United States
Securities and Exchange Commission
Washington, D.C. 20549
Form 8-K/A
Amendment No. 1 to
Current Report
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) August 23, 2000
John H. Harland Company
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
Georgia 1-6352 58-0278260
- -------------------------- ------------ -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
2939 Miller Road, Decatur, Georgia 3 0035
- ---------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 981-9460
This Amendment No. 1 on Form 8-K/A (this "Amendment") is being filed by
John H. Harland Company., a Georgia corporation ("Harland" or the
"Company"), to amend Item 7 of the Registrant's Current Report on Form 8-K
dated August 23, 2000, filed with the Securities and Exchange Commission
(the "SEC") on September 7, 2000 (the "Initial Report"). This Amendment
and the Initial Report relate to Concentrex Incorporated, an Oregon
corporation ("Concentrex") becoming a wholly owned subsidiary of Harland
as of August 23, 2000.
Pursuant to the instructions to Item 7 of Form 8-K, the Registrant is
filing this Amendment (not later than 60 days after the date that the
Initial Report was required to be filed) in order to include the pro forma
financial information required with respect to the acquisition of
Concentrex. Pursuant to Rule 12b-15 under the Securities Exchange Act of
1934, as amended, the complete text of Item 7, as amended, is set forth
below.
ITEM 7. Financial Statements, Pro Forma Financial
Information and Exhibits
(a) Financial Statements of Business Acquired
The following is a list of unaudited financial
statements for Concentrex Incorporated filed
herewith:
Unaudited Consolidated Balance Sheet as of June 30,
2000
Unaudited Consolidated Statements of Operations for
the Six Months Ended June 30, 2000 and 1999
Unaudited Consolidated Statements of Cash Flows for
the Six Months Ended June 30, 2000 and 1999
Notes to Unaudited Consolidated Financial Statements
(b) Pro Forma Financial Information
The following is a list of pro forma consolidated
financial information pertaining to John H. Harland
Company and Concentrex Incorporated filed herewith:
Unaudited Pro Forma Condensed Consolidated Balance
Sheet as of June 30, 2000
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Six Months Ended June 30,
2000
Unaudited Pro Forma Condensed Consolidated Statement
of Operations for the Year Ended December 31,
1999
Notes to Unaudited Pro Forma Consolidated Financial
Statements
(c) Exhibits.
Exhibit No. Description
10.1
CFI PROSERVICES, INC.
dba Concentrex Incorporated
Audited Consolidated Financial
Statements for the years ended
December 31, 1999 and 1998.
23.1 Consent of Arthur Andersen LLP
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amended report to be signed on
its behalf by the undersigned hereunto duly authorized.
John H. Harland Company
Date: November 6, 2000 By: /s/ William M. Dollar
-------------------------------
William M. Dollar, Vice President,
Corporate Controller
CONCENTREX INCORPORATED
CONSOLIDATED BALANCE SHEET
(Dollars in thousands)
June 30,
2000
-------------------
(Unaudited)
ASSETS
Current Assets:
Cash $ 139
Restricted cash 1,318
Receivables, net of allowances of $3,582 32,592
Inventory 550
Deferred tax asset 2,843
Prepaid expenses and other current assets 3,246
Income taxes receivable 2,876
-------------------
Total Current Assets 43,564
Property and equipment, net of accumulated
depreciation of $14,144 8,486
Software development costs, net of accumulated
amortization of $5,825 4,019
Purchased software costs, net of accumulated
amortization of $1,512 7,098
Goodwill, net of accumulated amortization
of $8,707 56,753
Deferred tax asset 9,438
Other assets, net 3,029
-------------------
Total Assets $ 132,387
===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,231
Accrued expenses 9,521
Deferred revenues 15,858
Customer deposits 5,578
Line of credit 8,149
Current portion of long-term debt, less debt discount 62,616
-------------------
Total Current Liabilities 107,953
Commitments and Contingencies
Long-term debt, less current portion 194
Other long-term liabilities 998
Convertible Subordinated Notes 5,957
Mandatory Redeemable Class A Preferred Stock 722
Shareholders' Equity:
Series preferred stock, 5,000,000 shares authorized,
none issued and outstanding -
Common stock, no par value, 10,000,000 shares authorized,
5,411,212 shares issued and outstanding 26,929
Accumulated deficit (10,366)
-------------------
Total Shareholders' Equity 16,563
-------------------
Total Liabilities and Shareholders' Equity $ 132,387
===================
The accompanying notes are an integral part of this consolidated balance sheet.
CONCENTREX INCORPORATED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
(Unaudited)
Six Months Ended June 30,
-------------------------------
2000 1999
------------- --------------
REVENUE
Software Products and Services Group
License Revenue $ 27,491 $ 23,164
Service and Support Revenue 23,803 16,582
Other Revenue 5,541 3,017
e-Commerce Group
License Revenue 808 1,116
Service and Support Revenue 5,594 4,003
------------- --------------
Total Revenue 63,237 47,882
COST OF REVENUE 25,766 18,006
------------- --------------
Gross Profit 37,471 29,876
OPERATING EXPENSES
Sales and marketing 11,565 8,546
Product development 16,596 10,267
General and administrative 10,209 6,742
GOODWILL amortization 2,004 816
Acquired in-process research and development - 3,800
------------- --------------
Total Operating Expenses 40,374 30,171
------------- --------------
Loss From Operations (2,903) (295)
NON-OPERATING INCOME (EXPENSE)
Interest expense (6,848) (315)
Interest income 42 144
Other, net 276 27
------------- --------------
Total Non-operating Income (Expense) (6,530) (144)
------------- --------------
LOSS BEFORE BENEFIT FROM
INCOME TAXES (9,433) (439)
BENEFIT FROM INCOME TAXES (2,094) (305)
------------- --------------
NET LOSS (7,339) (134)
PREFERRED STOCK DIVIDEND 46 46
------------- --------------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (7,385) $ (180)
============= ==============
BASIC NET LOSS PER SHARE $ (1.39) $ (0.04)
============= ==============
DILUTED NET LOSS PER SHARE $ (1.39) $ (0.04)
============= ==============
The accompanying notes are an integral part of these consolidated statements.
CONCENTREX INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
Six Months Ended June 30,
---------------------------------------
2000 1999
----------------- -----------------
Cash flows from operating activities:
Net loss applicable to common shareholders $ (7,385) $ (180)
Adjustments to reconcile net loss applicable to common
shareholders to cash provided by (used in) operating activities:
Depreciation and amortization 5,946 4,126
Interest accreted on mandatory redeemable preferred stock 46 46
Interest accreted on notes payable 335 48
Write off of in process research and development - 3,800
Amortization of debt discount and deferred loan costs 1,746 -
(Increase) decrease in assets, net of effects from purchase of businesses:
Receivables, net 8,346 1,909
Inventories, net 33 93
Prepaid expenses and other assets 818 (1,675)
Income taxes receivable (1,220) -
Increase (decrease) in liabilities, net of effects from purchase of
businesses:
Drafts payable (728) -
Accounts payable (1,193) 94
Accrued expenses (5,394) (2,768)
Deferred revenues (2,155) 2,063
Customer deposits 226 (1,471)
Income taxes payable - (473)
----------------- -----------------
Net cash (used in) provided by operating activities (579) 5,612
Cash flows from investing activities:
Expenditures for property and equipment (2,491) (1,299)
Investment in Ultradata stock - (2,658)
Proceeds from long-term note receivable 91 76
Cash paid for acquisition of Modern Computer Systems, Inc.,
net of cash received - (5,520)
Cash received in acquisition of MECA Software, LLC - 1,595
----------------- -----------------
Net cash used in investing activity (2,400) (7,806)
Cash flows from financing activities:
Net proceeds from line of credit 4,667 11,093
Payments on long-term debt (1,487) (7,827)
Payments on mandatory redeemable preferred stock (52) (51)
Proceeds from issuance of common stock 19 905
Repurchase of common stock - (1,145)
----------------- -----------------
Net cash provided by financing activities 3,147 2,975
----------------- -----------------
Increase in cash and cash equivalents 168 781
Cash and cash equivalents (including restricted cash):
Beginning of period 1,289 3,589
----------------- -----------------
End of period $ 1,457 $ 4,370
================= =================
The accompanying notes are an integral part of these consolidated statements.
CONCENTREX INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(TABULAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS
OR AS OTHERWISE INDICATED)
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The financial information included herein for the six months ended June
30, 2000 and 1999 is unaudited; however, such information reflects all
adjustments consisting only of normal recurring adjustments which are,
in the opinion of management, necessary for a fair presentation of the
financial position, results of operations and cash flows for the
interim periods. The interim consolidated financial statements should
be read in conjunction with the consolidated financial statements for
the year ended 12/31/99 and 12/31/98 of CFI ProServices, Inc., d/b/a
Concentrex Incorporated ("Concentrex" or the "Company"). and the notes
thereto included in this Form 8-K/A. The Company formally changed its
name to Concentrex Incorporated in May 2000. The results of operations
for the interim periods presented are not necessarily indicative of the
results to be expected for the full year. Certain prior period amounts
have been reclassified to conform to the current presentation.
NOTE 2. SUPPLEMENTAL CASH FLOW INFORMATION
Supplemental disclosure of cash flow information is as follows:
Six Months Ended June 30,
-----------------------------------------
2000 1999
----------------- --------------------
Cash paid during the period for income taxes $ 75 $ 1,647
Cash paid during the period for interest and dividends 4,453 171
Noncash investing and financing activities were as follows:
Six Months Ended June 30,
-----------------------------------------
2000 1999
----------------- --------------------
Tax benefit from exercise of nonqualified stock
options $ 3 $ --
Reclassification of long-term debt, less debt
discount, to current liabilities 58,182 --
Decrease in ULTRADATA acquisition goodwill related
to reduction in accrued liabilities 471 --
Increase in goodwill for accrued acquisition related
contingent royalties 494 227
Issuance of common stock in connection with the
acquisition of Modern Computer Systems, Inc. -- 650
Issuance of common stock in connection with the acquisition
of MECA Software, LLC -- 569
Assumption of debt in connection with the acquisition of MECA
Software, LLC -- 7,500
Fair value of common stock issued in connection with the
Company's ESSOP 1,204 --
NOTE 3. EARNINGS PER SHARE
Following is a reconciliation of basic earnings per share ("EPS") and diluted
EPS:
Six Months Ended June 30, 2000 1999
--------------------------------------- ---------- --------- ----------- ---------- -------- ----------
Per Per
Share Share
BASIC EPS Loss Shares Amount Loss Shares Amount
--------- ---------- --------- ----------- ---------- -------- ----------
Net loss applicable to common
shareholders $ (7,385) 5,325 $ (1.39) $ (180) 5,054 $(0.04)
=========== ==========
Effect of dilutive securities:
Stock options -- --
---------- --------- ---------- --------
DILUTED EPS
-----------
Net loss applicable to common
shareholders $(7,385) 5,325 $ (1.39) $ (180) 5,054 $ (0.04)
=========== ==========
The number of options and warrants to purchase shares of common stock and
the assumed conversion of convertible subordinated notes that were excluded
from the tables above (as the effect would have been anti-dilutive) were
2,557,411 and 1,103,079 for the six months ended June 30, 2000 and 1999,
respectively.
NOTE 4. CLASSIFICATION OF REVENUE
The Company has reorganized itself into two product groups: Software Products
and Services Group and e-Commerce Group. Prior period revenues have been
reclassified for all periods included herein to reflect the new product groups.
Total revenues did not change as a result of this reclassification.
NOTE 5. LOAN DEFAULT
As of June 30, 2000 the Company was not in compliance with certain financial
covenants under its loan agreements. Because waivers for noncompliance were not
received from the lenders, indebtedness of the Company under the loan agreements
has been classified as current in the accompanying balance sheet.
NOTE 6. ACQUISITIONS
Effective January 1, 1999 the Company acquired substantially all of the assets
of Modern Computer Systems, Inc. and certain related corporations (collectively,
MCS). MCS offers hardware and software solutions for the back office accounting
needs of community banks and credit unions. The acquisition was accounted for as
a purchase, resulting in approximately $7.0 million of goodwill, intangibles and
purchased software. The purchase price was $6.0 million in cash and $650,000 of
common stock. The operations of MCS have been included in the Company's results
of operations since January 1, 1999.
Effective May 17, 1999 the Company and Moneyscape Holdings, Inc. (a wholly owned
subsidiary of Concentrex) acquired 99% and 1%, respectively, of the equity in
MECA Software, L.L.C. ("MECA") in exchange for 50,000 shares of Concentrex
common stock. The acquisition was accounted for as a purchase. The net purchase
price approximated $12.3 million and consisted of the common stock issued,
assumption of net liabilities and accrued acquisition costs. The liabilities
assumed included $7.5 million of debt owed to certain former members of MECA and
was repaid by the Company from proceeds from bank borrowings. The purchase price
was allocated to the estimated fair value of the assets acquired, which included
the expensing of $3.8 million of in-process research and development and the
recognition of approximately a $9.9 million deferred tax asset. The excess of
the fair value of the assets acquired over cost (negative goodwill) was
allocated to reduce acquired non-current assets. The operations of MECA have
been included in the Company's results of operations since May 17, 1999.
Unaudited pro forma results of operations for the six month
period ended June 30, 1999, assuming the MECA acquisition occurred at the
beginning of 1999 and including the in process research and development
charge related to the MECA acquisition.
Six Months Ended
June 30, 1999
----------------
Total revenues $ 56,930
Net loss applicable to common shareholders (153)
Loss per share - Basic (0.03)
Loss per share - Diluted $ (0.03)
Effective August 13, 1999 Concentrex acquired all of the outstanding common
stock of ULTRADATA Corporation ("ULTRADATA"). ULTRADATA provides information
management software and solutions for relationship-oriented financial
institutions. The acquisition was accounted for as a purchase, resulting in
approximately $53.6 million of goodwill, intangibles and purchased software.
These amounts are being amortized over a period of 6 to 20 years. The purchase
price was $66.3 million, including acquisition-related expenses. The purchase
price was allocated to the estimated fair value of the assets acquired, which
included the expensing of $5.2 million of in-process research and development.
The Company is still obtaining certain data related to the acquisition, and,
accordingly, the purchase price allocation remains open. The operations of
ULTRADATA have been included in the Company's results of operations since August
13, 1999.
NOTE 7. SUBSEQUENT EVENT
On July 17, 2000 the Company and John H. Harland Company ("Harland") reached an
agreement for Harland to purchase all of the outstanding common stock of the
Company and assume all of its obligations. The transaction is in the form of a
tender offer. The tender offer price is $7.00 per share. The transaction
closed on August 23, 2000.
PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma condensed consolidated
financial statements for the periods ended June 30, 2000 and
December 31, 1999 have been prepared to present the effect of the
purchase completed on August 23, 2000 by John H. Harland Company
("Harland") of the outstanding common stock of Concentrex
Incorporated ("Concentrex"). The pro forma condensed consolidated
statements of operations assume that the purchase was at January 1,
1999. The pro forma condensed consolidated balance sheet has been
prepared to present the effect of the purchase by Harland of
Concentrex as if it had occurred on June 30, 2000.
Related to presenting this effect, the unaudited pro forma
consolidated financial statements also include adjustments related
to the purchase of 100% of the common stock of ULTRADATA Corporation
by Concentrex on August 13, 1999. Also, a portion of Harland's
purchase price of Concentrex has been allocated to the net
realizable value of certain assets of Concentrex's online banking
and electronic payments business which Harland has identified as
businesses held for sale. The pro forma consolidated financial
statements include adjustments which remove the operating results of
the businesses held for sale from the pro forma condensed
consolidated statements of operations and reclassify the assets as
held for sale on the pro forma condensed consolidated balance sheet.
The pro forma consolidated financial statements have been prepared
based on the historical consolidated financial statements of Harland
adjusted to reflect the purchase of Concentrex. In addition, certain
historical amounts have been reclassified to conform to the current
presentation. The pro forma consolidated financial statements may
not be indicative of the results of the operations that actually
would have occurred if the transactions had been in effect as of the
beginning of the respective periods nor do they purport to indicate
the results of the future operations of Harland. The pro forma
consolidated financial statements should be read in conjunction with
the audited and unaudited interim consolidated financial statements
and notes thereto of Harland and Concentrex.
JOHN H. HARLAND COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000
(In thousands)
ASSETS
Pro Forma
Harland Concentrex Adjustments Pro Forma
---------- ---------- ----------- -----------
CURRENT ASSETS:
Cash and cash equivalents $ 53,411 $ 139 $ (41,050)(b) $ 12,500
Restricted cash 1,318 1,318
Receivables, net of allowances 54,690 32,592 87,282
Inventory 21,185 550 21,735
Deferred tax asset 11,209 2,843 174 (a) 14,226
Prepaid expenses and
other current assets 8,995 6,122 15,117
---------- ---------- ----------- -----------
Total current assets 149,490 43,564 (40,876) 152,178
INVESTMENTS AND OTHER ASSETS:
Investments 21,803 21,803
Software development costs, net 4,279 11,117 2,157 (a) 17,553
In-process research and development 8,248 (a)
(8,248)(a)
Goodwill and other intangibles-net 59,331 56,753 21,791 (a) 137,875
Deferred tax asset 8,738 9,438 (1,863)(a) 16,313
Assets held for sale 1,188 18,000 (a) 19,188
Other assets 30,719 3,029 (2,581)(a) 31,167
---------- ---------- ----------- -----------
Total investments and other assets 126,058 80,337 37,504 243,899
Property and equipment, net 115,329 8,486 123,815
---------- ---------- ----------- -----------
Total assets $ 390,877 $ 132,387 $ (3,372) $ 519,892
========== ========== =========== ===========
See accompanying notes to unaudited pro forma condensed financial information.
JOHN H. HARLAND COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 2000
(In thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY
Pro Forma
Harland Concentrex Adjustments Pro Forma
---------- ---------- ----------- -----------
CURRENT LIABILITIES:
Accounts payable - trade $ 22,868 $ 6,231 $ $ 29,099
Deferred revenues and
and customer deposits 16,616 21,436 38,052
Bank line of credit 8,149 (8,149)(a)
Current portion of long-term debt 4 62,616 (62,616)(a) 4
Other 45,064 9,521 14,480 (a)(b) 69,065
---------- ---------- ----------- -----------
Total current liabilities 84,552 107,953 (56,285) 136,220
---------- ---------- ----------- -----------
LONG-TERM LIABILITIES:
Long-term debt, less current portion 106,441 194 84,783 (b) 191,418
Other long-term liabilities 17,872 998 (380)(a) 18,490
---------- ---------- ----------- -----------
Total long-term liabilities 124,313 1,192 84,403 209,908
---------- ---------- ----------- -----------
Commitments and contingencies
Convertible subordinated notes 5,957 (5,957)(a) --
Mandatory redeemable
class A preferred stock 722 (722)(a) --
SHAREHOLDERS' EQUITY:
Common stock and
additional paid-in capital 37,907 26,929 (26,929)(a) 37,907
Retained earnings (deficit) 344,099 (10,366) 10,366 (a) 335,851
(8,248)(a)
Accumulated other
comprehensive income 17,613 17,613
Unamortized restricted
stock awards (1,554) (1,554)
---------- ---------- ----------- -----------
398,065 16,563 (24,811) 389,817
Less shares held in treasury 216,053 216,053
---------- ---------- ----------- -----------
Shareholders' equity - net 182,012 16,563 (24,811) 173,764
---------- ---------- ----------- -----------
Total liabilities and
shareholders' equity $ 390,877 $ 132,387 $ (3,372) $ 519,892
========== ========== =========== ===========
See accompanying notes to unaudited pro forma condensed financial information.
JOHN H. HARLAND COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
(In thousands)
Pro Forma Adjustments
-------------------------------
Business Held
Harland Concentrex For Sale(c) Other Pro Forma
---------- ---------- ---------- ---------- ----------
NET SALES $ 348,393 $ 63,237 $ (9,769) $ $ 401,861
COSTS AND EXPENSES:
Cost of goods sold 211,922 25,766 (6,251) (314)(e) 231,123
Selling, general and
administrative expenses 92,042 21,774 (3,699) 110,117
Product development 16,596 (2,979) 13,617
Amortization of intangibles 3,085 2,004 2,290 (e) 7,379
---------- ---------- ---------- ---------- ----------
Total 307,049 66,140 (12,929) 1,976 362,236
---------- ---------- ---------- ---------- ----------
INCOME (LOSS) FROM OPERATIONS 41,344 (2,903) 3,160 (1,976) 39,625
---------- ---------- ---------- ---------- ----------
OTHER INCOME (EXPENSE):
Interest expense (3,518) (6,848) 1 2,539 (g) (7,826)
Other, net 1,347 318 2 (1,321)(h) 346
---------- ---------- ---------- ---------- ----------
Total (2,171) (6,530) 3 1,218 (7,480)
---------- ---------- ---------- ---------- ----------
INCOME BEFORE INCOME TAXES 39,173 (9,433) 3,163 (758) 32,145
INCOME TAXES 15,277 (2,094) 731 (i) 13,914
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) 23,896 (7,339) 3,163 (1,489) 18,231
Preferred Stock Dividend 46 (46)(j)
---------- ---------- ---------- ---------- ----------
NET INCOME (LOSS) APPLICABLE
TO COMMON SHAREHOLDERS $ 23,896 $ (7,385) $ 3,163 $ (1,443) $ 18,231
========== ========== ========== ========== ===========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 28,419 28,419
Diluted 28,871 28,871
EARNINGS PER COMMON SHARE
Basic $ 0.84 $ 0.64
Diluted $ 0.83 $ 0.64
See accompanying notes to unaudited pro forma condensed financial information.
JOHN H. HARLAND COMPANY
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
(In thousands)
Pro Forma Adjustments
-----------------------------------------
Business Held
Harland Concentrex ULTRADATA(d) For Sale(c) Other Pro Forma
---------- ---------- ---------- ---------- ----------- -----------
NET SALES $ 702,512 $ 107,081 $ 15,554 $ (16,064) $ $ 809,083
COSTS AND EXPENSES:
Cost of goods sold 438,223 42,625 6,557 (8,358) (458)(e) 478,589
Selling, general and
administrative expenses 185,072 37,392 9,618 (5,354) 226,728
Product development 24,505 2,588 (3,298) 23,795
Amortization of intangibles 6,035 2,539 6,048 (e) 14,622
Acquired in-process
research and development 10,208 8,248 (f) 18,456
---------- ---------- ---------- ---------- ----------- ---------
Total 629,330 117,269 18,763 (17,010) 13,838 762,190
---------- ---------- ---------- ---------- ----------- ---------
INCOME (LOSS) FROM OPERATIONS 73,182 (10,188) (3,209) 946 (13,838) 46,893
---------- ---------- ---------- ---------- ----------- ---------
OTHER INCOME (EXPENSE):
Interest expense (7,170) (4,975) (100) 4 (1,170)(g) (13,411)
Other, net 2,447 438 373 (24) (3,069)(h) 165
---------- ---------- ---------- ---------- ----------- ---------
Total (4,723) (4,537) 273 (20) (4,239) (13,246)
---------- ---------- ---------- ---------- ----------- ---------
INCOME BEFORE INCOME TAXES 68,459 (14,725) (2,936) 926 (18,077) 33,647
INCOME TAXES 25,775 (894) 22 (2,752)(i) 22,151
---------- ---------- ---------- ---------- ----------- ---------
NET INCOME (LOSS) 42,684 (13,831) (2,958) 926 (15,325) 11,496
Preferred Stock Dividend 93 (93)(j)
---------- ---------- ---------- ---------- ----------- ---------
NET INCOME (LOSS) APPLICABLE
TO COMMON SHAREHOLDERS $ 42,684 $ (13,924) $ (2,958) $ 926 $ (15,232) $ 11,496
========== ========== ========== ========== =========== ==========
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 30,638 30,638
Diluted 31,261 31,261
EARNINGS PER COMMON SHARE
Basic $ 1.39 $ 0.38
Diluted $ 1.37 $ 0.38
See accompanying notes to unaudited pro forma condensed financial information.
NOTES TO UNAUDITED PRO FORMA CONDENSED FINANCIAL INFORMATION
Balance Sheet
Effective August 23, 2000, Harland acquired substantially all the
outstanding common stock of Concentrex in a cash tender offer. The
footnotes (a) through (j) describe the nature of the transaction and
are for informational purposes only. They reflect the adjustments that
would have been recorded on the balance sheet at June 30, 2000 had the
acquisition occurred on that date.
a) To reflect the acquisition by the purchase of the outstanding
stock of Concentrex and the preliminary allocation of the purchase
price on the basis of the estimated fair values of the net assets
acquired assuming a June 30, 2000 purchase date. The components of the
purchase price and its preliminary allocation to the assets and
liabilities are as follows:
Cash paid for Concentrex common stock $ 39,266
Cash paid to retire Concentrex debt 83,878
Cash paid for Concentrex options 900
Cash paid for Concentrex preferred stock 1,788
Other costs of acquisition 20,932
----------
Total investment $ 146,764
==========
Allocation of the investment:
Current assets $ 43,738
Assets held for disposal 18,000
Noncurrent deferred income taxes 7,575
Developed computer software technology 13,274
Property, plant and equipment 8,486
Purchased in-process computer software technology 8,248
Other assets 448
Current liabilities (30,737)
Long-term liabilities (812)
Goodwill and other intangibles-net 78,544
----------
Total investment $ 146,764
==========
b) To reflect the financing of the acquisition of Concentrex
assuming a June 30, 2000 purchase date including accrued acquisition
costs.
Statements of Operations
c) To remove the operating results of certain online banking and
electronic payments businesses of Concentrex which were identified at
acquisition by Harland as business held for sale. These adjustments
include the results of operations of MECA Software LLP ("MECA") from
the date Concentrex acquired MECA (May 17, 1999) through the end of the
period. The adjustments also include the results of operations of
certain other related Concentrex businesses included in the Harland
identification as held for sale.
d) To reflect the operations of Ultradata Corporation ("Ultradata")
for the periods January 1, 1999 to August 13, 1999 at which date
Ultradata was acquired by Concentrex.
e) To adjust the amortization of capitalized developed computer
software, goodwill and other intangibles to reflect the appropriate
amounts related to the acquisition of Concentrex.
f) To expense the cost of purchased in-process research and
development in accordance with generally accepted accounting
principles.
g) To adjust interest expense to reflect projected debt levels which
would have been required during the periods and a weighted average
interest rate available to Harland during those periods.
h) To reduce interest income recognized by Harland during the period
to give effect to the available cash would have been used in lieu of
borrowings. Also includes adjustments to increase the amortization of
deferred debt costs associated with the assumed financing activities.
i) To adjust the provision (benefit) for income taxes for the
anticipated tax effect of the pro forma adjustments (excluding non-
deductible adjustments). The principle difference in the effective tax
rate for the consolidated pro forma statements of income relates to
non-deductible acquired in-process research and development and non-
deductible goodwill and other intangibles amortization.
j) To remove the historical preferred stock dividend amount paid out
by Concentrex