cash used for investing activities (144,504) (105,989) (226,708) - ---------------------------------------------------------------------------------------------------------------------------------- EFFECT OF EXCHANGE RATE CHANGES ON CASH (762) 927 57 - ---------------------------------------------------------------------------------------------------------------------------------- NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (12,496) (34,606) 43,009 CASH AND CASH EQUIVALENTS, JANUARY 1 25,276 59,882 16,873 - ---------------------------------------------------------------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, DECEMBER 31 $ 12,780 $ 25,276 $ 59,882 ================================================================================================================================== SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION - CASH PAID FOR: Income taxes, including amounts paid for discontinued operations $ 12,834 $ 12,863 $ 10,616 Interest $ 25,512 $ 20,664 $ 20,351 ==================================================================================================================================
The accompanying notes to the consolidated financial statements are an integral part of these statements. PRIMARK CORPORATION AND SUBSIDIARIES 3 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
In Thousands At December 31 1997 1996 - -------------------------------------------------------------------------------------------------------------------------------- ASSETS CURRENT ASSETS Cash and cash equivalents, at cost(which approximates market value) $ 12,780 $ 25,276 Billed receivables less allowance for doubtful accounts of $2,756 and $2,234, respectively 70,084 54,466 Unbilled and other receivables 9,546 10,662 Federal and state income tax benefit 21,304 2,308 Other current assets 24,036 12,466 Net assets of discontinued operations 197,330 - - -------------------------------------------------------------------------------------------------------------------------------- Total current assets 335,080 105,178 - -------------------------------------------------------------------------------------------------------------------------------- DEFERRED CHARGES AND OTHER ASSETS Goodwill, less accumulated amortization of $41,834 and $26,502, respectively 556,737 492,835 Capitalized data and other intangible assets, less accumulated amortization of $20,710 and $13,393, respectively 47,512 41,283 Capitalized software, less accumulated amortization of $20,162 and $10,787, respectively 48,645 35,004 Net assets of discontinued operations - 192,435 Other 8,980 9,907 - -------------------------------------------------------------------------------------------------------------------------------- Total deferred charges and other assets 661,874 771,464 - -------------------------------------------------------------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT, AT COST Computer equipment 63,169 49,924 Leasehold improvements 17,631 14,294 Other 9,806 7,947 - -------------------------------------------------------------------------------------------------------------------------------- 90,606 72,165 Less - Accumulated depreciation (43,751) (28,006) - -------------------------------------------------------------------------------------------------------------------------------- Net property, plant and equipment 46,855 44,159 - -------------------------------------------------------------------------------------------------------------------------------- Total assets $1,043,809 $ 920,801 ================================================================================================================================ LIABILITIES AND COMMON SHAREHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ 27,602 $ - Accounts payable 14,125 16,691 Accrued employee payroll and benefits 24,585 19,806 Federal income taxes payable - 9,071 Foreign and other taxes payable 10,717 12,262 Deferred income 69,931 62,576 Current portion of long-term debt, including capital lease obligations 11,301 6,518 Other 43,814 38,761 - -------------------------------------------------------------------------------------------------------------------------------- Total current liabilities 202,075 165,685 - -------------------------------------------------------------------------------------------------------------------------------- LONG-TERM DEBT AND OTHER LIABILITIES Long-term debt, including capital lease obligations 331,260 241,822 Deferred income taxes 21,133 16,189 Other 17,463 21,010 - -------------------------------------------------------------------------------------------------------------------------------- Total long-term debt and other liabilities 369,856 279,021 - -------------------------------------------------------------------------------------------------------------------------------- Total liabilities 571,931 444,706 - -------------------------------------------------------------------------------------------------------------------------------- MINORITY INTEREST 907 265 - -------------------------------------------------------------------------------------------------------------------------------- COMMITMENTS AND CONTINGENCIES (NOTE 13) - -------------------------------------------------------------------------------------------------------------------------------- COMMON SHAREHOLDERS' EQUITY Common stock and additional paid-in-capital 275,370 296,546 Retained earnings 198,658 178,943 Cumulative foreign translation adjustment (3,057) 341 - -------------------------------------------------------------------------------------------------------------------------------- Total common shareholders' equity 470,971 475,830 - -------------------------------------------------------------------------------------------------------------------------------- Total liabilities and common shareholders' equity $1,043,809 $ 920,801 ================================================================================================================================
The accompanying notes to the consolidated financial statements are an integral part of these statements. PRIMARK CORPORATION AND SUBSIDIARIES 4 CONSOLIDATED STATEMENTS OF COMMON SHAREHOLDERS' EQUITY
In Thousands For Years Ended December 31 1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------------- Common Stock, without par value-authorized 100,000,000 shares, issued 26,800,399; 27,067,951 and 24,435,968 shares, respectively, at $0.02 stated value Balance - beginning of year $ 541 $ 489 $ 398 Issued for employee stock purchase and option plans 36 2 -- Retirement of common stock (41) -- -- Purchase of subsidiary -- 44 -- Conversion of preferred stock to common -- 6 -- Issued in public offering -- -- 91 - ----------------------------------------------------------------------------------------------------------------------------------- Balance - end of year 536 541 489 - ----------------------------------------------------------------------------------------------------------------------------------- Additional Paid-in Capital Balance - beginning of year 296,005 226,005 113,696 Tax benefit relating to stock option plans 22,827 3,218 4,177 Issued for employee stock purchase and option plans 12,198 1,557 3,076 Retirement of common stock (56,196) -- -- Purchase of subsidiary -- 59,906 -- Conversion of preferred stock to common - net of costs -- 4,738 -- Gain on treasury shares -- 581 439 Issued in public offering -- -- 104,617 - ----------------------------------------------------------------------------------------------------------------------------------- Balance - end of year 274,834 296,005 226,005 - ----------------------------------------------------------------------------------------------------------------------------------- Retained Earnings Balance - beginning of year 178,943 141,846 124,964 Net income 19,715 37,108 18,316 Dividends on preferred stock -- (359) (1,434) Change in year-end of subsidiaries -- 348 -- - ----------------------------------------------------------------------------------------------------------------------------------- Balance - end of year 198,658 178,943 141,846 - ----------------------------------------------------------------------------------------------------------------------------------- Treasury Stock, at average cost, 0; 0 and 1,119,287 shares, respectively, held in treasury Balance - beginning of year -- (14,814) (13,145) Repurchased -- -- (6,944) Conversion of preferred stock to common -- 10,878 -- Reissued for stock purchase and option plans -- 3,936 5,275 - ----------------------------------------------------------------------------------------------------------------------------------- Balance - end of year -- -- (14,814) - ----------------------------------------------------------------------------------------------------------------------------------- Unearned Compensation Balance - beginning of year -- (709) (1,674) Amortization of unearned compensation -- 709 965 - ----------------------------------------------------------------------------------------------------------------------------------- Balance - end of year -- -- (709) - ----------------------------------------------------------------------------------------------------------------------------------- Cumulative Foreign Currency Translation Adjustment Balance - beginning of year 341 1,245 450 Translation adjustment (5,221) (1,378) 1,262 Income tax benefit (expense) on adjustment 1,823 474 (467) - ----------------------------------------------------------------------------------------------------------------------------------- Balance - end of year (3,057) 341 1,245 - ----------------------------------------------------------------------------------------------------------------------------------- Total Common Shareholders' Equity $ 470,971 $ 475,830 $ 354,062 ===================================================================================================================================
The accompanying notes to the consolidated financial statements are an integral part of these statements. PRIMARK CORPORATION AND SUBSIDIARIES 5 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. Business The Company is a global information services company with businesses strategically focused in supplying financial, economic and market research information to financial and corporate markets. b. Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of Primark Corporation and its majority-owned subsidiaries (the "Company"). All significant intercompany transactions and balances have been eliminated. Investments in companies of less than 50 percent are accounted for using the equity method. 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 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. Effective January 1996, Datastream International Limited and its affiliates and Vestek Systems, Inc. changed their year-end reporting period from November 30 to December 31. The change was made to provide more timely information and enhance comparability. The operating results for December 1995 were credited directly to retained earnings. Certain reclassifications have been made to prior years' statements to conform to the 1997 presentation. Prior periods have been restated to separately present continuing operations from discontinued operations (Note 3). c. Foreign Currency Translation The functional currency for most of the Company's foreign operations is the applicable local currency. Foreign currency accounts are translated into U.S. dollars using current exchange rates in effect at the balance sheet date for assets and liabilities, and weighted average monthly exchange rates during the period for revenues and expenses. Adjustments resulting from translating foreign functional currency financial statements into U.S. dollars are reported as a separate component of shareholders' equity. Gains and losses resulting from transactions and certain balance sheet accounts denominated in currencies other than the applicable functional currency are included in income. The net effect of changes in cash are separately identified in the consolidated statements of cash flows. d. Derivative Financial Instruments The Company enters into currency exchange and interest rate swap agreements to minimize interest rate and foreign exchange risk. Gains and losses related to qualifying accounting hedges of firm commitments are deferred and recognized in income when the hedged transaction occurs. Gains and losses from financial instruments that do not qualify for hedge accounting are marked to market and recognized as a gain or loss in the current period. The Company does not hold or issue derivative financial instruments for trading purposes. e. Revenue Recognition Revenue derived from subscription contracts is generally billed in advance of services provided. Amounts billed in advance are recorded as deferred income and recognized ratably over the periods in which services are performed. f. Cash and Cash Equivalents Cash and cash equivalents represent cash and short-term, highly liquid investments with original maturities of three months or less. g. Goodwill Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired and is amortized on a straight line basis over estimated useful lives ranging from 20 to 40 years. The Company regularly evaluates the net carrying value of all long-lived assets, including intangibles and goodwill, for recoverability based upon the undiscounted future cash flows associated with these assets. Management believes there have been no impairments of these assets. h. Capitalized Software Costs related to the conceptual formulation and design of software developed for internal use are expensed as incurred. Costs incurred subsequent to establishment of technological feasibility are capitalized and amortized over periods ranging from 3 to 5 years. Costs to support or service software are expensed as incurred. The Company does not develop software for sale or lease. i. Capitalized Data and Other Intangibles Costs incurred to update and maintain the Company's database assets are expensed as incurred. Costs associated with the purchase of historical data not currently part of the Company's database assets, as well as the cost of initiating a new database product, are capitalized. Other intangible assets and liabilities consist of non-compete covenants, trademarks and unfavorable lease commitments. Data and other intangibles are amortized on a straight line basis over periods ranging from 3 to 20 years. PRIMARK CORPORATION AND SUBSIDIARIES 6 NOTES CONTINUED j. Property and Equipment Computer equipment and other property are recorded at cost and depreciated on a straight line basis over their estimated useful lives, ranging from 3 to 10 years. Leasehold improvements are amortized over the shorter of the remaining life of the lease or the estimated useful life of the improvement. k. Income Taxes Income tax expense is based on reported earnings before income taxes. Deferred income taxes reflect the impact of temporary differences between assets and liabilities recognized for financial reporting purposes and such amounts recognized for tax purposes. Deferred tax balances are adjusted to reflect changes in tax rates expected to be in effect during the periods in which the temporary differences reverse. As temporary differences reverse, the related deferrals are recorded to income. l. Earnings Per Share In February 1997, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 128 "Earnings Per Share." This standard requires dual presentation of basic and diluted earnings per share ("EPS") on the face of the income statement and requires a reconciliation of the numerators and denominators of basic and diluted EPS calculations (Note 8). The EPS of prior periods have been restated to present basic and diluted EPS. m. Accounting For Stock-Based Compensation The Company accounts for stock-based compensation using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations. The impact of recording stock-based compensation under the fair value method is disclosed in Note 10. n. New Accounting Pronouncements In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income" and SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information." The Company will adopt these statements during fiscal year 1998 and does not expect that the adoption will have a material impact on the consolidated financial statements. 2. ACQUISITIONS During the three years ending December 31, 1997, the Company made the acquisitions set forth below, each of which has been accounted for as a purchase. Accordingly, the purchase price has been allocated to the identifiable net assets acquired. The excess of the purchase price over the estimated fair value of net assets acquired has been allocated to goodwill and is amortized on a straight line basis over periods ranging from 25 to 40 years. Future adjustments to the total purchase price allocation, if any, are not expected to materially affect the Company's financial statements. The consolidated financial statements include the operating results of each business from the date of acquisition. a. Fiscal 1997 Summary of Acquisition Costs (000s) WEFA Baseline - --------------------------------------------------------------------------- Cash $ 45,000 $ 40,963 Acquisition Fees 204 233 - --------------------------------------------------------------------------- Total Consideration $ 45,204 $ 41,196 Acquired Cash (308) (2) - --------------------------------------------------------------------------- Consideration Paid $ 44,896 $ 41,194 - --------------------------------------------------------------------------- Net Excess of Purchase Price over Fair Value $ 44,979 $ 39,431 =========================================================================== WEFA On February 7, 1997, the Company acquired all of the outstanding stock of WEFA Holdings, Inc. ("WEFA") for $45,000,000 in cash. Headquartered in Pennsylvania, WEFA is an international provider of value added economic information and consulting services to Fortune 500 companies, governments, universities, and financial institutions. Baseline On January 6, 1997, the Company purchased all of the outstanding stock of Baseline Financial Services, Inc. ("Baseline") pursuant to the terms of a Stock Purchase Agreement dated November 24, 1996, between the Company, Bowne & Co., and another owner for $40,963,000 in cash. Headquartered in New York City, Baseline provides institutional investors with visual valuation graphics of financial market information. b. Fiscal 1996
Summary of Acquisition Costs The Yankee (000s) ICV Worldscope Group DAFSA - -------------------------------------------------------------------------------------------- Cash $ 40,316 $ 5,000 $ 33,000 $ 9,000 Stock Issued 59,950 -- -- -- Notes Issued 8,250 -- -- -- Receivables Forgiven -- 3,889 -- -- Guaranteed Payment -- -- 5,000 -- Acquisition Fees 3,765 237 119 199 - -------------------------------------------------------------------------------------------- Total Consideration $ 112,281 $ 9,126 $ 38,119 $ 9,199 Acquired Cash (16,309) (353) (1,600) -- Purchase Price Adjustment -- -- -- (1,316) - -------------------------------------------------------------------------------------------- Consideration Paid $ 95,972 $ 8,773 $ 36,519 $ 7,883 - -------------------------------------------------------------------------------------------- Excess of Purchase Price over Fair Value $ 112,348 $ 3,926 $ 34,583 $ 6,793 ============================================================================================
PRIMARK CORPORATION AND SUBSIDIARIES 7 NOTES CONTINUED ICV On October 24, 1996, the Company acquired all the outstanding stock of ICV Limited. The purchase price, excluding fees, consisted of $24,007,000 in net cash, 2,200,000 shares of Primark common stock at a $27.25 market value and $8,250,000 in six year notes (the "ICV Purchase Notes"), issued by the Company to the sellers (Note 6b). ICV supplies a variety of real-time data and news products to equity traders and investors in London and throughout the United Kingdom. In accordance with the terms of the purchase agreement, the Company registered the 2,200,000 shares of its common stock in 1998. Worldscope On October 15, 1996, the Company acquired an additional 30% ownership interest in Worldscope for $5,000,000 in cash, giving Primark a controlling ownership interest of 80%. Prior to the transaction, Worldscope was a 50% partnership accounted for under the equity method. In connection with the transaction, Primark and the previous 50% owner each forgave working capital advances equal to $3,889,000. The sellers of the 30% interest in Worldscope have a non-expiring option to sell their remaining 20% ownership to Primark, in increments of 5% or 15%. The price of a 5% increment would be at 5 times the most recent 12 months of revenue multiplied by the 5% ownership. The price of a 15% increment would be at 4 times revenue multiplied by the 15% ownership. As of October 15, 2006, Primark will have the right to purchase an additional 15% of Worldscope. The Yankee Group On August 9, 1996, the Company acquired all the outstanding stock of Yankee Group Research, Inc. (the "Yankee Group"), pursuant to the terms of a stock purchase agreement by and between the Company and the shareholders of the Yankee Group. The purchase price included cash payments of $31,000,000 on August 9, 1996; $2,000,000 in September of 1997, a guaranteed payment of $5,000,000 due in August 1998 and future contingent payments to the former Yankee shareholders based upon future operating results, ranging from $0 to a maximum of $27,000,000. Future contingent payments, if any, are due in the year 2000 and will be recorded as goodwill when incurred. The Yankee Group provides market research on telecommunications and computer systems. DAFSA On June 18, 1996, Datastream International (France) SA acquired all of the outstanding stock of Groupe DAFSA ("DAFSA"), for $7,883,000 in cash, net of purchase price adjustments. DAFSA supplies company account information on all listed companies in France and ownership information on French companies through print and CD-ROM. c. Fiscal 1995 Disclosure On June 29, 1995, the Company acquired all the outstanding stock of Disclosure Incorporated and certain of its affiliates including I/B/E/S International Inc. and a 50% ownership of Worldscope for a total purchase price of $200,000,000 in cash. The Company obtained $215,000,000 of external financing, of which $185,000,000 was used to finance the cash consideration paid in the acquisition. The Company incurred fees of approximately $6,076,000 associated with the acquisition. The excess of the purchase price over the estimated fair value of total net assets acquired of approximately $193,713,000 was recorded to goodwill. Disclosure is a provider of "as reported" and abstracted financial information, primarily derived from Securities and Exchange Commission filings and supplemented with information from companies, stock exchanges and other sources, both in the United States and worldwide. I/B/E/S is a source of earnings estimates for investors, financial institutions and portfolio managers on a global basis. d. Pro Forma Financial Information The following unaudited pro forma financial information reflects the consolidated results of operations of the Company for the years ended December 31, 1997 and 1996 as though the acquisitions had occurred on January 1, 1997 and 1996. This information has been prepared for comparative purposes only and does not necessarily represent actual operating results that may be achieved in the future or that would have occurred had the acquisitions been consummated on January 1, 1997 or 1996.
PRO FORMA INFORMATION (000s except EPS) 1997 1996 - ------------------------------------------------------------------- Operating revenues $400,228 $375,147 Income from continuing operations $ 6,946 $ 4,681 Net income applicable to common stock $ 19,671 $ 28,914 EPS from continuing operations: Basic $ 0.26 $ 0.18 Diluted $ 0.25 $ 0.17 ===================================================================
3. DISCONTINUED OPERATIONS AND DISPOSITIONS a. Discontinued Operations The accompanying consolidated financial statements reflect the operating results of TASC, TIMCO and PSLC separately from the Company's continuing operations for all periods presented. Consolidated interest expense has been allocated to discontinued operations based upon their ratio of net assets to total consolidated net assets. Net assets of discontinued operations represent the net book value of the Company's investment in TASC and TIMCO and consist principally of working PRIMARK CORPORATION AND SUBSIDIARIES 8 NOTES CONTINUED capital, fixed assets and other non-current assets and liabilities.
DISCONTINUED OPERATIONS (000s) 1997 1996 1995 - --------------------------------------------------------------------- Income/(loss): TASC $14,950 $ 13,028 $ 9,749 TIMCO (270) 2,411 2,717 PSLC - 753 1,003 - --------------------------------------------------------------------- Total $14,680 $ 16,192 $13,469 - --------------------------------------------------------------------- Gain on disposal: PSLC $ - $ 8,400 $ - - --------------------------------------------------------------------- Total $ - $ 8,400 $ - - ----------------------------------------------------------=========== Net Assets: TASC $155,376 $152,505 TIMCO 41,954 39,930 - ----------------------------------------------------- Total $197,330 $192,435 =====================================================
TASC On December 8, 1997, the Company entered into an agreement to sell its subsidiary, TASC, Inc. subject to shareholder approval (Note 14), for $432 million in cash, subject to adjustment, including changes in the TASC consolidated equity account through the date of closing. The sale of TASC represents disposal of essentially all of the Company's applied technology segment. On a consolidated basis, TASC had revenues of $437.9, $383.7, and $346.2 million for the years ended December 31, 1997, 1996 and 1995, respectively. The purchaser has agreed to indemnify the Company from and against all expenses and liabilities Primark may incur related to an outstanding claim against TASC. TIMCO In June 1997, the Company adopted a formal plan to sell its non-core transportation services segment consisting of Triad International Maintenance Corporation ("TIMCO"). TIMCO reported revenues of $113.3, $106.4 and $79.2 million for the years ended December 31, 1997, 1996 and 1995, respectively. The Company anticipates that the sale of TIMCO will be completed by June 30, 1998. PSLC On September 30, 1996, the Company sold all of the outstanding stock of Primark Storage Leasing Corporation ("PSLC"), for $14,300,000 in cash. The disposal of PSLC resulted in an after-tax gain of approximately $8,400,000 and eliminated $28,700,000 of non-recourse debt from the Company's balance sheet. The purchaser has agreed to indemnify the Company from and against all expenses and liabilities that Primark may incur with respect to any adverse environmental condition relating to PSLC's natural gas storage fields. b. Dispositions On January 7, 1997, the Company completed the sale of its investment in the Weather Network pursuant to the terms of a sale agreement dated December 5, 1996 for 2,100,000 pounds sterling ($3,500,000). The $2,500,000 pre-tax gain on the sale has been included in other income. 4. RESTRUCTURING CHARGES a. Disclosure During the first quarter of 1997, the Company recorded a $1,800,000 pre-tax charge, or $0.04 per share, at Disclosure to take advantage of new information technology, reorganization of Disclosure's document business and other actions aimed at reducing costs and enhancing efficiency. The restructuring provision included estimated costs for employee severance and other benefits of $981,200, asset write-downs of $713,600 and idle facility related costs of $105,200. As part of the restructuring, 114 employees were eliminated. The spending for these accrued restructuring costs was completed in June 1997. b. DAFSA During the second quarter of 1997, the Company recorded a restructuring charge of $5,000,000 related to the integration and downsizing of operations at DAFSA. Due to DAFSA's unprofitable condition, tax benefits associated with losses incurred during 1997, including the restructuring charge, were not recognized. Consequently, the restructuring charge resulted in a $0.18 reduction of earnings per share in 1997. When the Company acquired DAFSA in June of 1996, approximately $1,500,000 of integration costs were recorded in determining the purchase accounting. The subsequent restructuring charge is the result of a plan to further integrate DAFSA's personnel, space and product with those of the Company's other subsidiaries. The $6,500,000 total restructuring provision includes estimated costs for exiting a line of business of $1,700,000, the future rent cost of abandoned space of $1,000,000, employee severance and other benefits of $1,400,000, asset write-downs of $1,200,000 and legal, professional and other related costs of $1,200,000. The accrual for abandoned space will be utilized over the remaining life of the lease. As of December 31, 1997, $4,800,000 of restructuring costs had been incurred, of which $1,500,000 related to exiting a line of business, $1,100,000 related to employee severance and other benefits, $1,200,000 related to asset write-downs and abandoned lease space and $1,000,000 related to legal, professional and other related costs. As part of the restructuring, 31 employees of DAFSA have PRIMARK CORPORATION AND SUBSIDIARIES 9 NOTES CONTINUED been terminated and an additional 9 employees will be terminated in 1998. The restructuring plan, when fully implemented, is expected to significantly improve DAFSA's operating margins. 5. LEASES The Company leases a variety of assets principally under non-cancelable operating lease agreements, including office facilities, real property, and computer and office equipment. These leases expire at various dates through 2008. Total rent expense for all operating leases was $15,105,000, $11,563,000, and $7,649,000 for the years ended December 31, 1997, 1996 and 1995, respectively.
Future minimum lease commitments (000s) Capital Operating - ---------------------------------------------------------------- 1998 $ 1,390 $13,899 1999 534 12,321 2000 370 11,259 2001 136 10,523 2002 - 10,109 Thereafter - 30,171 - ---------------------------------------------------------------- Total minimum lease payments 2,430 $88,282 ======== Amounts representing interest and other (133) - --------------------------------------------------- Present value of net minimum payments 2,297 Current portion (1,242) - --------------------------------------------------- Long-term obligations $ 1,055 ===================================================
6. SHORT-TERM AND LONG-TERM DEBT On February 7, 1997, the Company entered into a $300,000,000 refinancing arrangement to replace some of the funds expended for recent acquisitions and enhance liquidity for future opportunities. The new arrangement, comprised of a $75,000,000 revolving credit facility (the "Credit Facility") and a $225,000,000 term loan (the "Term Loan") replaced an outstanding $75,000,000 revolving credit facility and a $125,000,000 term loan and provided $8,382,000 as a note backup agreement. The Company incurred costs of $2,831,000 in conjunction with the arrangement, which will be amortized over the term of the debt. The write-off of unamortized debt issue costs related to the original financing generated an extraordinary after-tax loss of $1,955,000 in the first quarter of 1997. The Company recognized an extraordinary after-tax loss of $534,000 for the write-off of unamortized debt issue costs associated with the June 1995 refinancing of its $75,000,000 revolving credit facility. Deferred debt issue costs are amortized over the terms of the related debt, ranging from 3 to 18 years. a. Short-Term Debt
Short-term bank borrowings (000s) 1997 1996 1995 - -------------------------------------------------------------------------------- Outstanding borrowings at December 31 $27,602 $ -- $ -- Available for future borrowings at December 31 $47,398 $74,650 $75,000 Weighted average effective interest rate on average bank borrowings 7.7% 8.3% 8.0% Aggregate borrowings: Maximum outstanding $32,695 $ 1,871 $64,324 Average outstanding $ 5,115 $ 17 $22,661 ===============================================================================
The Credit Facility expires on October 15, 2000 and bears interest on outstanding borrowings based upon performance pricing which results in rates ranging from 0.50% to 1.00% above the current prevailing LIBOR rate. Commitment fees are payable quarterly at rates ranging from 0.20% to 0.30% per annum on the average daily unused portion of the facility. The Credit Facility contains various restrictive covenants, which, among other things, require the Company to maintain certain minimum levels of consolidated net worth and specific consolidated liquidity and long-term solvency ratios. The Credit Facility is secured by a pledge of the outstanding common stock of certain of Primark's subsidiaries. b. Long-Term Debt The Company's outstanding long-term debt, including capital lease obligations, are shown below.
Long-term debt December 31 (000s) 1997 1996 - ----------------------------------------------------------------------------- Primark 8.75% Senior Notes $112,000,000 due 2000 $ 111,455 $ 111,291 Primark bank Term Loan due through 2004 220,000 125,000 ICV Purchase Notes due 2002 7,750 8,250 Capital lease obligations and other 3,356 3,799 - ----------------------------------------------------------------------------- Total debt and capital lease obligations 342,561 248,340 Less current maturities (11,301) (6,518) - ----------------------------------------------------------------------------- Long-term debt and capital lease obligations $ 331,260 $ 241,822 =============================================================================
Required principal payments on long-term debt and notes payable over the next five years, excluding the Senior Notes and capital lease and other obligations, are $15,000,000 in 1998, $20,000,000 in 1999, $30,000,000 in 2000, $35,000,000 in 2001, and $53,250,000 in 2002. Primark's 8.75% Senior Notes due 2000 ("Senior Notes") are carried at their principal amount due at maturity less the unamortized discount. Interest on the Senior Notes is payable semi-annually on April 15 and October 15. The Senior Notes are unsecured obligations of the Company, contain no mandatory sinking fund or redemption PRIMARK CORPORATION AND SUBSIDIARIES 10 NOTES CONTINUED requirements, and are redeemable in whole or in part at the option of the Company at redemption prices ranging from 104.375% to 100.00% in 1999 and thereafter, plus accrued interest. The Indenture pursuant to which the Senior Notes were issued contains various restrictive covenants. Under the most restrictive covenants, the Company is restricted from paying cash dividends on its common stock, repurchasing its common stock or making certain other payments which in the aggregate exceed the sum of: (i) $10,000,000; (ii) 50% of the Company's consolidated net income (cumulative from the date of issuance of the Senior Notes); plus (iii) 100% of the net proceeds received from sales of the Company's common stock for cash. The Term Loan is due through June 30, 2004. Principal payments are due semi-annually on June 30 and December 31. Interest on outstanding borrowings under the Term Loan is payable at rates ranging from 0.50% to 1.25% above the current prevailing LIBOR rate of interest. The Term Loan contains various restrictive covenants which, among other things, require the Company to maintain certain minimum levels of consolidated net worth and specific consolidated liquidity and long-term solvency ratios. The Term Loan is secured by a pledge of the outstanding common stock of certain of the Company's subsidiaries. On October 24, 1996, the Company entered into five loan note agreements totaling $8,250,000 in connection with the purchase of ICV (Note 2b). The ICV Purchase Notes are due October 24, 2002. Interest on the ICV Purchase Notes is payable quarterly at the current prevailing LIBOR rate. In November 1997, the Company paid $500,000 of the ICV Purchase Notes. On February 7, 1997, the Company entered into a $8,382,000 Note Backup Agreement (the "Note Agreement") which expires on November 8, 2002. Under the terms of the Note Agreement, standby letters of credit were issued to provide credit enhancement for the payment of the Notes. Interest on outstanding borrowings under the Note Agreement is based upon performance pricing and payable at rates ranging from 0.75% to 1.25% above the current prevailing LIBOR rate of interest. Letter of credit fees are based upon performance pricing and are payable quarterly at a rate of 0.25% per annum on the average daily unused portion of the facility. As of December 31, 1997, the Company had no outstanding borrowings under the Note Agreement. 7. FINANCIAL INSTRUMENTS a. Foreign Exchange Risk Management The Company enters into forward exchange and currency option contracts to reduce the exposure of foreign currency fluctuations associated with certain firm commitments and anticipated cash flows. The Company's principal strategy is to protect the net cash flow from foreign customers' contracts. As these contracts are typically under two years in length, most of the derivative financial instruments are similarly two years or less in duration. The Company principally enters into contracts to deliver foreign currencies for U.S. dollars at agreed-upon exchange rates. Other contracts include the purchase of British pounds and Irish Punts for U.S. dollars. Counterparties to these agreements are major international financial institutions. The tables below illustrate the U.S. dollar equivalent of foreign exchange contracts at December 31, 1997 and 1996 along with unrecorded gross unrealized gains and losses.
December 31 (000s) 1997 - ---------------------------------------------------------------------------- Gross Gross Unrealized Unrealized Notional Gains Losses Amount Deferred Deferred - ---------------------------------------------------------------------------- FORWARD EXCHANGE CONTRACTS: Japanese Yen $ 2,684 $ 57 $ (19) U.S. Dollars/U.K. Pound Sterling 5,087 -- -- U.S. Dollars/Irish Punt 5,895 -- -- Deutsche Mark 518 -- -- Swiss Franc 1,061 15 -- French Franc 172 3 -- Swedish Krona 3,588 54 (21) Other 3,264 254 (9) - ---------------------------------------------------------------------------- $22,269 $ 383 $ (49) ============================================================================ OPTION CONTRACTS PURCHASED: Japanese Yen $ 2,903 $ 193 $ -- U.S. Dollars/U.K. Pound Sterling 10,665 56 (63) Deutsche Mark 5,562 22 (16) Swiss Franc 1,563 14 -- Other 2,048 105 (2) - ---------------------------------------------------------------------------- $22,741 $ 390 $ (81) ============================================================================ OPTION CONTRACTS SOLD: Japanese Yen $ 1,495 $ 3 $ -- U.S. Dollars/U.K. Pound Sterling 3,520 -- (28) Deutsche Mark 2,781 12 -- Swiss Franc 735 1 -- - ---------------------------------------------------------------------------- $ 8,531 $ 16 $ (28) ============================================================================
PRIMARK CORPORATION AND SUBSIDIARIES 11 NOTES CONTINUED
DECEMBER 31 (000s) 1996 - ---------------------------------------------------------------------------- GROSS GROSS UNREALIZED UNREALIZED NOTIONAL GAINS LOSSES AMOUNT DEFERRED DEFERRED - ---------------------------------------------------------------------------- FORWARD EXCHANGE CONTRACTS: Japanese Yen $ 2,593 $ 120 $ (7) U.S. Dollars/U.K. Pound Sterling 3,956 -- (43) Deutsche Mark 3,804 17 -- Swiss Franc 2,451 90 -- French Franc 1,452 5 (1) Swedish Krona 4,432 53 (11) Other 5,460 26 (35) - ---------------------------------------------------------------------------- $24,148 $ 311 $ (97) ============================================================================ OPTION CONTRACTS PURCHASED: Japanese Yen $ 4,302 $ 123 $ -- U.S. Dollars/U.K. Pound Sterling 11,900 134 -- Deutsche Mark 9,547 86 -- Swiss Franc 5,531 167 -- French Franc 4,465 37 -- Other 3,248 15 (16) - ---------------------------------------------------------------------------- $38,993 $ 562 $ (16) ============================================================================ OPTION CONTRACTS SOLD: Japanese Yen $ 645 $ 3 $ -- U.S. Dollars/U.K. Pound Sterling 11,105 82 -- Deutsche Mark 2,616 8 -- Swiss Franc 569 -- -- French Franc 1,064 3 -- Other 431 1 -- - ---------------------------------------------------------------------------- $16,430 $ 97 $ -- ============================================================================
b. Interest Rate Swap Agreement On August 1, 1995, the Company entered into an interest rate swap agreement with a major bank, having a notional principal amount of $18,333,000. The swap agreement effectively changed the interest rate of a portion of Primark's long-term debt from a floating rate to a 6.1% fixed rate. This swap agreement expires in December of 1999. As of December 31, 1997, the notional principal amount outstanding was $8,333,000. Though the Company is exposed to credit and market risk in the event of future non-performance by the bank, management does not anticipate that such an event will occur. c. Fair Value of Financial Instruments The carrying and estimated fair values of certain of the Company's financial instruments are shown below.
CARRYING VALUE ESTIMATED FAIR VALUE DECEMBER 31 (000s) 1997 1996 1997 1996 - ------------------------------------------------------------------------------------ Forwards $ 753 $ 1,301 $ 1,087 $ 1,515 Options $ 195 $ 343 $ 492 $ 986 Interest rate swaps $ -- $ -- $ (23) $ (45) 8.75% Senior Notes $ 111,455 $ 111,291 $ 115,220 $ 114,100 ====================================================================================
Estimated fair values of these financial instruments were based upon quotes obtained from investment and commercial bankers using comparable securities. The fair values of currency forward contracts and currency options were estimated based on quoted market prices of contracts with similar terms. Other financial instruments have been excluded as their carrying value approximates their market value. 8. EARNINGS PER SHARE In February of 1997, the FASB released SFAS No. 128, "Earnings per Share", effective for fiscal periods ending after December 15, 1997. The statement simplifies the standards for computing EPS and makes them comparable to international EPS standards. The statement replaces primary EPS with basic EPS. Basic EPS is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock. Diluted EPS is computed similarly to fully diluted EPS previously presented. In accordance with the standard, all prior period EPS data has been restated. Options to purchase 785,000; 227,000 and 19,000 shares of common stock were outstanding for the years ended 1997, 1996 and 1995 respectively but were excluded in the computation of diluted EPS because the options' exercise price was greater than the average market price of common shares. The conversion of preferred stock outstanding during 1995 and the first quarter of 1996 was excluded from the PRIMARK CORPORATION AND SUBSIDIARIES 12 NOTES CONTINUED computation of diluted EPS as its effect was anti-dilutive. A reconciliation of the numerators and denominators of the basic and diluted EPS computations for income from continuing operations is shown below.
(000s except per share) Income Shares Earnings December 31, 1997 (Numerator) (Denominator) per Share - ------------------------------------------------------------------------------- Basic EPS: Income available to common shareholders $ 6,990 26,348 $ 0.26 Effect of Dilutive Securities Options -- 1,596 ------------------------ Diluted EPS: Income available to common shareholders and assumed conversions $ 6,990 27,944 $ 0.25 December 31, 1996 - ------------------------------------------------------------------------------- Basic EPS: Income from continuing operations $ 12,516 Less: preferred stock dividends (359) ----------- Income available to common shareholders $ 12,157 24,813 $ 0.49 Effect of Dilutive Securities Options -- 1,758 ------------------------ Diluted EPS: Income available to common shareholders and assumed conversions $ 12,157 26,571 $ 0.46 December 31, 1995 - ------------------------------------------------------------------------------- Basic EPS: Income from continuing operations $ 5,381 Less: preferred stock dividends (1,434) ---------- Income available to common shareholders $ 3,947 19,150 $ 0.21 Effect of Dilutive Securities Options -- 1,531 ------------------------ Diluted EPS: Income available to common shareholders and assumed conversions $ 3,947 20,681 $ 0.19 ==============================================================================
9. SHAREHOLDERS' EQUITY a. Common Stock On May 28, 1997, the shareholders of the Company approved a resolution that amended the Company's Articles of Incorporation to increase the number of authorized shares of common stock from 65,000,000 to 100,000,000. Changes in the number of shares of the Company's common stock are shown below.
December 31 1997 1996 1995 - ------------------------------------------------------------------------------------ Common Stock Issued 26,800,399 27,067,951 24,435,968 Common Stock Held In Treasury: Balance - beginning of period -- (1,119,287) (1,392,789) Treasury shares acquired -- -- (279,154) Treasury shares reissued: Employee stock purchase plan -- 79,683 203,647 Exercise of stock options -- 217,715 349,009 Conversion of Preferred Stock -- 821,889 -- - ------------------------------------------------------------------------------------ Balance - end of period -- -- (1,119,287) - ------------------------------------------------------------------------------------ Common Stock Outstanding 26,800,399 27,067,951 23,316,681 ====================================================================================
In December of 1997, the Company received 722,000 shares of its common stock to satisfy the exercise price of stock options and payment of withholding taxes due on option exercises totaling $29,604,000. These shares were retired upon receipt. The Company drew on its revolving credit facility to satisfy the withholding tax payment. Primark will receive a compensation deduction related to the option exercises and anticipates a tax refund of approximately $25,000,000. In April 1997, the Company's Board of Directors authorized the repurchase of up to 2,200,000 shares of the Company's common stock from time to time through open market and/or privately negotiated transactions. During the second quarter of 1997, the Company repurchased 1,349,000 shares of its outstanding common stock in the open market at a total cost of $26,633,000. On May 13, 1997 and June 5, 1997, the Company retired 1,145,300 and 203,700 shares, respectively. On October 24, 1996, the Company issued 2,200,000 shares of its common stock as part of the purchase price for ICV Limited (Note 2b). On May 2, 1996, the Company received notification to convert the total outstanding shares of Primark Series A, 8.5% Cumulative Convertible Preferred Stock into shares of Primark common stock. The 674,943 preferred shares plus accrued and unpaid dividends were converted into 1,164,276 shares of Primark common stock based upon the stated conversion rate of $14.49. The preferred shares were held entirely by the Profit Sharing and Stock Ownership Plan of TASC, a discontinued subsidiary (Note 3). PRIMARK CORPORATION AND SUBSIDIARIES 13 NOTES CONTINUED On December 5, 1995, the Company completed an equity offering in which it sold 4,068,200 shares of its common stock and offered an additional 288,000 shares for certain selling shareholders. The sale of common stock together with option proceeds related to the selling shareholders provided the Company $107,784,000, net of commissions and expenses. A portion of the proceeds was used to pay down the outstanding balance of $48,166,000 on the Company's revolving credit agreement and to prepay $15,000,000 on a loan held by TASC, a discontinued subsidiary (Note 3). In December of 1995, 92,000 shares of the Company's common stock were delivered to satisfy the exercise price of stock options and 168,000 shares were withheld from the exercise of stock options to satisfy the related tax withholding requirements. b. Rights Agreement In May of 1997, the Board of Directors of the Company executed a new Rights Agreement (the "Rights Agreement") to extend the benefits of the rights agreement adopted in 1988. The Company's Rights Agreement is designed to deter coercive or unfair takeover tactics, and to prevent a buyer from gaining control of the Company without offering a fair price to all of its shareholders. The Rights Agreement generally becomes effective when an "Acquiring Person" (as defined in the agreement) beneficially owns 15% or more of the outstanding shares of Primark's common stock. In general, upon a "Triggering Event" (as defined in the agreement), each Right represents the right to purchase one share of Common Stock of the Company at a price per share of $138.00, subject to adjustment. The Rights, which do not have voting privileges, are redeemable under certain circumstances at $0.01 per Right and will expire on January 25, 2008, unless previously redeemed. At December 31, 1997, common stock reserved for issuance under the Rights Agreement was 26,800,399 shares. 10. RETIREMENT AND BENEFIT PLANS a. Employee Savings and Stock Ownership Plan The Primark Corporation Savings and Stock Ownership Plan was amended and revised effective January 1, 1997 ("ESSOP") to provide for 401(K) contributions, employer matching contributions and certain other changes. Prior to the amendment, the plan, which covers all employees of Primark and certain subsidiaries, was pre-funded in 1989 with 965,000 shares of the Company's common stock which were allocated to participants, based upon a percentage of compensation, through 1996. Under the current 401(K) provisions of the ESSOP, the Company matches 50% of an employee's contribution up to a maximum of 3% of each participant's compensation. Participating employees' future benefits are based on their vested portion of contributions, plus their pro rata share of fund investment gains or losses. Under the 401(K) provisions, the Company contributed $1,629,000 during 1997. No contributions were made to the ESSOP during 1996 and 1995. b. Foreign Plans Substantially all employees in foreign countries who are not U.S. citizens are covered by various retirement benefit arrangements, some of which are considered to be defined benefit pension plans for accounting purposes. Benefits are based primarily on years of service and employees' salaries near retirement. In general, plans are funded based upon legal requirements, tax considerations, local practices and investment opportunities. Plan assets are generally held in restricted trusts or foundations that are segregated from the assets of the plan sponsor, and consist primarily of common stock and fixed income securities. The components of net periodic pension cost for foreign defined benefit pension plans are shown below.
DECEMBER 31 (000s) 1997 1996 1995 - ------------------------------------------------------------------------------ Service cost of benefits earned during the period $ 1,348 $ 1,181 $ 1,039 Interest cost of projected benefit obligation 1,367 1,186 887 Actual return on plan assets (3,072) (883) (974) Net amortization and deferral 1,358 (523) (370) - ------------------------------------------------------------------------------ Net pension expense $ 1,001 $ 961 $ 582 ==============================================================================
The following assumptions were used in accounting for foreign defined benefit plans.
DECEMBER 31 1997 1996 1995 - -------------------------------------------------------------------------------- Discount rate 7.8% 8.5% 8.5% Rate of increase in future compensation 5.0% 5.0% 5.0% Rate of return on plan assets 9.3% 10.0% 10.0% ================================================================================
The funded status on the non-U.S. plans is shown below.
DECEMBER 31 (000s) 1997 1996 - -------------------------------------------------------------------------------- Actuarial present value of benefit obligations: Vested benefit obligation $(17,553) $(14,736) - -------------------------------------------------------------------------------- Accumulated benefit obligation (17,553) (14,736) - -------------------------------------------------------------------------------- Projected benefit obligation (20,508) (16,578) Plan assets at fair value 19,661 15,639 - -------------------------------------------------------------------------------- Projected benefit obligation more than plan assets (847) (939) Unrecognized net loss 3,770 3,501 Unrecognized prior service cost 127 156 Unrecognized net asset (1,735) (2,023) - -------------------------------------------------------------------------------- Prepaid pension cost $ 1,315 $ 695 ================================================================================
PRIMARK CORPORATION AND SUBSIDIARIES 14 NOTES CONTINUED c. Employee Stock Purchase and Stock Option Plans Established in 1992, the Primark Corporation Employee Stock Purchase Plan is available for all employees of Primark and certain subsidiaries. Under this plan employees may purchase, through periodic payroll deductions, up to a maximum of 3,000,000 shares of the Company's common stock at 85% of the lower of the average market price of such shares either at the beginning or end of each six month offering period. The Primark Corporation Stock Option Plan for Non-Employee Directors provides for the granting of options to purchase shares of common stock to each director who is not an employee. The Primark Corporation 1992 Stock Option Plan provides for the granting of options to purchase common stock to officers and certain key employees of Primark and its subsidiaries. This plan limits the number of shares subject to option that may be granted to any participant in any year to 100,000 shares. Stock options available for grant in any one year under Primark Corporation's 1992 Stock Option Plan may not exceed 1.5% of the Company's outstanding common stock as of January 1 each year, plus any excess of available stock options not granted from previous years. At December 31, 1997, options available for grant in 1998 included 449,513 stock options under Primark Corporation's 1992 Stock Option Plan. Generally, options outstanding under the Company's stock option plans: (i) are granted at prices equal to the fair market value of the stock on the date of grant, (ii) vest within a three year period, and (iii) expire ten years subsequent to award. Changes in the number of options granted under the Company's various stock option plans are shown below.
1997 1996 1995 - ----------------------------------------------------------------------------------------------------------------------------- Weighted Weighted Weighted Average Average Average Exercise Exercise Exercise Shares Price Shares Price Shares Price - ----------------------------------------------------------------------------------------------------------------------------- Outstanding at January 1 4,375,865 $ 12.51 4,213,718 $ 10.07 4,351,285 $ 8.75 Granted at market value 1,056,875 24.89 464,932 34.38 680,286 16.26 Granted above market value 500,000 33.34 -- -- 3,500 24.88 Exercised (1,692,663) 5.68 (251,068) 10.00 (804,109) 8.18 Canceled (123,671) 23.36 (51,717) 23.09 (17,244) 11.78 - ----------------------------------------------------------------------------------------------------------------------------- Outstanding at December 31, 4,116,406 $ 20.71 4,375,865 $ 12.51 4,213,718 $ 10.07 - ----------------------------------------------------------------------------------------------------------------------------- Available for grant at December 31, 657,361 687,560 675,331 =============================================================================================================================
The following table sets forth information regarding options outstanding at December 31, 1997:
Options Outstanding Options Exercisable - ------------------------------------------------------------------------------------ Number Weighted Weighted Number Weighted Outstanding Average Average Exercisable Average Range of at Remaining Exercise at Exercise Exercise Prices 12/31/97 Life Price 12/31/97 Price - ------------------------------------------------------------------------------------ $ 7.63-$12.88 956,503 4.37 $11.19 956,503 $11.19 $13.50-$14.00 964,813 6.30 $13.70 697,818 $13.73 $14.63-$24.25 827,300 8.65 $22.66 175,484 $19.06 $25.00-$30.31 872,825 9.00 $27.28 211,843 $25.59 $33.13-$39.75 494,965 8.61 $37.91 171,615 $39.53 - ------------------------------------------------------------------------------------ $ 7.63-$39.75 4,116,406 7.17 $20.71 2,213,263 $16.19 ====================================================================================
The fair value of options on their grant date, including the valuation of the option feature implicit in the Company's stock purchase plan, was measured using the Black-Scholes option-pricing model. The fair value of options on their grant date and key assumptions used to apply this model are shown below:
December 31 1997 1996 1995 - ---------------------------------------------------------------------------------- Grant date fair value $ 12.21 $ 13.49 $ 7.12 Range of risk-free interest rates 5.51% to 6.82% 5.03% to 6.79% 5.77% to 7.59% Range of expected life of option grants 3 to 9 years 4 to 9 years 4 to 9 years Expected volatility of underlying stock 37.5% 30.9% 30.9% ==================================================================================
It should be noted that the option-pricing model used was designed to value readily tradable stock options with relatively short lives. The options granted to employees are not tradable and have contractual lives of up to ten years. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. However, management believes that the assumptions used and the model applied to value the awards yields a reasonable estimate of the fair value of the grants made under the circumstances. PRIMARK CORPORATION AND SUBSIDIARIES 15 NOTES CONTINUED The Company uses the intrinsic value method to measure compensation expense associated with grants of stock options to employees. Had compensation cost been determined based upon the fair value at the grant date for awards under these plans, reported net income and earnings per share would have been as follows:
December 31 (000s except per share data) 1997 1996 1995 - ------------------------------------------------------------------------------------------- Net income $ 12,351 $ 33,428 $ 16,360 Basic EPS $ 0.47 $ 1.35 $ 0.85 EPS Assuming Dilution $ 0.44 $ 1.26 $ 0.79 - ------------------------------------------------------------------------------------------- Net income applicable to common stock $ 12,351 $ 33,069 $ 14,926 Basic EPS $ 0.47 $ 1.33 $ 0.78 EPS Assuming Dilution $ 0.44 $ 1.24 $ 0.72 ===========================================================================================
The effects of applying SFAS 123 in this pro forma disclosure include only the effects of grants made subsequent to January 1, 1995 and, accordingly, are not indicative of future amounts. 11. INCOME TAXES
December 31 (000s) 1997 1996 1995 - --------------------------------------------------------------------------------------------- FEDERAL AND OTHER INCOME TAXES CONSISTED OF: Current provision $ 7,250 $ 8,311 $ 3,607 Deferred provision (benefit) - net 5,713 (879) 1,023 - --------------------------------------------------------------------------------------------- Total Federal and other income tax expense $ 12,963 $ 7,432 $ 4,630 - --------------------------------------------------------------------------------------------- RECONCILIATION BETWEEN STATUTORY AND ACTUAL INCOME TAXES: Income from continuing operations $ 6,990 $ 12,516 $ 5,381 Income tax expense 12,963 7,432 4,630 - --------------------------------------------------------------------------------------------- Book pre-tax income $ 19,953 $ 19,948 $ 10,011 - --------------------------------------------------------------------------------------------- Statutory Federal income taxes at a rate of 35% $ 6,983 $ 6,982 $ 3,504 Adjustments to Federal income taxes: Amortization of goodwill 4,737 3,390 2,163 Adjustment of Federal income taxes provided in prior years (1,375) (1,121) 10 Losses of foreign subsidiaries without current benefit 2,493 55 -- State income taxes - net 545 (176) (430) Effect of foreign tax rates (198) (335) (228) Other - net (222) (1,363) (389) - --------------------------------------------------------------------------------------------- Total Federal and other income tax expense $ 12,963 $ 7,432 $ 4,630 =============================================================================================
The 1997 adjustment of Federal income taxes provided in prior years is primarily due to the recognition of net operating losses and the true up of prior year tax expense. The 1996 adjustment is primarily the result of the Company settling seven open tax years at lower than anticipated levels. The tax effects of significant temporary differences that gave rise to deferred income tax assets and liabilities are shown below.
December 31 (000s) 1997 1996 - ---------------------------------------------------------------- Deferred tax assets: State taxes $ 9,645 $ 3,991 Postretirement benefits 1,509 1,428 Fixed assets 1,212 763 Unfavorable lease reserve 961 1,186 Net operating loss carry forwards 7,545 7,063 Bad debts 486 703 Other 7,839 2,928 - ---------------------------------------------------------------- Total deferred tax assets 29,197 18,062 Valuation allowance (7,199) (6,411) - ---------------------------------------------------------------- Net deferred tax assets 21,998 11,651 - ---------------------------------------------------------------- Deferred tax liabilities: Intangibles (20,379) (9,695) Fixed assets (866) (1,398) Unearned revenue (2,014) (1,172) Other (9,854) (8,962) - ---------------------------------------------------------------- Total deferred tax liabilities (33,113) (21,227) - ---------------------------------------------------------------- Net deferred tax liabilities $(11,115) $ (9,576) - ---------------------------------------------------------------- Net current asset $ 10,018 $ 6,613 Net long-term liability $(21,133) $(16,189) - ---------------------------------------------------------------- Net deferred tax liability $(11,115) $ (9,576) ================================================================
The Company's operating loss carry forwards in France of $7,199,000 at December 31, 1997, expire in the years 1998 through 2002. PRIMARK CORPORATION AND SUBSIDIARIES 16 NOTES CONCLUDED 12. SEGMENT AND GEOGRAPHIC INFORMATION During 1997 and 1996, the Company realigned its business segments to reflect its strategic emphasis in the information services industry. The realignment included several acquisitions throughout 1996 and 1997 (Note 2) as well as the discontinuance of two of its previously reported segments, applied technology and transportation services during 1997 (Note 3). Accordingly, the Company's continuing operations primarily reflect that of one industry segment, information services, which provides services and related products principally in the United States and the United Kingdom. Most of Primark's international sales are generated through its affiliates, which are located throughout Europe, Asia and the United States. The Company's operations by geographic region are presented in the following table on a stand-alone basis. Information presented includes acquired companies from their respective dates of acquisition (Note 2), and has been restated to exclude discontinued operations (Note 3).
GEOGRAPHIC REGIONS 1997 1996 1995 (000s) - ----------------------------------------------------------------------------------- DOMESTIC Operating Revenues $ 173,150 $ 119,728 $ 63,679 Operating Income (Loss)(1) Non-affiliate $ 19,857 $ 17,167 $ 9,045 Affiliate(2) $ (7,005) $ (6,374) $ (4,834) Identifiable Assets $ 393,572 $ 297,193 $ 272,976 - ----------------------------------------------------------------------------------- UNITED KINGDOM Operating Revenues Non-affiliate $ 131,889 $ 76,979 $ 60,422 Affiliate(2) $ 39,894 $ 38,711 $ 33,621 Operating Income (Loss)(3) Non-affiliate $ (18,933) $ (17,568) $ (16,137) Affiliate (2) $ 39,894 $ 38,711 $ 33,621 Identifiable Assets $ 363,611 $ 353,098 $ 160,338 - ----------------------------------------------------------------------------------- OTHER INTERNATIONAL Operating Revenues $ 92,836 $ 80,356 $ 60,678 Operating Income (Loss)(1) Non-affiliate $ 36,812 $ 34,970 $ 33,993 Affiliate(2) $ (32,889) $ (32,337) $ (28,787) Identifiable Assets $ 58,063 $ 63,788 $ 47,027 - ----------------------------------------------------------------------------------- CORPORATE & OTHER (3) Operating Revenues Affiliate(2) $ (39,894) $ (38,711) $ (33,621) Operating Income (Loss)(1) $ (5,752) $ (6,730) $ (6,015) Identifiable Assets $ 228,563 $ 206,722 $ 237,843 - ----------------------------------------------------------------------------------- CONSOLIDATED Operating Revenues $ 397,875 $ 277,063 $ 184,779 Operating Income (Loss)(1) $ 31,984 $ 27,839 $ 20,886 Identifiable Assets $ 1,043,809 $ 920,801 $ 718,184 ===================================================================================
(1) Includes, for 1997, restructuring charges of $6.8 million (Note 4). (2) Affiliate transfers represent service fees received by Datastream's United Kingdom operation from its international affiliates. (3) Corporate and other includes corporate accounts, eliminations and reclassifications, as well as the net assets of discontinued operations. 13. COMMITMENTS AND CONTINGENCIES The Company and its subsidiaries are involved in other administrative proceedings and matters concerning issues arising in the ordinary course of business. Management cannot predict the final disposition of such issues, but believes that adequate provision has been made for the probable losses and the ultimate resolution of these proceedings will not have a material adverse effect on the Company's financial condition, results of operations or financial liquidity. 14. SUBSEQUENT EVENTS a. Sale of TASC On March 30, 1998, the shareholders of Primark approved the terms of a stock purchase agreement providing for the sale of TASC and its subsidiaries to Litton Industries, Inc. (Note 3). b. Refinancing In March 1998, the Company amended the terms of its revolving credit facility and term loan agreements. Under the terms of the amendment, which will become effective upon the consummation of the TASC sale, the Company will prepay its $112,000,000 Senior Notes and its $220,000,000 outstanding term loan and replace its outstanding $75,000,000 credit facility with a $225,000,000 revolving credit facility expiring in 2000. Interest on the borrowings under the new revolving credit facility is payable at rates ranging from 0.05% to 1.00% above the current prevailing LIBOR rate of interest. PRIMARK CORPORATION AND SUBSIDIARIES 17 REPORT OF MANAGEMENT Management of Primark Corporation and its subsidiaries (the "Company") is responsible for the preparation and integrity of the accompanying consolidated financial statements and other financial information contained in this Annual Report. Management believes that all such information has been prepared in conformity with generally accepted accounting principles, and necessarily includes certain amounts that are based on management's judgments and estimates. The consolidated financial statements have been audited by Deloitte & Touche LLP, the Company's independent Certified Public Accountants. Their audit was made in accordance with generally accepted auditing standards, as indicated in their report, and included a review of the Company's system of internal accounting controls and tests of transactions to the extent they considered necessary to carry out their responsibilities. In management's opinion, the Company's system of internal accounting controls, coupled with an ongoing program of internal audits to review such controls, provide reasonable assurance that the Company's assets are safeguarded from material loss and the transactions are executed and recorded in accordance with established procedures. The system is supported by formal policies and procedures, including an active Code of Conduct program intended to ensure key employees adhere to the highest standards of personal and professional integrity. The concept of reasonable assurance is based on the recognition that the cost of maintaining a system of internal accounting controls should not exceed the related benefits to be derived. The Audit Committee of the Board of Directors, composed solely of outside directors, meets periodically with management, internal auditors and Deloitte & Touche LLP to review planned audit scope and results and to discuss other matters affecting the adequacy of internal accounting controls and the quality of financial reporting. Deloitte & Touche LLP has full and free access to the Audit Committee and may meet with the committee without management representatives present. /s/Stephen H. Curran Stephen H. Curran Executive Vice President and Chief Financial Officer February 10, 1998 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS OF PRIMARK CORPORATION: We have audited the accompanying consolidated statements of financial position of Primark Corporation and its subsidiaries as of December 31, 1997 and 1996 and the related consolidated statements of income, cash flows and common shareholders' equity for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Primark Corporation and its subsidiaries at December 31, 1997 and 1996, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. /s/Deloitte & Touche LLP Deloitte & Touche LLP Boston, Massachusetts February 10, 1998 (March 30, 1998 as to Note 14 to the Consolidated Financial Statements) PRIMARK CORPORATION AND SUBSIDIARIES 18 MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION RESULTS OF OPERATIONS: Primark reported net income of $19.7 million ($0.71 per share) for the twelve months ended December 31, 1997 compared to $36.8 million ($1.38 per share) in 1996 and $16.9 million ($0.82 per share) in 1995. Net income for 1997 and 1995 includes an after tax extraordinary loss of $2.0 million ($0.07 per share) and $0.5 million ($0.03 per share) for the write off of debt issue costs associated with bank debt which was successfully refinanced. Primark reported income from continuing operations of $7.0 million ($0.25 per share) for the year ended December 31, 1997, compared to $12.5 million ($0.46 per share) and $5.4 million ($0.19 per share) in 1996 and 1995, respectively. The 1997 income from continuing operations includes restructuring charges of $6.2 million ($0.22 per share), net of tax, taken at DAFSA and Disclosure during the first half of 1997. Excluding the restructuring charges, 1997 income from continuing operations increased 5.4% to $13.2 million ($0.47 per share). The Company's decision to discontinue the operations of TASC and TIMCO in 1997, as well as PSLC in 1996, affected income from continuing operations for all periods. During 1996 and 1997, management pursued a strategy of focusing the Company's operations on its information services businesses. In connection with that strategy, the Company discontinued three operating segments as discussed below and acquired several businesses in the information industry. The Company is in the preliminary stages of investigating further organizational changes to address the best way to manage the remaining information services segment. This investigation includes, among other things, the examination of all tangible and intangible assets of the Company for possible adjustment. On December 8, 1997, the Company entered into an agreement for the sale of TASC for $432 million in cash. The Company estimates the sale will generate a net gain of approximately $179.9 million. On March 30, 1998 the shareholders of Primark approved the sale. Consequently, the operating results and net assets of TASC have been reclassified from continuing operations and recorded as a discontinued operation for all periods presented. As an essential part of the transaction, TASC and Primark entered into an information technology services agreement. Under this agreement, TASC will continue to provide Primark information technology research and development, planning, and technical assistance for a three year period. TASC will also continue to manage the Primark Telecommunications Network and supply professional information technology services to the business units of Primark and their customers. TASC generated net income of $15.0, $13.0 and $9.7 million, for the twelve months ended December 31, 1997, 1996 and 1995, respectively. In June of 1997, the Company adopted a formal plan to dispose of its transportation business, TIMCO. Accordingly, the operating results and net assets of TIMCO have been reclassified from continuing operations and recorded as a discontinued operation for all periods presented. During the three years ended 1997, 1996 and 1995, TIMCO generated net losses of $0.3 million, net income of $2.4 million and $2.7 million, respectively. In September of 1996, the Company sold its financial services segment, PSLC, which resulted in a $8.4 million gain, net of tax. Discontinued operations for the twelve months ended December 31, 1996 and 1995 include net income of $0.8 and $1.0 million. Acquisitions during the first quarter of 1997 and last half of 1996, together with the Company's stock repurchase program, resulted in the Company increasing its level of funded debt. As a result, interest costs from continuing operations increased $3.5 million and $4.1 million during 1997 and 1996. The Company allocated interest costs to each of the discontinued operations based upon their ratios of net assets proportional to total net assets. After the allocation of interest cost to discontinued operations, the Company reported interest expense of $16.0 million, $12.5 million and $8.4 million for the years ended 1997, 1996 and 1995, respectively. It is the Company's intention to repay all funded debt with the proceeds from the sale of TASC and eliminate substantially all interest costs. During 1997, the Company's effective tax rate increased due to the non-deductibility of goodwill created by certain of its recent acquisitions and because no tax benefits have been recorded for the $8.6 million of net losses incurred at DAFSA for the year. In 1996, the Company's effective tax rate received a favorable impact from settling seven years of open tax returns. PRIMARK CORPORATION AND SUBSIDIARIES 19 MANAGEMENT'S DISCUSSION CONTINUED The Company has a formal plan and task force assigned to make all of its financial systems, product offerings and related databases year 2000 compliant. In 1997 the Company spent $1.5 million of resources on this endeavor and anticipates that it will be required to spend an additional $2.7 million and $2.6 million in 1998 and 1999, respectively, to be year 2000 compliant. The majority of the remaining year 2000 work will be performed at Datastream/ICV. Summary of Operating Results
PRO FORMA* ACTUAL DECEMBER 31 (000s) 1997 1996 Change 1997 1996 Change - ------------------ ---- ---- ------ ---- ---- ------ Operating Revenues $ 400.2 $ 375.1 $ 25.1 $ 397.9 $ 277.1 $ 120.8 Operating Income $ 32.0 $ 27.2 $ 4.8 $ 32.0 $ 27.8 $ 4.2 ================== ========= ========= ======= ========= ========= ========
* Pro forma results include the results of recent acquisitions for the full year periods. For the year ended December 31, 1997, revenues increased 43.6% and 115.3% over the same periods in 1996 and 1995. The increase is primarily due to the effect of the acquisitions of Baseline and WEFA during the first quarter of 1997; ICV, the Yankee Group, DAFSA and a controlling interest in Worldscope during 1996; and Disclosure and I/B/E/S in 1995. On a pro forma basis to include the effect of acquisitions, the Company grew 1997 revenues and operating income 6.7% and 17.6%, respectively, over the same period in 1996. These pro forma growth rates include adverse currency movements and restructuring charges, a resized DAFSA and Disclosure's paper based product fall-off. DAFSA had the single most significant negative impact on operating income during 1997. During 1997, DAFSA generated revenue of $5.5 million but incurred operating losses of $8.4 million, which included a $5.0 million restructuring charge. The restructuring program was implemented in the second quarter of 1997 and, together with the introduction of technology and applications developed at Disclosure and WEFA, DAFSA was able to achieve near break-even results during the fourth quarter of 1997. Datastream/ICV: During 1997, the Datastream/ICV operation grew revenues 8.8%. These businesses experienced most of the negative impacts of currency fluctuations. Excluding the effects of currency and exchange fees, the Datastream/ICV operation grew revenues approximately 13.1% for the year. Exclusive of currency effects, ICV's Topic3 product line grew 19.2% for the year but overall revenues were offset by declining exchange fee revenues. ICV's overall margins increased due to shifts in product mix, primarily the reduction of minimum margin exchange fee revenues. Excluding the effects of currency, Datastream grew revenues 12.7% for the year. Datastream's annual growth in revenues was led by increases in the UK of 9.4%, the Americas of 10.4%, Continental Europe of 17.3% and Asia of 15.1%. Including the effects of currency, the Pacific Basin accounted for $21.1 million of Datastream's annual revenues. The Company reduced investment in the Far East region in early 1997 and does not plan to risk any further capital until management believes the current period of adjustment comes to an end. Disclosure/Worldscope: Disclosure and Worldscope generated revenues of $88.5 million for the year, a decrease of 3.0% compared to the same period in 1996. Overall growth in revenues was impacted by the 14.1% decrease in paper demand business. Disclosure's electronic products now represent approximately 40% of total revenues and continue to do very well with 29.9% growth in revenues for 1997. At the beginning of 1996, the electronic products represented less than 19.6% of Disclosure's total revenue. Financial Analytics: The financial analytics group, comprised of I/B/E/S, Baseline, WEFA and Vestek, generated $90.6 million of revenues for the year. As a group, on a pro forma basis, these operations grew revenues 24.7% over 1996. The strong performance in the year was lead by I/B/E/S, Baseline and Vestek, which had record growth in revenues of 42.9%, 32.8% and 18.3%, respectively. Yankee: The Yankee Group was originally acquired, in part, to be the market research arm of the Company's applied technology segment, focusing on identifying current trends and future directions in communications and computer industries for commercial, industrial and consumer markets. With the disposition of TASC, management has folded Yankee in with information services. Yankee finished the year with pro forma revenue growth of 11.2%. CAPITAL RESOURCES & LIQUIDITY: Primark ended 1997 with $12.8 million in cash and cash equivalents compared to $25.3 in 1996 and $59.9 in 1995. During 1997, $86.1 million was used to purchase Baseline and WEFA, $56.2 million to repurchase and retire stock and $43.9 million to fund capital expenditures. Partially offsetting these uses were cash flows from operating activities which generated $ 58.0 million, the issuance of long-term debt that provided $97.2 million, net of debt issue costs, and the sale of the Weather Network which generated $3.5 million. During 1996, the Company acquired four separate businesses for $71.1 million in net cash, $8.3 million in seller notes, 2.2 million shares of common stock and $7.6 million of other consideration. Primark also increased capital expenditures PRIMARK CORPORATION AND SUBSIDIARIES 20 MANAGEMENT'S DISCUSSION CONCLUDED $20.8 million over 1995. The 1996 cash expenditures were primarily funded from cash on the balance sheet, the sale of PSLC for $14.3 million and increased operating cash flows. During 1995, the Company issued $125.0 million of commercial bank debt and $106.5 million of common stock that provided funds partially used for the acquisition of Disclosure and I/B/E/S for $199.7 million in net cash. Operating cash flows decreased $7.7 million during 1997. The decrease reflects a decline in net income primarily attributable to the restructuring charges, decreases in deferred income, and tax refunds due. The tax refunds arose as the Company accepted stock from certain employees to pay taxes due on their option exercises in accordance with the Company's benefit policies. The Company received a compensation deduction associated with the option exercises, which should result in approximately $25 million of tax refunds to be received in 1998. The increase between 1995 and 1996 primarily represents additional cash flows from acquired companies offset by increased working capital requirements. All periods benefited from improving growth in the base businesses. Cash flows from financing activities provided $74.7 million for the year, a $70.0 million increase over the same period in 1996. The increase is primarily the result of the $300.0 million bank refinancing arrangement on February 7, 1997 which provided an additional $100.0 million in long term debt. The new arrangement is comprised of a $75.0 million revolving credit facility and a $225.0 million term loan expiring in June 2004. The new financing replaced an outstanding $75.0 million revolving credit facility and a $125.0 million term loan. The Company incurred costs of $2.8 million in conjunction with the arrangement that will be amortized over the term of the debt. The additional borrowings increased Primark's debt to total capital ratio from 34.3% at December 31, 1996 to 44.0% at December 31, 1997. Partially offsetting this increase was $56.2 million used to repurchase the Company's common stock comprised of $26.6 million for a stock buy back program and $29.6 million associated with the Company's acceptance of stock from certain employees to pay withholding taxes on option exercises. These repurchased shares were retired during the year. At year end, the Company had $27.6 million outstanding on its revolving credit facility primarily as a result of withholding taxes due on stock options exercised in December. During 1996, the Company entered into several non cash financing transactions including the conversion of its $16.9 million redeemable preferred stock to 1.2 million shares of common stock and the issuance of 2.2 million shares of common stock in connection with the acquisition of ICV. During 1995, the Company entered into a $200.0 million credit arrangement with several banks to support the Disclosure and I/B/E/S acquisition. The credit arrangement included a $75.0 million revolving credit facility and a $125.0 million term loan which were refinanced in 1997. In December of 1995, the Company sold 4.1 million shares of common stock for $107.8 million and used the net proceeds to repay loan balances and for other general corporate purposes. Investing activities, primarily for acquisitions, used $144.5 million of cash during 1997, compared to $106.0 million in 1996 and $226.7 million in 1995. The majority of 1997 investing uses were for the purchases of Baseline and WEFA, which used $41.2 and $44.9 million, respectively. Capital expenditures and capitalized software amounted to $43.9 million during the year, an increase of $7.6 million over the same period in 1996. The majority of the expenditures were for computer equipment, leasehold improvements for new facilities at I/B/E/S and ICV, and capitalized software and data for upgrading and revising Disclosure's product line and production operation. Partially offsetting these uses were proceeds from the Company's sale of its investment in the Weather Network that provided $3.5 million of cash. During 1996, the Company acquired four separate operations with net cash consideration totaling $71.1 million. The sale of PSLC partially offset these uses, providing $14.3 million. During 1995, Primark purchased Disclosure and I/B/E/S for $199.7 million in net cash. The Company anticipates the sale of TASC for $432 million during the first quarter of 1998 will generate approximately $345 million of cash after taxes and related expenses are paid. It is the intention of management to repay the Senior Notes and any outstanding bank debt at the closing of the transaction. In June of 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income" and SFAS No. 131 "Disclosures about Segments of an Enterprise and Related Information." The Company will adopt these statements during fiscal year 1998 and does not expect that the adoption of these statements will have a material impact on the consolidated financial statements. Changes in foreign exchange rates during 1997 negatively impacted the Company's revenues and operating income by approximately $3.2 million and $4.9 million, respectively. Management anticipates that the international component of its revenues and operating income will be approximately 50% and 55%, respectively during 1998. The Company will continue to manage foreign currency risk through its hedging program. PRIMARK CORPORATION AND SUBSIDIARIES 21 SELECTED FINANCIAL INFORMATION FIVE YEAR DATA
(000s) Except Per Share Amounts 1997 1996 1995 1994 1993 - ------------------------------------------------------------------------------------------------------------------------------------ Financial and Operating Data (1) Operating revenues $ 397,875 $ 277,063 $ 184,779 $ 111,621 $ 98,810 Operating income $ 31,984 $ 27,839 $ 20,886 $ 6,225 $ 6,418 Income from continuing operations $ 6,990 $ 12,516 $ 5,381 $ 1,705 $ (3,434) Net income applicable to common stock (2) $ 19,715 $ 36,749 $ 16,882 $ 12,316 $ 4,087 Basic earnings per share: From continuing operations $ 0.26 $ 0.49 $ 0.21 $ 0.01 $ (0.27) Total earnings per share (2) $ 0.75 $ 1.48 $ 0.88 $ 0.66 $ 0.22 Earnings per share assuming dilution: From continuing operations $ 0.25 $ 0.46 $ 0.19 $ 0.01 $ (0.27) Total earnings per share (2) $ 0.71 $ 1.38 $ 0.82 $ 0.62 $ 0.22 Total assets $1,043,809 $ 920,801 $ 718,184 $ 427,950 $ 419,816 Total debt, including capital lease obligations $ 370,163 $ 248,340 $ 239,476 $ 115,573 $ 130,386 Redeemable preferred stock $ -- $ -- $ 16,874 $ 16,874 $ 16,874 Common shareholders' equity (4) $ 470,971 $ 475,830 $ 354,062 $ 224,689 $ 208,134 EBITDA (3) $ 82,189 $ 61,121 $ 46,795 $ 24,727 $ 23,987 Debt to total capitalization 44.0% 34.3% 39.2% 32.4% 36.7% Capital expenditures $ 23,965 $ 19,412 $ 9,803 $ 10,765 $ 7,648 Capitalized software $ 19,971 $ 16,916 $ 5,704 $ 4,372 $ 4,021 Total employees 2,328 2,025 1,588 769 746 - ------------------------------------------------------------------------------------------------------------------------------------ Common Stock Data (4) Actual shares outstanding 26,800 27,068 23,317 18,520 18,378 Weighted average common shares outstanding 26,348 24,813 19,150 18,510 18,326 Weighted average common and equivalent shares outstanding 27,944 26,571 20,681 19,953 18,326 Book value per share $ 17.57 $ 17.58 $ 15.18 $ 12.13 $ 11.33 Market price per share on NYSE Composite: High $ 41 5/8 $ 40 $ 30 1/4 $ 15 $ 16 3/8 Low $ 18 1/8 $ 21 3/8 $ 12 3/4 $ 11 $ 10 1/2 Close $ 40 11/16 $ 24 3/4 $ 30 $ 13 1/8 $ 11 1/4 ====================================================================================================================================
(1) - The financial data for the Company has been restated to exclude discontinued operations (Note 3) and includes all acquired companies from their respective dates of acquisition (Note 2). (2) - Includes an $8.4 million after-tax gain on the sale of discontinued operations in 1996 (Note 3) and an after-tax extraordinary loss of $2.0 million and $534 thousand for 1997 and 1995, respectively (Note 6). Also includes dividends on the Company's outstanding preferred stock through its conversion to common in 1996 (Note 9a) and gains and losses associated with discontinued operations of the Company. (3) - EBITDA represents operating income plus depreciation and amortization expense and should not be considered in isolation from, or as a substitute for, operating income, net income or cash flows from operating activities computed in accordance with generally accepted accounting principles. While not computed in accordance with generally accepted accounting principles, EBITDA is a widely used measure of a company's performance in its industry because it assists in comparing performance on a consistent basis without regard to depreciation and amortization, which may vary significantly depending on accounting methods (particularly where acquisitions are involved). Management of the Company believes that EBITDA is a meaningful measure given the widespread industry acceptance as a basis for financial analysis. Further, certain of the Company's debt agreements include financial covenants that are based upon EBITDA, as defined above. Due to the variety of methods that may be used by companies and analysts to calculate EBITDA, the EBITDA measures presented herein may not be comparable to that presented by other companies. (4) - During 1997, the Company retired 2,071,000 shares of its common stock. In May 1996, 1,164,276 shares of common stock were issued for the conversion of preferred. In December 1995, the Company sold 4,356,200 shares of common stock (Note 9a). PRIMARK CORPORATION AND SUBSIDIARIES 22 SUPPLEMENTARY FINANCIAL INFORMATION QUARTERLY DATA The following quarterly operating results have been restated to exclude discontinued operations (Note 3). The quarterly data includes the operations of acquired businesses from their respective dates of acquisition (Note 2). Quarterly earnings per share may not total for the year as quarterly computations are based on weighted average common and common equivalent shares outstanding during each quarter. The following quarterly common stock prices set forth the intraday high and low market prices per share on the NYSE Composite Tape. As of the close of business on February 28, 1998, there were 8,286 holders of record of the Company's common stock.
(000s) Except Per Share Amounts First Second Third Fourth - ------------------------------------------------------------------------------------------------------------------------------------ 1997 - ------------------------------------------------------------------------------------------------------------------------------------ Operating revenues, as reported $225,500 $209,713 $210,561 $103,149 Less discontinued operations 130,819 108,781 111,448 -- -------- -------- -------- -------- Operating revenues, restated $ 94,681 $100,932 $ 99,113 $103,149 -------- -------- -------- -------- Operating income, as reported (1) $ 13,191 $ 10,586 $ 21,405 $ 14,166 Less discontinued operations 9,394 8,153 9,817 -- -------- -------- -------- -------- Operating income, restated (1) $ 3,797 $ 2,433 $ 11,588 $ 14,166 -------- -------- -------- -------- Income before extraordinary item (1) $ 4,115 $ 1,034 $ 7,603 $ 8,918 -------- -------- -------- -------- Net income applicable to common stock (1)(2) $ 2,160 $ 1,034 $ 7,603 $ 8,918 -------- -------- -------- -------- Basic earnings per share before extraordinary item (1) $ 0.15 $ 0.04 $ 0.29 $ 0.34 Earnings per share before extraordinary item - diluted (1) $ 0.14 $ 0.04 $ 0.28 $ 0.32 -------- -------- -------- -------- Market price per share: High $ 28 1/4 $ 26 5/8 $30 11/16 $ 42 Low $ 23 3/8 $ 17 3/8 $25 3/16 $ 26 1/2 - ------------------------------------------------------------------------------------------------------------------------------------ 1996 - ------------------------------------------------------------------------------------------------------------------------------------ Operating revenues, as reported $179,022 $158,901 $168,143 $ 84,262 Less discontinued operations 118,656 95,054 99,555 -- -------- -------- -------- -------- Operating revenues, restated $ 60,366 $ 63,847 $ 68,588 $ 84,262 -------- -------- -------- -------- Operating income, as reported $ 15,602 $ 14,702 $ 18,391 $ 5,933 Less discontinued operations 9,533 8,149 9,107 -- -------- -------- -------- -------- Operating income, restated $ 6,069 $ 6,553 $ 9,284 $ 5,933 -------- -------- -------- -------- Income before extraordinary item (3) $ 6,400 $ 7,517 $ 16,461 $ 6,730 -------- -------- -------- -------- Net income applicable to common stock (4) $ 6,041 $ 7,517 $ 16,461 $ 6,730 -------- -------- -------- -------- Basic earnings per share before extraordinary item (4) $ 0.27 $ 0.31 $ 0.66 $ 0.25 Earnings per share before extraordinary item - diluted (4) $ 0.25 $ 0.28 $ 0.62 $ 0.24 -------- -------- -------- -------- Market price per share: High $ 40 $ 38 1/2 $ 33 5/8 $ 28 1/2 Low $ 27 $ 30 3/4 $ 25 1/8 $ 21 3/8 - ------------------------------------------------------------------------------------------------------------------------------------
(1) Includes, for the first and second quarter of 1997, restructuring charges of $1,800,000 and $5,000,000, respectively (Note 4). (2) Includes, for the 1997 first quarter, an after-tax extraordinary loss of $1,955,000 which resulted from the extinguishment of debt (Note 6). (3) Includes, for the fourth quarter of 1996, a $678,000 benefit recorded for the settlement of seven open tax years at lower than anticipated levels. (4) Includes dividends on the Company's preferred stock through its conversion to common stock on May 2, 1996 (Note 9a). PRIMARK CORPORATION AND SUBSIDIARIES EX-21.1 5 SUBSIDIARIES OF PRIMARK CORPORATION 1 Exhibit 21.1 SUBSIDIARIES OF PRIMARK CORPORATION Primark Corporation owns all of the issued and outstanding common stock of Primark Holding Corporation, Triad International Maintenance Corporation, and Primark Financial Technologies, Inc., which are all Delaware corporations; and Yankee Group Research, Inc., a Massachusetts corporation, which owns the stock of Yankee Group and Asia Pacific Pty., Limited (Australia). Primark Corporation also holds a 20% interest in Primark Decision Economics, Inc., a Massachusetts corporation. Primark Holding Corporation owns all of the issued and outstanding common stock of: - - Baseline Financial Services, Inc.; a New York Corporation. - - Primark Information Service (U.K.) Limited (U.K.) which owns all the common stock of: - Datastream Group (U.K.) which owns Datastream (U.K.); - Datastream Pension Trustees Limited (U.K.); - Primark Investment Management Services Limited (U.K.); - Datastream International Limited (U.K.) which owns all the common stock of Datastream International B.V. (the Netherlands) and has a branch in Malaysia. - I/B/E/S (U.K.) LTD; and - Disclosure Limited (U.K.) - ICV Limited which owns all the common stock of: - ICV Europe Limited (Channel Islands) - Inter quote Limited (England) - I.C.V. Benelux BV - - Datastream International (Switzerland) Limited - - Datastream International GmbH (Germany) - - Primark Hong Kong Limited - - Datastream International Inc. (Delaware) 1 2 - - Datastream International (Japan) K.K. (Japan) - - Primark Australia Pty. Limited (Australia) - - Datastream International (D.C.), Inc.(Delaware) - - Datastream International (Canada) Ltd.(Canada) - - Datastream International (Italy) Srl (Italy) - - Datastream International (Sweden) Aktiebolag (Sweden) - - Datastream International (South Africa) Proprietary Limited (South Africa) - - Datastream International (Korea) Limited (Korea) - - Datastream International (Thailand) Limited (Thailand) - - Datastream International (Singapore) Pte., Ltd. (Singapore) - - Vestek Systems, Inc., a California corporation - - Disclosure Incorporated (Delaware) which owns all the issued and outstanding stock of: - Disclosure International, Inc. (Delaware) which owns an 80% interest in: - Worldscope/ Disclosure LLC which owns all of the issued and outstanding stock of Worldscope/ Disclosure India Pvt. Ltd.; and - Worldscope/ Disclosure International Partners (Ireland) - - I/B/E/S International, Inc. (Delaware) which owns all the issued and outstanding stock of: - I/B/E/S Inc. (Delaware) - I/B/E/S Japan K.K. (Japan) - - Datastream International (France) SA (France) which owns the issued and outstanding stock of Groupe DAFSA S.A. and a 4.4% interest in Globe On-Line. Groupe DAFSA owns a 33% interest in Panroma and the stock of: - DAFSA Edition SNC 2 3 - WEFA, Inc. (Delaware) which owns all of the issued and outstanding common stock of WEFA Southern Africa (Pty) Ltd. (S. Africa) - WEFA GmbH (Germany) - WEFA S.A. (France) - Primark Belgium SA (Belgium) - WEFA Canada, Inc. (Canada) - WEFA (Holdings) Limited, (England), which owns WEFA Limited (England), which in turns owns Staniland Hall Associates Limited (England) - WEFA Inc. also owns a 45% interest in Ciemex, Inc. (Delaware), which owns Ciemex WEFA, Inc. (Delaware). - Primark Data Company (Delaware) - Primark Information Service Spain S.A. (Spain) - Primark Luxembourg SA (Luxembourg) 99% interest held by PHC; remaining 1% held by Primark Corporation - Primark Poland S.P. 20.0 As of March 31, 1998 Primark Holding Corporation also owns all of the outstanding common stock of: - TASC, Inc. a Massachusetts corporation, which owns all of the issued and outstanding common stock of: - WSI Corporation, a Massachusetts corporation; - TASC Services Corporation, a Delaware corporation; and - TASC Systems Engineering Corporation, a Delaware corporation and Primark Information Services (U.K.) Limited (U.K.) owns all the common stock of: - The Analytic Sciences Corporation Limited (U.K.) which owns all of the issued and outstanding common stock of The Weather Department Limited (U.K.) and The Computer Department Limited (U.K.); These entities are being sold to Litton Industries and anticipated to close in early April 1998. 3 EX-23.1 6 CONSENT OF DELOITTE & TOUCHE LLP 1 Exhibit 23.1 INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULES To the Board of Directors Primark Corporation Waltham, MA We consent to the incorporation by reference in Registration Statement Nos. 2-92579, 2-77751, 33-23876, 33-6009, 33-49132, 333-17561, 333-17567, 333-17563 and 333-24677 of Primark Corporation, all on Form S-8, of our reports dated February 10, 1998 (March 30, 1998 as to Note 14 to the consolidated financial statements) incorporated by reference in the Annual Report on Form 10-K of Primark Corporation for the year ended December 31, 1997. Our audits of the financial statements referred to in our aforementioned report also included the financial statement schedule of Primark Corporation, listed in Item 14. This financial statement schedule is the responsibility of the Company's management. Our responsibility is to express an opinion based on our audits. In our opinion, such financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein. DELOITTE & TOUCHE LLP Boston, MA March 30, 1998 EX-27.1 7 FDS FOR FY ENDED 12/31/1997
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM PRIMARK CORPORATION'S CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1997 INCLUDED IN THE FORM 10-K AS EXHIBIT 13.1 AND THE 1997 ANNUAL REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000356064 PRIMARK 1,000 U.S. DOLLARS YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 12,780 0 79,630 2,756 0 335,080 90,606 43,751 1,043,809 202,075 331,260 0 0 536 470,435 1,043,809 0 397,875 0 157,327 208,564 0 15,986 19,953 12,963 6,990 14,680 (1,955) 0 19,715 0.75 0.71
EX-27.2 8 RESTATED FDS PERIODS 3/31/97, 6/30/97, 9/30/97
5 This schedule contains summary financial information portions of which have been extracted From Primark Corporation's Consolidated Financial Statements for the Year Ended December 31, 1997 included in the Form 10-K as Exhibit 13.1 and the 1997 Annual Report and is qualified in its entirety by reference to such financial statements. Prior periods have been restated to give the effect to the implementation of FAS 128 as well as to separately report the operations of discontinued businesses. 0000356064 PRIMARK 1 U.S. DOLLARS 3-MOS 3-MOS 3-MOS DEC-31-1997 DEC-31-1997 DEC-31-1997 JAN-01-1997 APR-01-1997 JUL-01-1997 MAR-31-1997 JUN-30-1997 SEP-30-1997 1 1 1 30,180 13,520 16,148 0 0 0 105,217 101,999 87,437 2,602 2,571 2,589 0 0 0 150,242 170,244 162,018 77,388 83,944 85,863 31,240 35,909 39,286 1,052,603 1,033,224 1,021,182 195,305 198,064 186,464 340,175 341,053 335,843 0 0 0 0 0 0 543 518 520 477,478 453,085 462,384 1,052,603 1,033,224 1,021,182 0 0 0 94,681 100,932 99,113 0 0 0 39,303 40,119 37,361 51,581 58,380 50,164 0 0 0 3,640 4,075 4,090 2,792 (469) 8,546 2,479 1,417 5,159 313 (1,886) 3,387 3,802 2,920 4,216 (1,955) 0 0 0 0 0 2,160 1,034 7,603 0.15 0.04 0.29 0.14 0.04 0.28
EX-27.3 9 RESTATED FDS FOR FY 1996 AND 1995
5 This schedule contains summary financial information portions of which have been extracted From Primark Corporation's Consolidated Financial Statements for the Year Ended December 31, 1997 included in the Form 10-K as Exhibit 13.1 and the 1997 Annual Report and is qualified in its entirety by reference to such financial statements. Prior periods have been restated to give the effect to the implementation of FAS 128 as well as to separately report the operations of discontinued businesses. 0000356064 PRIMARK 1 U.S. DOLLARS YEAR YEAR DEC-31-1996 DEC-31-1995 JAN-01-1996 JAN-01-1995 DEC-31-1996 DEC-31-1995 1 1 25,276 59,882 0 0 65,128 40,346 2,234 1,730 0 0 105,178 107,018 72,165 50,189 28,006 19,044 920,801 718,184 165,685 84,480 241,822 238,123 0 0 0 16,874 541 489 475,289 353,573 920,801 718,184 0 0 277,063 184,779 0 0 104,479 66,063 144,745 97,830 0 0 12,468 8,377 19,948 10,011 7,432 4,630 12,516 5,381 24,592 13,469 0 0 0 0 37,108 16,882 1.48 0.88 1.38 0.82
EX-27.4 10 RESTATED FDS FOR PERIODS 3/31/96, 6/30/96, 9/30/96
5 This schedule contains summary financial information portions of which have been extracted From Primark Corporation's Consolidated Financial Statements for the Year Ended December 31, 1997 included in the Form 10-K as Exhibit 13.1 and the 1997 Annual Report and is qualified in its entirety by reference to such financial statements. Prior periods have been restated to give the effect to the implementation of FAS 128 as well as to separately report the operations of discontinued businesses. 0000356064 PRIMARK 1 U.S. DOLLARS 3-MOS 3-MOS 3-MOS DEC-31-1996 DEC-31-1996 DEC-31-1996 JAN-01-1996 APR-01-1996 JUL-01-1996 MAR-31-1996 JUN-30-1996 SEP-30-1996 1 1 1 58,235 54,792 58,229 0 0 0 40,754 40,382 48,873 1,896 2,144 1,871 0 0 0 111,875 108,514 117,889 53,631 56,268 58,569 21,456 24,187 23,037 735,226 749,179 784,986 88,003 94,693 112,149 238,940 237,727 239,849 0 0 0 16,874 0 0 489 496 497 364,531 389,963 408,096 735,226 749,179 784,986 0 0 0 60,366 63,847 68,588 0 0 0 20,713 20,821 23,636 33,584 36,473 35,668 0 0 0 3,070 2,781 2,980 4,056 5,241 7,488 2,071 2,469 3,077 1,985 2,772 4,411 4,415 4,745 12,050 0 0 0 0 0 0 6,400 7,517 16,461 0.27 0.31 0.66 0.25 0.28 0.62
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