- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------
AMENDMENT NO. 1 to
FORM 8-K/A
--------------------
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 27, 1999
--------------
CFI ProServices, Inc. d/b/a Concentrex Incorporated
(Exact name of registrant as specified in its charter)
Oregon 0-21980 93-0704365
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
400 S.W. Sixth Avenue, Portland, Oregon 97204
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (503) 274-7280
CFI ProServices, Inc.
(Former name or former address, if changed since last report)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The following is a list of unaudited financial statements for ULTRADATA
Corporation filed herewith:
Unaudited Balance Sheet as of June 30, 1999....................... FS-1
Unaudited Statement of Operations for the Six Months Ended
June 30, 1999 and 1998................................... FS-2
Unaudited Statement of Cash Flows for the Six Months Ended
June 30, 1999 and 1998................................... FS-3
Notes to Unaudited Financial Statements........................... FS-4
(b) Pro Forma Financial Information.
The following is a list of pro forma financial information pertaining
to CFI ProServices, Inc., d/b/a/ Concentrex Incorporated, MECA
Software, L.L.C., and ULTRADATA Corporation filed herewith:
Notes to Pro Forma Unaudited Financial Statements......... ....... PF-1
Pro Forma Unaudited Balance Sheet as of June 30, 1999............. PF-2
Pro Forma Unaudited Statement of Operations for the
Six Months Ended June 30, 1999........................... PF-3
Pro Forma Unaudited Statement of Operations for the
Year Ended December 31, 1998............................. PF-4
Pro Forma Adjustment Reconciliation's..............................PF-5
(c) Exhibits.
Exhibit No. Description
10.1 ULTRADATA Corporation Audited Financial
Statements for the years ended December 31,
1998, 1997, and 1996.
23.1 Consent of KPMG LLP
23.2 Consent of Deloitte & Touche 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.
CFI PROSERVICES, INC.
d/b/a CONCENTREX INCORPORATED
Date: October 27, 1999 By: /s/ Kurt W. Ruttum
----------------------------------------------
Kurt W. Ruttum, Vice President and
Chief Financial Officer
ULTRADATA CORPORATION
BALANCE SHEET
(Unaudited)
(In thousands)
June 30,
1999
---------------
ASSETS
Current assets:
Cash and cash equivalents $ 2,716
Restricted cash 700
Trade accounts receivable, net 3,905
Inventory 491
Prepaid expenses and other current assets 667
---------------
Total current assets 8,479
Property and equipment, net 3,001
---------------
Total assets $ 11,480
===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Bank borrowings and current portion of long-term obligations $ 290
Accounts payables 794
Accured expenses 1,594
Deferred revenue and customer advances - current portion 880
---------------
Total current liabilities 3,558
Deferred revenue and customer advances 477
Long-term obligations 252
---------------
Total liabilities 4,287
---------------
Stockholders' equity:
Common stock 8
Additional paid in capital 15,709
Accumulated deficit (8,524)
---------------
Total stockholders' equity 7,193
---------------
Total liabilities and stockholders' equity $ 11,480
===============
The accompanying notes are an integral part of this balance sheet.
FS-1
ULTRADATA CORPORATION
STATEMENT OF OPERATIONS
(Unaudited)
(In thousands)
Six Months Ended Six Months Ended
June 30, 1999 June 30, 1998
--------------- ---------------------
Revenues:
Software $ 4,186 $ 5,406
Services and other 9,456 7,650
--------------- ---------------------
13,642 13,056
Hardware 244 1,756
--------------- ---------------------
Total revenues 13,886 14,812
--------------- ---------------------
Cost of revenues:
Software 948 490
Services and other 4,460 5,471
Hardware 310 1,441
--------------- ---------------------
Total cost of revenues 5,718 7,402
--------------- ---------------------
Gross margin 8,168 7,410
--------------- ---------------------
Operating expenses:
Product development 1,996 2,402
Selling, general and administrative 6,991 4,759
--------------- ---------------------
Total operating expenses 8,987 7,161
--------------- ---------------------
Operating income (loss) (819) 249
Interest Expense, net (59) (50)
Other income 47 54
=============== =====================
Net (loss) income $ (831) $ 253
=============== =====================
Earnings (loss) per share information:
Basic net income (loss) per share $ (0.11) $ 0.03
Diluted net income (loss) per share $ (0.11) $ 0.03
Shares used to compute basic net income (loss)
per share 7,745 7,657
Shares used to compute diluted net income (loss)
per share 7,745 7,885
The accompanying notes are an integral part of these statements.
FS-2
ULTRADATA
STATEMENT OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended Six Months Ended
June 30, 1999 June 30, 1998
---------------- -----------------
Cash flows from operating activities:
Net (loss) income $ (831) $ 253
Adjustments to reconcile net (loss) income to net cash provided by operating
activities:
Depreciation and amortization 647 928
Write off related to renegotiation of agreement 149 -
Changes in operating assets and liabilities:
Trade accounts receivable, net 2,618 (1,169)
Inventory 664 (1,404)
Prepaid expenses and other current assets (284) 70
Income taxes receivable - 25
Accounts payable (333) 390
Accrued expenses (52) 293
Deferred revenue and customer advances (804) (67)
LT Obligations - 1,268
---------------- -----------------
Net cash provided by operating activities 1,774 587
---------------- -----------------
Cash flows from investing activities:
Capital expenditures (336) (368)
Sale of short-term investments - 303
---------------- -----------------
Net cash used for investing activities (336) (65)
---------------- -----------------
Cash flows from financing activities:
Restricted cash (379) 103
Repayment of debt (955) (133)
Net proceeds from issuance of common stock 194 200
---------------- -----------------
Net cash provided by (used for) financing activities (1,140) 170
---------------- -----------------
Net increase in cash and equivalents 298 692
Cash and equivalents at beginning of period 2,418 486
---------------- -----------------
Cash and equivalents at end of period $ 2,716 $ 1,178
================ =================
The accompanying notes are an integral part of these statements.
FS-3
ULTRADATA CORPORATION
Notes to Unaudited Financial Statements
(In Thousands)
1. Unaudited Interim Financial Data
The interim financial data as of June 30, 1999 and for the six months ended June
30, 1999 and June 30, 1998 is unaudited; however, in the opinion of the Company,
the interim data includes all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of results for the interim periods.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been omitted from the unaudited financial statements. The results of
operations for the six-month period ended June 30, 1999 are not necessarily
indicative of the operating results for the full year or for future periods. For
further information, refer to the financial statements and footnotes thereto for
the year ended December 31, 1998 included as an exhibit to this Form 8-K/A.
2. Short-term Obligations
In 1997, the Company entered into an agreement ("License Agreement") to
distribute certain products developed by a third party. In the first quarter of
1999, the Company renegotiated this agreement which effectively reduced the
number of licenses purchased (which had been recorded as inventory), long-term
debt obligations and the related maintenance commitments. Under the revised
License Agreement, payments totaling $1,200 are due through April 2001 and
include payments of $400 for maintenance. This revision resulted in a charge of
$149 during the six months ended June 30, 1999, which is included in software
costs of revenues in the accompanying income statement.
3. Computation of Earnings (Loss) Per Share
In accordance with Statement of Financial Accounting Standards No. 128, Earnings
Per Share ("SFAS No. 128"), basic earnings per share is computed using the
weighted average number of common shares outstanding during the period. Diluted
earnings per share is computed using the weighted average number of common and
dilutive common equivalent shares outstanding during the period, using the
treasury stock method for options. The following is a reconciliation of the
denominator in the computation of diluted earnings per share (the numerator
equals the net income (loss)):
Six Months Ended Six Months Ended
June 30, 1999 June 20, 1998
----------------- -----------------
Weighted average outstanding shares 7,745 7,657
Common stock equivalents - 228
----------------- -----------------
Shares used to compute diluted net income (loss) per
share 7,745 7,885
================== =================
Antidilutive common stock equivalents excluded
2,163 897
================== =================
4. Subsequent Event
On August 13, 1999, CFI ProServices, Inc., d/b/a Concentrex Incorporated,
purchased all of the Company's common stock and certain outstanding vested
options for approximately $63.3 million in cash, including previously acquired
common stock. The acquisition was accounted for as a purchase.
FS-4
CONCENTREX INCORPORATED
NOTES TO PRO FORMA UNAUDITED FINANCIAL STATEMENTS
(In Thousands)
The accompanying unaudited pro forma financial statements for the periods ended
June 30, 1999 and December 31, 1998 have been prepared to present the effect of
the purchase by CFI ProServices, Inc., d/b/a Concentrex Incorporated
("Concentrex") and Moneyscape Holdings, Inc. of 99% and 1%, respectively, of all
the Members' equity in MECA Software, L.L.C. ("MECA") on May 17, 1999 and 100%
of the common stock of ULTRADATA Corporation ("ULTRADATA") on August 13, 1999.
The pro forma statements assume that both purchases were effective at the
beginning of 1998 for the Pro Forma Statements of Operations. The June 30, 1999
Pro Forma Balance Sheet has been prepared to present the effect of the purchase
by Concentrex of ULTRADATA. Concentrex's June 30, 1999 historical balance sheet
reflects the purchase of MECA.
The pro forma financial statements have been prepared based on the historical
financial statements of Concentrex adjusted to reflect the purchase of MECA and
ULTRADATA. In addition, certain historical amounts of MECA and ULTRADATA have
been reclassified to conform to Concentrex's presentation. The pro forma
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 Concentrex. The pro forma financial statements
should be read in conjunction with the audited financial statements and notes
thereto of MECA and ULTRADATA.
PF-1
CONCENTREX INCORPORATED
PRO FORMA UNAUDITED BALANCE SHEET
AS OF JUNE 30, 1999
(In thousands)
Pro forma
Concentrex UltraData Adjustments Pro Forma
ASSETS ---------- --------- ----------- ---------
Current Assets:
Cash and cash equivalents $ 4,370 $ 2,716 $ (7,086) (c) $ -
Restricted cash - 700 - 700
Investments 206 - - 206
Receivables, net of allowances 31,225 3,905 - 35,130
Inventory 264 491 - 755
Deferred tax asset 1,918 - - 1,918
Prepaid expeses and other current assets 3,799 667 - 4,466
---------- --------- ----------- ----------
Total Current Assets 41,782 8,479 (7,086) 43,175
Property and equipment, net 4,642 3,001 - 7,643
Software development costs, net 6,713 - - 6,713
Purchased software costs, net 2,291 - 6,100 (a) 8,391
Goodwill, net 10,153 - 47,811 (a) 57,964
Deferred tax asset 9,666 - - 9,666
Other assets 3,095 - 2,411 (b) 5,506
---------- --------- ----------- ----------
Total Assets $ 78,342 $ 11,480 $ 49,236 $ 139,058
========== ========= =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 2,744 $ 794 $ - $ 3,538
Accrued expenses 12,959 1,594 1,344 (a) 15,897
Deferred revenues 8,725 658 - 9,383
Customer deposits 4,284 222 - 4,506
Bank line of credit - - 1,700 (c) 1,700
Note Payable - 290 - 290
Current portion of long-term debt 448 - 2,000 (c) 2,448
---------- --------- ----------- ----------
Total Current Liabilities 29,160 3,558 5,044 37,762
Long-term debt, less current portion 16,707 252 47,710 (c) 64,669
Other long-term liabilities 312 477 - 789
Convertible Subordinated Notes - - 5,550 (d) 5,550
Mandatory Redeemable Class A Preferred Stock 733 - - 733
Stockholders' Equity:
Common stock and add'l paid-in capital 20,667 15,717 (12,392) (e) 23,992
Retained earnings(Accumulated deficit) 10,763 (8,524) 3,324 (f) 5,563
---------- --------- ----------- ----------
Total Stockholders' Equity 31,430 7,193 (9,068) 29,555
---------- --------- ----------- ----------
Total Liabilities and Stockholders'
Equity $ 78,342 $ 11,480 $ 49,236 $ 139,058
========== ========= =========== ==========
The accompanying notes are an itegral part of this pro forma balance sheet.
PF-2
CONCENTREX INCORPORATED
PRO FORMA UNAUDITED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
(In thousands, except per share data)
MECA Pro forma
Concentrex LLC Ultra Data Adjustments Pro Forma
------------ ------------- ------------ ------------ ------------
Revenue
Software license fees $ 24,927 $ 5,241 $ 6,819 $ - $ 36,987
Service and support 18,849 3,065 6,225 - 28,139
Other 4,106 743 536 5,385
------------ ------------- ------------ ------------ ------------
Total Revenue 47,882 9,049 13,580 - 70,511
Cost of Revenue 18,006 4,076 5,290 379 (a) (b) 27,751
------------ ------------- ------------ ------------ ------------
Gross Profit 29,876 4,973 8,290 (379) 42,760
Operating Expenses
Sales and marketing 8,546 631 2,214 (2) (a) 11,389
Product development 10,267 1,918 2,159 (21) (a) 14,323
General and administrative 6,742 2,427 4,899 (77) (a) 13,991
Amortization of goodwill 816 - - 1,265 (c) 2,081
Aquired in-process research and development 3,800 - - - 3,800
------------ ------------- ------------ ------------ ------------
Total Operating Expenses 30,171 4,976 9,272 1,165 45,584
------------ ------------- ------------ ------------ ------------
Loss from Operations (295) (3) (982) (1,544) (2,824)
Non-operating Income (Expense)
Interest expense (315) (217) (83) (5,358) (d) (5,973)
Interest income 144 48 24 - 216
Other, net 27 - 210 - 237
------------ ------------- ------------ ------------ ------------
Total Non-operating Income (Expense) (144) (169) 151 (5,358) (5,520)
------------ ------------- ------------ ------------ ------------
Loss before Income Taxes (439) (172) (831) (6,902) (8,344)
Provision (Benefit) for Income Taxes (305) - - (422) (e) (727)
------------ ------------- ------------ ------------ ------------
Net loss (134) (172) (831) (6,480) (7,617)
Preferred Stock Dividend 46 - - - 46
------------ ------------- ------------ ------------ ------------
Net loss Applicable to Common Shareholders $ (180) $ (172) $ (831) $ (6,480) $ (7,663)
============ ============= ============ ============ ============
Basic Net Loss Per Share $ (0.04) $ (1.50)
============ ============
Shares Used in Calculating Basic Net Loss
Per Share 5,054 5,104 (f)
============ ============
Diluted Net Loss Per Share $ (0.04) $ (1.50)
============ ============
Shares Used in Calculating Diluted Net Loss
Per Share 5,054 5,104 (f)
============ ============
The accompanying notes are an integral part of this pro forma statement.
PF-3
CONCENTREX INCORPORATED
PRO FORMA UNAUDITED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(In thousands, except per share data)
MECA Pro forma
Concentrex LLC Ultra Data Adjustments Pro Forma
------------- ----------- ------------ ----------- ------------
Revenue
Software license fees $ 49,202 $ 11,807 $ 14,551 $ - $ 75,560
Service and support 30,352 8,876 11,895 - 51,123
Other 6,076 2,965 3,913 - 12,954
------------- ----------- ------------ ----------- ------------
Total Revenue 85,630 23,648 30,359 - 139,637
Cost of Revenue 29,423 10,648 12,725 422 (a)(b) 53,218
------------- ----------- ------------ ----------- ------------
Gross Profit 56,207 13,000 17,634 (422) 86,419
Operating Expenses
Sales and marketing 19,204 513 4,853 (3) (a) 24,567
Product development 14,913 9,257 6,024 (56) (a) 30,138
General and administrative 10,012 10,803 5,908 (823) (a) 25,900
Amortization of goodwill 1,228 17,333 - (14,802) (c) 3,759
Acquired in-process research and development and
other charges 2,661 - - - 2,661
------------- ----------- ------------ ----------- ------------
Total Operating Expenses 48,018 37,906 16,785 (15,684) 87,025
------------- ----------- ------------ ----------- ------------
Income (loss) from Operations 8,189 (24,906) 849 15,262 (606)
-
Non-operating Income (Expense) -
Interest expense (454) (613) (312) (10,714) (d) (12,093)
Interest income 295 131 40 - 466
Equity in losses attributable to joint venture (670) - - - (670)
Other, net 83 - 664 - 747
------------- ----------- ------------ ----------- ------------
Total Non-operating Income (Expense) (746) (482) 392 (10,714) (11,550)
------------- ----------- ------------ ----------- ------------
Income (loss) before Income Taxes 7,443 (25,388) 1,241 4,548 (12,156)
Provision (Benefit) for Income Taxes 3,483 - 22 (5,787) (e) (2,282)
------------- ----------- ------------ ----------- ------------
Net Income (Loss) 3,960 (25,388) 1,219 10,335 (9,874)
Preferred Stock Dividend 95 - - - 95
------------- ----------- ------------ ----------- ------------
Net Income (Loss) Applicable to Common Shareholders $ 3,865 $ (25,388) $ 1,219 $ 10,335 $ (9,969)
============= =========== ============ =========== ============
Basic Net Income (Loss) Per Share $ 0.77 $ (1.97)
============= ============
Shares Used in Calculating Basic Net Income (Loss)
Per Share 5,012 5,062 (f)
============= ============
Diluted Net Income (Loss) Per Share $ 0.75 $ (1.97)
============= ============
Shares Used in Calculating Diluted Net
Income (Loss) Per Share 5,167 5,062 (f)
============= ============
The accompanying notes are an integral part of this pro forma statement.
PF-4
1. Balance Sheet
Effective August 13, 1999 Concentrex acquired 100% of ULTRADATA Corporation's
common stock in a purchase transaction. The following amounts in footnotes (a)
through (f) 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, 1999 had the purchase occurred on that date.
a. Purchase Price
Cash paid for ULTRADATA common stock $ 55,532
Cash paid for ULTRADATA options 5,111
Fair value of ULTRADATA options converted to Concentrex options 1,658
Fair value of previously owned ULTRADATA common stock 2,659
Accrued acquisition costs 1,344
Fair value of net assets acquired (7,193)
Appraised value of ULTRADATA in-process research and development acquired (5,200)
Appraised value of ULTRADATA existing product technology (6,100)
-----------
Goodwill resulting from purchase $ 47,811
===========
b. Other assets as of June 30, 1999 were adjusted as follows:
To record deferred loan costs related to ULTRADATA acquisition $ 5,070
To reclassify investment in ULTRADATA common stock recorded in June 30, 1999 historical
balance sheet (2,659)
-----------
$ 2,411
===========
c. To record change in debt other than subordinated notes as of June 30, 1999:
Long term debt:
To record new term loans for purchase of ULTRADATA $ 65,000
To record fair value of lenders warrants issued in connection with debt (1,447)
Cash on hand used to repay existing long term debt (7,086)
Cash used from new debt to repay existing long term debt (6,757)
-----------
Net change in long term debt $ 49,710
===========
Recorded as current $ 2,000
===========
Recorded as long term $ 47,710
===========
To record draw down on line of credit for purchase of ULTRADATA $ 1,700
===========
PF-5
d. Convertible subordinated notes as of June 30, 1999 was adjusted as follows:
To record convertible subordinated notes related to purchase of ULTRADATA, net
of debt discount $ (5,550)
============
e. Common Stock and additional paid in capital as of June 30, 1999 was adjusted as follows:
To record fair value of warrants issued in connection with the financing
of the ULTRADATA acquisition $ 1,667
To record fair value of the conversion of ULTRADATA options to Concetrex options 1,658
Elimination of ULTRADATA additional paid in capital (15,717)
------------
$ (12,392)
============
f. Retained earnings as of June 30, 1999 was adjusted as follows:
Elimination of Ultradata accumulated deficit $ 8,524
To record ULTRADATA acquired in process research and development write off (5,200)
------------
$ 3,324
============
PF-6
2. Statements of Operations
The Pro Forma Unaudited Statements of Operations are presented without the
impact of the $5.2 million write-off of in-process research and development
related to the purchase of ULTRADATA Corporation, as the write-off would not
have an effect on normal operations. The pro forma adjustments to the Pro Forma
Unaudited Statements of Operations for the six months ended June 30, 1999 and
the year ended December 31, 1998 consist of the following:
a. Depreciation expense and loss on disposal of fixed assets was reduced
in the amounts shown below as a result of the reduction in the carrying
value of MECA's fixed assets acquired:
Six months ended Year ended
June 30, 1999 December 31, 1998
--------------- --------------------
Depreciation Expense $ (204) $ (989)
Loss on disposal of fixed assets (25) (488)
--------------- --------------------
$ (229) $ (1,477)
=============== ====================
Classification on Statement of Operations:
Cost of Revenue $ (129) $ (595)
Sales and Marketing (2) (3)
Product Development (21) (56)
General and Administrative (77) (823)
--------------- --------------------
$ (229) $ (1,477)
=============== ====================
b. Cost of Revenue was adjusted as follows:
Six months ended Year ended
June 30, 1999 December 31, 1998
--------------- --------------------
To record purchased software amortization related to ULTRADATA $ 508 $ 1,017
=============== ====================
c. Amortization of goodwill was adjusted as follows:
Six months ended Year ended
June 30, 1999 December 31, 1998
--------------- --------------------
To record goodwill amortization related to ULTRADATA $ 1,265 $ 2,531
To record reversal of a write off of existing goodwill by MECA during 1998 - (17,333)
--------------- --------------------
$ 1,265 $ (14,802)
=============== ====================
PF-7
d. Interest expense was adjusted as follows:
Six months ended Year ended
June 30, 1999 December 31, 1998
--------------- --------------------
To record interest expense related to term loans at 10% to 13% $ 3,700 $ 7,400
To record interest expense related to the revolving credit facility 77 153
To record interest accreted on convertible subordinated notes at 10% 278 555
To record amortization of deferred loan costs and debt discount 1,303 2,606
--------------- --------------------
$ 5,358 $ 10,714
=============== ====================
e. The pro forma adjustments to provision (benefit) for income taxes were
made to bring the total tax benefit to the amount that would have been
recorded based on an effective rate for the year calculated using the
combined pro forma loss.
f. Shares used in the calculation of pro forma net income (loss) per share
have been adjusted to reflect the 50,000 shares of common stock issued
in the purchase of MECA.
PF-8