Clarivate PLC 8-K/A, filed Oct 26, 2020

Clarivate PLC (CLVT)

8-K/A 2020-10-26 For: 2020-10-01

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Added on April 11, 2026

About this 8-K/A

Clarivate PLC filed this 8-K/A on October 26, 2020, reporting on events of October 1, 2020.

Items reported

Item 2.01: Completed an acquisition or sale of assets
Item 9.01: Financial statements and exhibits

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Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Ordinary shares	CCC	New York Stock Exchange


No.			Document Description
23.1			Consent of KPMG LLP, independent auditors
99.1			The audited consolidated financial statements of CPA Global as of and for the year s ended December 31, 2019 and December 31, 2018
99.2			The unaudited consolidated financial statements of CPA Global as of and for the interim period ended June 30, 2020
99.3			The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019 and the six months ended June 30 , 2020, giving effect to the acquisition of CPA Global
104			The cover page from the Company's Current Report on Form 8-K dated October 29, 2020, formatted in Inline XBRL


		CLARIVATE PLC

Date: October 26, 2020	By:	/s/ Richard Hanks
	Name:	Richard Hanks
	Title:	Chief Financial Officer


	As of December 31,
	2019	2018
Assets
Current assets:
Cash and cash equivalents	87,286	43,193
Restricted cash	2,732	3,112
Accounts receivable, net of allowance for doubtful accounts of £3,321 and £5,285 at December 31, 2019 and 2018, respectively	302,424	251,343
Related party receivables	137,664	23,464
Prepaid expenses	13,038	6,915
Costs to acquire contracts	2,235	1,985
Other current assets	23,434	15,499
Total current assets	568,813	345,511
Property, plant and equipment	11,060	8,460
Other intangible assets	526,502	239,377
Goodwill	901,385	420,809
Other non-current assets	2,318	2,226
Deferred income taxes	11,196	5,518
Costs to acquire contracts	20,842	18,868
Operating lease right-of-use assets	27,299	22,314
Total assets	2,069,415	1,063,083
Liabilities and Shareholder's Equity
Current liabilities
Accounts payable	45,598	40,690
Related party payables	61,605	—
Accrued expenses and other current liabilities	96,258	43,658
Deferred revenues	200,572	194,306
Current portion of operating lease liability	6,873	6,023
Current portion of long-term debt	—	352
Related party loan	168,202	—
Total current liabilities	579,108	285,029
Other non-current liabilities	9,217	8,197
Deferred income taxes	106,476	29,033
Operating lease liabilities	20,800	16,461
Total liabilities	715,601	338,720
Shareholder's equity:
Ordinary shares, £0.1 par value; 5,008,355 shares authorized at December 31, 2019 and 2018; 5,008,285 and 5,008,283 shares issued and outstanding at December 31, 2019 and 2018, respectively;	1,448,042	887,324
Accumulated other comprehensive loss	(7,820)	(4,196)
Accumulated deficit	(86,408)	(158,765)
Total shareholder's equity	1,353,814	724,363
Total Liabilities and Shareholder's Equity	2,069,415	1,063,083


	Year ended December 31,
	2019	2018
Revenues	424,881	345,365

Operating costs and expenses:
Cost of revenues, excluding depreciation and amortization	(141,077)	(103,036)
Selling, general and administrative costs, excluding depreciation and amortization	(103,974)	(82,902)
Depreciation	(3,019)	(2,406)
Amortization	(54,596)	(38,935)
Transaction expenses	(9,045)	(97,608)
Transition, integration and other related expenses	(6,995)	(1,002)
Restructuring	(2,137)	(9,705)
Legal settlement	(4,322)	(466)
Other operating (expense) income, net	(11,858)	21,131
Total operating expenses	(337,023)	(314,929)
Income from operations	87,858	30,436
Related party interest expense	(5,736)	(2,323)
Interest expense	(3,615)	(3,635)
Income before income tax	78,507	24,478
Provision for income taxes	(6,150)	(9,148)
Net income	72,357	15,330


	Ordinary shares
	Shares	Amount	Accumulated Other Comprehensive Income (Loss)	Accumulated Deficit	Total Shareholder’s Equity
Balance as at January 1, 2018	5,008,280	4,100	(3,382)	(174,095)	(173,377)
Net income	—	—	—	15,330	15,330
Foreign currency translation	—	—	(814)	—	(814)
Issue of Ordinary Shares	3	883,224	—	—	883,224
Balance as at December 31, 2018	5,008,283	887,324	(4,196)	(158,765)	724,363

Balance as at January 1, 2019	5,008,283	887,324	(4,196)	(158,765)	724,363
Net income	—	—	—	72,357	72,357
Foreign currency translation	—	—	(3,624)	—	(3,624)
Issue of Ordinary Shares	2	560,718	—	—	560,718
Balance as at December 31, 2019	5,008,285	1,448,042	(7,820)	(86,408)	1,353,814


Asset Class			Years
Leasehold improvements			Shorter of the lease term or estimated useful life
Furniture and equipment			5-10
Computer equipment			5
Other tangible assets			5


Asset Class			Years
Customer relationships			12-23
Software Algorithms			9
Internal use software			5-10
Trade name			4-25
Reporting/Analysis Software			6
Proprietary Software			5
Software			6-9


Current assets
Cash and cash equivalents			21,267
Restricted cash			1,207
Accounts receivable			36,188
Prepaid expenses			4,921
Other current assets			4,286
Total current assets			67,869
Property, plant, and equipment			938
Other intangible assets			305,329
Other non-current assets			1,586
Deferred income taxes			4,701
Operating lease right-of-use assets			2,411
Total assets			382,834
Current liabilities
Accounts payable			13,551
Accrued expenses and other current liabilities			36,879
Deferred revenues			14,796
Current portion of long-term debt			164,523
Total current liabilities			229,749
Deferred income taxes			79,607
Operating lease liabilities			2,523
Total liabilities			311,879
Net assets			70,955
Purchase consideration			560,718
Goodwill on acquisition			489,763


Consideration satisfied by ultimate parent company:
Cash Payment			1,650
Vendor Loan Notes			24,691
Issue of Ordinary Shares			113,206
Issue of Preference Shares			421,171
Total			560,718


	Fair Value	Weighted Average Useful Economic life
Description of assets
Customer Relationships	283,800	21
Internal use software	11,788	5
Computer Programs and development expenditure	7,175	7
Trade Name	2,566	2
Total	305,329


Current assets
Cash and cash equivalents			19,443
Accounts receivable			22,038
Prepaid expenses			576
Other current assets			133
Total current assets			42,190
Property, plant and equipment			102
Other intangible assets			30,640
Deferred income taxes			175
Total assets			73,107
Current liabilities
Accounts payable			31,775
Accrued expenses and other current liabilities			12,930
Deferred revenues			3,699
Total current liabilities			48,404
Deferred income taxes			8,273
Total liabilities			56,677
Net assets			16,430
Purchase consideration
Payment to former shareholders			52,232
Payment to former lenders			24,052
			76,284
Goodwill on acquisition			59,854
Consideration satisfied by intermediate parent company:
Lien 1 USD borrowings			76,284


Year ending December 31,
2019
2020			6,873
2021			5,436
2022			4,455
2023			4,305
2024			4,082
2025 & Thereafter			7,274
Total operating lease commitments			32,425
Imputed interest			(4,752)
Total			27,673


	December 31, 2019					December 31, 2018
	Gross	Accumulated Depreciation	Net	Gross	Accumulated Depreciation	Net
Leasehold Improvements	7,369	(5,778)	1,591	6,951	(5,116)	1,835
Land and Buildings	—	—	—	826	(154)	672
Furniture, fixtures and equipment	6,613	(4,414)	2,199	5,546	(3,768)	1,778
Computer hardware	18,130	(11,876)	6,254	14,961	(11,813)	3,148
Other Tangible Assets	1,016		1,016	1,027	—	1,027
Total property, plant, and equipment	33,128	(22,068)	11,060	29,311	(20,851)	8,460


			Remaining Weighted - Average Amortization Period (in years)
Computer Programs and Development Expenditure			3.7
Customer Relationships			15.3
Software			5.4
Tradenames			11.1
Internal use software			3.5


	Year ended December 31,
	2019	2018
Cash flows from operating activities
Net income	72,357	15,330
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	57,615	41,341
Provision for bad debt expense	2,463	1,472
Loss/(Gain) on sale of investment	141	(1,355)
Benefit (provision) for Deferred taxes	(1,831)	2,846
Interest expense	9,351	5,957
Write off of related party receivables	—	87,903
Other	8,891	(20,005)
Changes in operating assets and liabilities:
Accounts receivable	(24,889)	3,378
Prepaid expenses	(1,412)	372
Other assets	(1,997)	(12,977)
Accounts payable	(8,449)	655
Accrued expenses and other current liabilities	26,735	1,809
Related Parties	(55,048)	(84,459)
Income taxes payable	(118)	2,792
Deferred revenues	(3,035)	(4,893)
Operating lease liabilities	(6,898)	(5,998)
Other liabilities	(3,548)	(3,573)
Net cash provided by operating activities	70,328	30,595
Cash flows from investing activities
Capital expenditures	(3,857)	(2,801)
Acquisitions, net of cash acquired	20,824	(56,892)
Acquisition of intangibles	(39,245)	(32,686)
Proceeds from sale of investment	(367)	1,215
Net cash (used in) investing activities	(22,645)	(91,164)
Cash flows from financing activities
Principal payments on term loan	(352)	(3,830)
Proceeds from issue of shares	—	89,205
Net cash (used in) provided by financing activities	(352)	85,375
Effects of exchange rates	(3,618)	2,174
Net increase in cash and cash equivalents, and restricted cash	43,713	26,980
Beginning of period:
Cash and cash equivalents	43,193	15,714
Restricted cash	3,112	3,611


	Year ended December 31,
	2019	2018
Balance at beginning of year	5,285	4,900
Additional provisions	2,701	1,778
Write-offs	(4,665)	(1,393)
Balance at the end of year	3,321	5,285


	December 31, 2019					December 31, 2018
	Gross	Accumulated Amortization	Net	Gross	Accumulated Amortization	Net
Finite-lived intangible assets
Computer Programs and Development Expenditure	218,120	(123,479)	94,641	171,965	(102,832)	69,133
Customer Relationships	542,502	(139,698)	402,804	261,514	(114,059)	147,455
Software	17,307	(13,506)	3,801	17,410	(12,424)	4,986
Tradenames	12,712	(4,722)	7,990	10,176	(3,439)	6,737
Internal use software	30,466	(13,200)	17,266	19,311	(8,245)	11,066
Total intangible assets	821,107	(294,605)	526,502	480,376	(240,999)	239,377


	Year ended December 31,
	2019	2018
Income before income tax	78,507	24,478
Income tax expense at the Jersey statutory rate of 0%	—	—
Effect of:
Tax at standard statutory income tax rates of foreign jurisdictions	4,646	7,607
Non deductible interest	737	—
R&D tax concession	(1,517)	(264)
Tax withholding on dividends	389	1,470
Tax rate change	138	(3)
Other tax adjustments	1,342	1,291
Change in valuation allowance	415	(953)
Income tax expense	6,150	9,148


2020			59,590
2021			58,181
2022			55,437
2023			53,188
2024			33,639
Thereafter			254,918
Subtotal finite-lived intangible assets			514,953
Internally developed software projects in process			11,549
Total finite-lived intangible assets			526,502
Total intangible assets			526,502


Balance as of January 1, 2018			354,340
Acquisition			59,854
Disposal			—
Impact of foreign currency fluctuations			6,615
Balance as of December 31, 2018			420,809
Acquisition			489,763
Disposal			(424)
Impact of foreign currency fluctuations			(8,763)
Balance as of December 31, 2019			901,385


	December 31,
	2019	2018
Assets
Foreign currency forward contracts	2,404	408
	2,404	408
	December 31,
	2019	2018
Liabilities
Foreign currency forward contracts	216	1,763
	216	1,763


	December 31, 2019
Assets	Level 1	Level 2	Level 3	Total
Foreign currency forward contracts	—	2,404	—	2,404
	—	2,404	—	2,404
Liabilities
Foreign currency forward contracts	—	216	—	216
Annuities	—	4,699	—	4,699
	—	4,915	—	4,915


	June 30, 2020	December 31, 2019
ASSETS
Current assets
Cash and cash equivalents	114,465	87,286
Restricted cash	2,675	2,732
Accounts receivable, net of allowance for doubtful accounts of £3,511 and £3,321 at June 30, 2020 and December 31, 2019, respectively	304,193	302,424
Related party receivables	184,894	137,664
Prepaid expenses	11,556	13,038
Costs to acquire contracts	2,280	2,235
Other current assets	22,712	23,434
Total current assets	642,775	568,813
Property, plant and equipment	10,332	11,060
Other intangible assets	519,974	526,502
Goodwill	915,806	901,385
Other non-current assets	2,833	2,318
Deferred income taxes	11,879	11,196
Costs to acquire contracts	21,044	20,842
Operating lease right-of-use assets	25,866	27,299
Total assets	2,150,509	2,069,415
Liabilities and Shareholder's Equity
Current liabilities
Accounts payable	44,885	45,598
Related party payables	62,157	61,605
Accrued expenses and other current liabilities	106,880	96,258
Deferred revenues	201,600	200,572
Current portion of operating lease liability	6,541	6,873
Related party loan	175,727	168,202
Total current liabilities	597,790	579,108
Other non-current liabilities	10,071	9,217
Deferred income taxes	104,593	106,476
Operating lease liabilities	19,707	20,800
Total liabilities	732,161	715,601
Shareholder's equity:
Ordinary shares, £0.1 par value; 5,008,355 shares authorized at June 30, 2020 and December 31, 2019; 5,008,285 and 5,008,283 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively;	1,448,042	1,448,042
Accumulated other comprehensive income (loss)	1,036	(7,820)
Accumulated deficit	(30,730)	(86,408)
Total shareholder's equity	1,418,348	1,353,814
Total Liabilities and Shareholder's Equity	2,150,509	2,069,415


	Six months ended June 30,
	2020	2019
Revenues	229,817	189,606
Operating costs and expenses:
Cost of revenues, excluding depreciation and amortization	(74,311)	(55,934)
Selling, general and administrative costs, excluding depreciation and amortization	(58,065)	(53,060)
Depreciation	(1,635)	(1,243)
Amortization	(32,375)	(23,461)
Transaction expenses	(122)	(8,125)
Transition, integration and other related expenses	(2,638)	(1,108)
Restructuring	(3,335)	(802)
Legal settlement	(359)	—
Other operating income (expense), net	6,642	(6,652)
Total operating expenses	(166,198)	(150,385)
Income from operations	63,619	39,221
Related party interest expense	(4,427)	(1,168)
Interest expense	(591)	(2,024)
Income before income tax	58,601	36,029
Provision for income taxes	(2,923)	(3,276)
Net income	55,678	32,753


	June 30, 2020	December 31, 2019
Balance at beginning of period	3,321	5,285
Additional provisions	633	2,701
Write-offs	(443)	(4,665)
Balance at the end of period	3,511	3,321


Period ending June 30,
2021			6,541
2022			5,224
2023			4,616
2024			4,453
2025			3,551
2026 & Thereafter			5,962
Total operating lease commitments			30,347
Imputed interest			(4,099)
Total			26,248


2021			65,158
2022			62,528
2023			61,008
2024			39,161
2025			37,237
Thereafter			236,909
Subtotal finite-lived intangible assets			502,001
Internally developed software projects in process			17,973
Total finite-lived intangible assets			519,974
Total intangible assets			519,974


Balance as of January 1, 2019			420,809
Acquisition			489,763
Disposal			(424)
Impact of foreign currency fluctuations			(8,763)
Balance as of December 31, 2019			901,385
Balance as at January 1, 2020			901,385
Acquisition			946
Disposal			—
Impact of foreign currency fluctuations			13,476
Balance as of June 30, 2020			915,806


	June 30, 2020	December 31, 2019
Deferred tax assets:
Net operating loss carry forwards and tax credits	10,881	10,415
Payroll liabilities	1,572	1,511
Operating lease liability	4,337	4,442
Others	4,761	4,357
Total deferred tax assets	21,551	20,725
Valuation allowance	(5,335)	(5,087)
Total net deferred tax assets	16,216	15,638
Deferred tax liabilities:
Intangibles	(104,073)	(104,887)
Operating lease right of use assets	(4,337)	(4,442)
Property, plant and equipment	(520)	(472)
Other	—	(1,117)
Total deferred tax liabilities	(108,930)	(110,918)

Net deferred tax asset / (liability)	(92,714)	(95,280)


	June 30, 2020	December 31, 2019
Uncertain Tax Benefit
Beginning Balance	2,596	1,958
Decreases related to prior year tax positions	(177)	—
Increases related to current year tax positions	129	671
Exchange difference	48	(33)
Ending Balance	2,596	2,596


	June 30, 2020	December 31, 2019
Opening balance	168,202	—
Loan obtained	—	164,523
Loan repaid	(8,408)	—
Interest charged	4,427	5,735
Foreign exchange loss	11,506	(2,056)
	175,727	168,202


Issuance of 218,183,778 shares	$	6,761,515
Cash paid for repayment of CPA Global's parent company debt	2,052,926
Total purchase price	$	8,814,441
Cash acquired	(91,878)
Total purchase price, net of cash acquired	$	8,722,563


	Historical							Pro Forma Adjustments
	Clarivate		CPA Global		Acquisition and Related			Financing			Pro Forma Combined
					Note 3			Note 4
Assets
Current assets:
Cash and cash equivalents	$	608,522	$	141,959	$	—		$	—		$	750,481
Restricted cash	2,010		3,318		—			—			5,328
Accounts receivable, net of allowance for doubtful accounts	279,160		377,260		—			—			656,420
Related party receivables	—		229,306		(229,306)		(h)	—			—
Prepaid expenses	51,440		14,331		—			—			65,771
Costs to acquire contracts	18,960		2,827		—			—			21,787
Other current assets	—		28,167		—			—			28,167
Total current assets	960,092		797,168		(229,306)			—			1,527,954
Computer hardware and other property, net	24,324		12,814		—			—			37,138
Other intangible assets, net	2,261,549		644,870		4,327,293		(f)	—			7,233,712
Goodwill	1,824,258		1,135,783		2,675,404		(f)	—			5,635,445
Costs to acquire contracts	—		26,098		—			—			26,098
Other non-current assets	22,178		3,514		—			—			25,692
Deferred income taxes	17,161		14,732		2,738		(l)	—			34,631
Operating lease right-of-use assets	100,622		32,081		1,484		(f)	—			134,187
Total Assets	5,210,184		2,667,060		6,777,613			—			14,654,857
Liabilities and Shareholders' equity
Current liabilities:
Accounts payable	22,068		55,668		—			—			77,736
Related party payables	—		77,087		(77,087)		(h)	—			—
Accrued expenses and other current liabilities	228,474		129,333		—			—			357,807
Current portion of deferred revenues	424,187		250,024		(14,571)		(f)	—			659,640
Current portion of operating lease liabilities	24,067		8,113		(443)		(f)	—			31,737
Current portion of long-term debt	12,600		—		—			16,000		(k)	28,600
Related party loan	—		217,937		(217,937)		(h)	—			—
Liabilities held for sale	—		—		—			—			—
Total current liabilities	711,396		738,162		(310,038)			16,000			1,155,520
Long-term debt	1,913,214		—					1,548,000		(k)	3,461,214
Non-current portion of deferred revenues	19,116		—		—			—			19,116
Other non-current liabilities	16,959		15,708		—			—			32,667
Deferred income taxes	86,247		129,715		163,798		(l)	—			379,760
Operating lease liabilities	80,663		24,440		(1,337)		(f)	—			103,766
Total liabilities	2,827,595		908,025		(147,577)			1,564,000			5,152,043
Commitments and contingencies
Shareholders’ equity:
Ordinary Shares	3,326,267		1,795,861		6,888,364		(h), (i)	(1,564,000)		(k)	10,446,492
Accumulated other comprehensive loss	(15,629)		1,285		(1,285)		(i)	—			(15,629)
Accumulated deficit	(928,049)		(38,111)		38,111		(i)	—			(928,049)
Total shareholders’ equity	2,382,589		1,759,035		6,925,190			(1,564,000)			9,502,814
Total Liabilities and Shareholders’ equity	$	5,210,184	$	2,667,060	$	6,777,613		$	—		$	14,654,857


DRG Historical Combined Statement of Comprehensive Loss Line Items	Clarivate Historical Consolidated Statement of Operations Line Items	DRG Historical Combined Statement of Comprehensive Loss			Reclassification (Rounded)			DRG Adjusted Historical Combined Statement of Operations (Unaudited, Rounded)
Cost of revenues		$	(98,270)	$	1,519	$	(96,751)
Selling and marketing expenses		(26,889)			26,889			—
General and administrative expenses		(52,682)			52,682			—
Non-operating income		1,900			(1,900)			—
Related party expenses, other than interest expense		(784)			784			—
	Selling, general and administrative costs, excluding depreciation and amortization				(76,500)			(76,500)
	Share-based compensation expense				(5,374)			(5,374)
	Other operating income (expense), net				1,900			1,900
Depreciation and amortization		(30,480)			30,480			—
Impairment of intangible assets		(131)			131			—
	Depreciation				(7,223)			(7,223)
	Amortization				(23,388)			(23,388)


CPA Global Historical Combined Balance Sheet Line Items	Clarivate Historical Combined Balance Sheet Line Items	CPA Global Historical Combined Balance Sheet		Reclassification (Rounded)		CPA Global Adjusted Historical Combined Balance Sheet (Unaudited, Rounded)
Accrued expenses and other current liabilities		$	126,974	$	(3,220)	$	123,754
	Other non-current liabilities			3,220		3,220


				Amortization Estimate
	Estimated Fair Value		Remaining Weighted-Average Amortization Period	Six Months Ended June 30, 2020				Year Ended December 31, 2019
Customer relationships	$	381,000	17.6	$	5,635			$	22,541
Database and content	50,200		4.7	2,697				10,787
Tradenames	5,200		4	325				1,300
Purchased software	23,000		6.4	902				3,607
Backlog	28,000		4	1,763				7,053
Total	$	487,400		11,322				45,288
Eliminate historical DRG amortization expense						(6,910)				(23,388)
Pro forma amortization adjustment						$	4,412			$	21,900


Assets and liabilities assumed, net	$	192,152
Net deferred tax liability	(161,061)
Identifiable intangible assets	4,972,163
Goodwill	3,811,187
Total estimated consideration	$	8,814,441


Estimated fair value of identified intangible assets	$	4,972,163
Pre-existing CPA Global intangible assets	(644,870)
Pro forma adjustment⁽¹⁾	$	4,327,293

Estimated fair value of goodwill	$	3,811,187
Pre-existing CPA Global goodwill	(1,135,783)
Pro forma adjustment⁽²⁾	$	2,675,404

Estimated fair value of operating lease right-of-use assets	$	33,565
Pre-existing CPA Global operating lease right-of-use assets	(32,081)
Pro forma adjustment⁽³⁾	$	1,484

Estimated fair value of current portion of deferred revenues	$	235,453
Pre-existing CPA Global current portion of deferred revenues	(250,024)
Pro forma adjustment⁽⁴⁾	$	(14,571)

Estimated fair value of current portion of operating lease liability	$	7,670
Pre-existing CPA Global current portion of operating lease liability	(8,113)
Pro forma adjustment⁽⁵⁾	$	(443)

Estimated fair value of operating lease liabilities	$	23,103
Pre-existing CPA Global operating lease liabilities	(24,440)
Pro forma adjustment⁽⁶⁾	$	(1,337)