UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) May 11, 2001
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SCC Communications Corp.
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(Exact name of Registrant as specified in charter)
Delaware
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(State or other jurisdiction of incorporation)
000-29678 84-0796285
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(Commission File Number) (IRS Employee Identification No.)
6285 Lookout Road
Boulder, Colorado 80301
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 303-581-5600
Not Applicable
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(Former name or former address, if changed since last report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 11, 2001, SCC Communications Corp. ("SCC") acquired certain assets,
and assumed certain liabilities, associated with the Call Handling and
Database Product Lines of Lucent Public Safety Systems ("LPSS"), an internal
venture of Lucent Technologies, Inc. ("Lucent"). SCC issued 2.25 million
shares of common stock valued at approximately $21.5 million and incurred
other direct costs and assumed other liabilities resulting in a total
estimated purchase price of approximately $29.1 million (as described in more
detail in the Notes to Unaudited Pro Forma Combined Financial Statements).
This consideration was determined through arm's length negotiation. There was
no material relationship between SCC and Lucent prior to the acquisition.
The purchase price includes SCC's commitment to acquire approximately $4.8
million of Sequent computers not later than one year from the date of the
acquisition. The equipment is included in inventory in the LPSS Financial
Statements.
In addition to the initial issuance of 2,250,000 shares of common stock, SCC
agreed to issue, on July 1, 2003 (or within 2 business days after the number
of shares to be issued is determined), up to $32.92 million of redeemable,
non-voting, preferred stock ("Preferred Stock") to Lucent, subject to the
attainment of specific total combined revenue ("Total Revenue") targets.
The actual amount of the Preferred Stock is subject to a 24-month contingency
period, which commences on June 1, 2001, whereby if Total Revenue meets or
exceeds $258 million, then Lucent is entitled to the full issuance of $32.92
million in Preferred Stock. If Total Revenue is greater than $179 million,
but less than $258 million, Lucent will be entitled to a pro rata issuance of
Preferred Stock at a rate of $0.417 for each dollar of Total Revenue in
excess of $179 million. If SCC sells the "Call Handling" product line to a
third-party during the contingency period, then the minimum issuance
threshold is reduced from $179 million to $161 million; the maximum issuance
threshold is reduced to $210 million; and the pro rata issuance of Preferred
Stock is raised from $0.417 for each dollar of Total Revenue in excess of
$179 million to $0.67 for each dollar of Total Revenue in excess of $161
million.
The redemption of the then issued Preferred Stock, if any, commences 30 days
from initial issuance with 33% due, followed by an additional 33% due on June
1, 2004, and the remaining 34% due June 1, 2005. Early redemption is
available at the option of SCC and SCC must redeem shares of Preferred Stock
with 25% of the gross proceeds of any underwritten public offering by SCC,
subsequent to issuance of the Preferred Stock.
LPSS provides 9-1-1 supporting hardware and software technology, including
its Palladium(TM) call center and data-management products. A number of
telecommunications companies manage their 9-1-1 infrastructure with LPSS's
hardware and software systems. In addition, LPSS products are used by public
safety call centers across the nation to receive and respond to wireline and
wireless E9-1-1 calls. As with other companies that sell hardware and
software licenses and systems, revenues of LPSS are variable - a combination
of monthly recurring revenues and one-time sales of very large systems. SCC
intends to utilize the assets acquired from LPSS in the same manner that LPSS
utilized the assets.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
The following financial statements of LPSS are included in
this report:
(i) Audited Statements of Net Assets (Liabilities) to be
Sold (Assumed) as of December 31, 2000 and 1999.
(ii) Audited Statements of Net Sales, Cost of Sales, and
Direct Operating Expenses for the years ended
December 31, 2000, 1999 and 1998
(iii) Notes to the Audited Financial Statements.
(b) Pro Forma Financial Information
The following unaudited pro forma financial information is
included in this report:
(i) Unaudited Pro Forma Combined Balance Sheet as of
December 31, 2000.
(ii) Unaudited Pro Forma Combined Statement of Operations
for the year ended December 31, 2000.
(iii) Notes to the unaudited Pro Forma Combined Financial
Information.
(c) Exhibits.
Exhibit
Number
Description
--------- -----------------------------------------------------
2.1 Amended and Restated Agreement for the Purchase and
Sale of Assets by and between SCC Communications Corp
and Lucent Technologies, Inc., dated as of May 11,
2001
4.1 Registration Rights Agreement
4.2 Certificate of Designation of the Preferred Stock of
SCC Communications Corp. to be Designated Series A
Preferred Stock
23.1 Consent of PricewaterhouseCoopers LLP
ITEM 7 (a). FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareowners of Lucent Technologies Inc.
We have audited the accompanying statements of net assets (liabilities) to be
sold (assumed) of the Call Handling and Database Product Lines ("Business to
be Acquired") of Lucent Technologies Inc. ("Lucent") as of December 31, 2000
and 1999, and the related statements of net sales, cost of sales and direct
operating expenses for each of the three years in the period ended December
31, 2000. These financial statements are the responsibility of Lucent's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. 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.
As more fully described in Note 1, the accompanying financial statements were
prepared to present the net assets (liabilities) to be sold (assumed) of the
Business to be Acquired, pursuant to a potential transaction, and the net
sales, cost of sales and direct operating expenses of the Business to be
Acquired and are not intended to be a complete presentation of the Business
to be Acquired's financial position and results of operations. These
financial statements have been derived from the accounting records of Lucent
and reflect significant assumptions and allocations. Moreover, the Business
to be Acquired relies on Lucent for administrative, management and other
services. The net assets (liabilities) to be sold (assumed) and net sales,
cost of sales and direct operating expenses of the Business to be Acquired
could differ from those that would have resulted had it operated autonomously
or as an entity independent of Lucent.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets (liabilities) to be sold (assumed) of
the Business to be Acquired as of December 31, 2000 and 1999, and its net
sales, cost of sales and direct operating expenses for each of the three
years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States of America.
/s/ PricewaterhouseCoopers LLP
May 11, 2001
Chicago, Illinois
LUCENT TECHNOLOGIES INC.
CALL HANDLING AND DATABASE PRODUCT LINES
STATEMENTS OF NET ASSETS (LIABILITIES) TO BE SOLD (ASSUMED)
DECEMBER 31, 2000 AND 1999
(DOLLARS IN THOUSANDS)
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DECEMBER 31,
2000 1999
ASSETS:
Current assets:
Inventories............................................................. $ 4,790 $ 4,833
Prepaid maintenance expenses........................................... 1,141 1,082
Deferred costs.......................................................... 452 4,932
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Total current assets to be sold................................. 6,383 10,847
Property and equipment, net............................................. 1,131 1,180
Other assets............................................................ 46 80
------- ---------
Total assets to be sold......................................... $ 7,560 $ 12,107
======= =========
LIABILITIES:
Current liabilities:
Deferred revenue........................................................ $ 4,374 $ 17,730
------- ---------
Total liabilities to be assumed................................. 4,374 17,730
------- ---------
Commitments and contingencies (Note 6) -- --
------- ---------
Net assets (liabilities) to be sold (assumed)................... $ 3,186 $ (5,623)
======= =========
The accompanying notes are an integral part of these financial statements.
LUCENT TECHNOLOGIES INC.
CALL HANDLING AND DATABASE PRODUCT LINES
STATEMENTS OF NET SALES, COST OF SALES, AND DIRECT OPERATING EXPENSES
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
(DOLLARS IN THOUSANDS)
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YEAR ENDED DECEMBER 31,
2000 1999 1998
------------ ------------ --------
Net sales........................................................ $ 24,821 $ 38,198 $ 16,662
Net sales - related party........................................ 7 177 55
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Total net sales............................................. 24,828 38,375 16,717
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Cost of sales.................................................... 14,994 24,884 8,218
Cost of sales - related party.................................... 1 83 38
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Total cost of sales......................................... 14,995 24,967 8,256
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Gross profit..................................................... 9,833 13,408 8,461
Direct operating expenses:
Research and development.................................... 6,683 3,815 3,903
Selling, general and administrative......................... 6,835 8,645 2,855
----------- ----------- -----------
Total direct operating expenses...................... 13,518 12,460 6,758
----------- ----------- -----------
Excess (deficit) of net sales over cost of sales and direct
operating expenses............................................. $ (3,685) $ 948 $ 1,703
=========== =========== ===========
LUCENT TECHNOLOGIES INC.
CALL HANDLING AND DATABASE PRODUCT LINES
NOTES TO FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
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1. BACKGROUND, NATURE OF BUSINESS AND BASIS OF PRESENTATION
The accompanying financial statements have been prepared pursuant to a
potential transaction for the purpose of presenting the net assets to be
sold and the net sales, cost of sales and direct operating expenses of
the Call Handling and Database Product Lines ("Business to be Acquired"),
of Lucent Public Safety Systems ("LPSS"), which is a part of Lucent
Technologies Inc.'s ("Lucent") New Venture Group ("NVG").
LPSS, headquartered in Lisle, Illinois, designs, builds and delivers a
wide range of public safety communication systems and software, including
public safety answering point systems, computer-aided dispatch and
records management systems and telephone company 911 database systems.
The potential transaction contemplates the sale of certain assets and
liabilities associated with two of the three product lines of LPSS: Call
Handling and Database. The third product line, Computer-Aided Dispatch,
will be retained by NVG and, therefore, its net assets, net sales, cost
of sales and direct operating expenses have not been presented in these
financial statements.
Lucent did not maintain the Business to be Acquired as a separate
business unit and external financial statements historically have not
been prepared. Therefore, the accompanying financial statements are
derived from the historical accounting records of LPSS in order to
present the net assets to be sold as of December 31, 2000 and 1999, and
the statement of net sales, cost of sales and direct operating expenses
for each of the three years in the period ended December 31, 2000 in
accordance with generally accepted accounting principles.
The statements of net sales, cost of sales and direct operating expenses
include the revenues and expenses directly attributable to the Business
to be Acquired. A portion of the Business to be Acquired's sales are
derived through the Lucent sales force. Cost of sales includes material
cost and allocated labor and overhead. Labor and overhead have been
allocated based upon the number of full-time equivalent employees
estimated to be dedicated to supporting sales activities. Direct
operating expenses consist principally of research and development,
marketing and selling expenses and general and administrative expenses.
These direct operating expenses have been allocated to the Business to be
Acquired based upon the number of full-time equivalent employees
estimated by management to be dedicated to the Business to be Acquired as
a component of the total LPSS employees.
Lucent and NVG provide LPSS with various infrastructure and support
services, which among other things include computer and network systems,
human resources, payroll services, accounting and cash management
services and legal support. These direct operating expenses have been
allocated to the Business to be Acquired based upon the number of
full-time equivalent employees estimated to be dedicated to the Business
to be Acquired as a component of the total LPSS employees.
The statements do not include certain Lucent corporate costs such as
interest, income taxes, amortization of intangible assets or other such
indirect Lucent corporate expense allocations. Since the Business to be
Acquired was not a separate business unit, Lucent had never segregated
indirect operating cost information relative to the Business to be
Acquired for external financial reporting purposes. Accordingly, it is
not practical to isolate or allocate such indirect Lucent operating costs
to the Business to be Acquired.
A statement of cash flows is not presented as the Business to be Acquired
did not maintain a cash balance. All cash flow activities were funded by
Lucent and primarily comprised of amounts for capital expenditures and
any operational cost requirements of the Business to be Acquired. These
statements are not intended to be a complete presentation of the Business
to be Acquired's financial
position, results of operations and cash flows.
Management believes the method used to allocate the direct operating
expenses and infrastructure and support services are reasonable. The
historical operating results may not be indicative of the results of
operations of the Business to be Acquired in the future.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenue is recognized in accordance with American Institute of Certified
Public Accountants ("AICPA") Statement of Position ("SOP") 97-2,
"Software Revenue Recognition", as amended.
Revenue is derived primarily from three sources: (i) software license
revenue, resulting from software licenses to resellers and end users,
(ii) service revenue from providing support and maintenance, education
and consulting services to end users, and (iii) hardware products.
Software license revenue and related hardware sales are recognized upon
execution of a contract and completion of delivery obligations, provided
that no uncertainties exist regarding customer acceptance and that
collection of the related receivable is reasonably assured. In instances
where the Business to be Acquired has received payment from customers but
has yet to obtain evidence of an arrangement, or evidence of delivery or
evidence of customer acceptance, the revenue and related costs are
deferred until the required evidence is obtained. Payments for supported
maintenance fees are generally made in advance and are nonrefundable.
Support and maintenance services revenue is recognized ratably over the
contractual period. Education and consulting services revenue is
recognized as the related services are performed.
RESEARCH AND DEVELOPMENT
Costs incurred in the research and development of the products of the
Business to be Acquired are expensed as incurred, except for certain
software development costs. Costs associated with the development of
computer software are expensed prior to establishment of technological
feasibility and capitalized thereafter until the product is available for
general release to customers. No software development costs were
capitalized during the years ended December 31, 2000, 1999 and 1998,
since costs incurred subsequent to establishment of technological
feasibility were not significant.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expense includes costs resulting
from:
- Direct expenses for customer needs and sales support;
- Expenses associated with market planning, market operations and
product line planning and management; and
- Employee salaries.
RENT EXPENSE
During the year ended December 31, 2000, the Business to be Acquired
recorded $1,891 of rent expense. Of the amount recorded, $1,022 related
to redundant rent expense arising from a facility lease that was entered
into during the year, which was never occupied by the Business to be
Acquired due to a change in business plan. The $1,022 redundant rent
expense was recorded as $346 of cost of sales, $335 of research and
development expenses and $341 of selling, general and administrative
expenses.
CONCENTRATION OF NET SALES
Two customers accounted for approximately 93%, 92% and 87% of net sales
for the years ended December 31, 2000, 1999 and 1998, respectively. The
loss of one of these customers would have a
material adverse effect on the financial position and results of
operations of the Business to be Acquired.
INVENTORIES
Inventories consist primarily of computer hardware and ancillary
components and are stated at the lower of cost or market value. Cost is
determined using the first-in first-out method. In 2000 and 1999,
inventories include Sequent Equipment with a net realizable value of
$4,790. The Business to be Acquired will sell the Sequent Equipment,
pursuant to the potential transaction described in Note 1, not later than
one year following the transaction's closing. The delivery of the Sequent
Equipment and the passage of title will occur at the time of the
equipment purchase.
USE OF ESTIMATES
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 the 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.
3. PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated over their
estimated useful lives of 5 years using the straight-line method.
Depreciation expense for the years ended December 31, 2000, 1999 and 1998
amounted to $414, $485 and $461, respectively. Repairs and maintenance
costs are expensed as incurred.
2000 1999
------------ ------------
Computer equipment and software.................... $ 4,482 $ 4,117
Less - accumulated depreciation and amortization... (3,351) (2,937)
------------ ------------
$ 1,131 $ 1,180
============ ============
4. EMPLOYEE BENEFIT PLANS
The Business to be Acquired participates in various employee benefit
plans, including pension, savings, post-retirement and post-employment
plans as part of LPSS, which are sponsored by Lucent. Detailed
information concerning the costs of these plans is not available for LPSS
but is included as part of the labor costs allocated by Lucent. The
specific charges and obligations under these plans related to the
Business to be Acquired are not separately identifiable.
5. TRANSACTIONS WITH RELATED PARTY
The Business to be Acquired sold products to Lucent's Business
Communications Systems ("BCS") business.
6. COMMITMENTS AND CONTINGENCIES
The Business to be Acquired has one purchase agreement in place with a
key supplier that extends beyond December 31, 2000. The agreement is
valued at $40 and is effective until February 28, 2001. Penalty clauses
are also included in the agreement and are based on the failure of the
Business to be Acquired to purchase agreed upon volumes.
7. SEGMENT INFORMATION
The Business to be Acquired operates in two product segments which are
contemplated to be sold in the proposed transaction, Call Handling and
Database. The Call Handling products involve software and hardware which
allow the Business to be Acquired's primary customer base of
communications service providers to help municipalities and other
end-users to help agencies respond to 911 emergency calls. The Database
products allow Business to be Acquired's same customer base to
provide agencies with the necessary hardware and software-based resources
to maintain caller location records.
Cost of sales includes material cost and allocated labor and overhead.
Labor and overhead have been allocated to cost of sales based on the
number of full-time equivalent employees estimated by management to be
dedicated to supporting the sales activities of each product segment. The
product segment information is as follows:
CALL HANDLING DATABASE TOTAL
----------------------------- -------------------------------- ---------------------------------
2000 1999 1998 2000 1999 1998 2000 1999 1998
Net sales $ 4,534 $ 9,385 $ 4,122 $ 20,287 $ 28,813 $ 12,540 $ 24,821 $ 38,198 $ 16,662
Net sales -
related party 7 177 55 -- -- -- 7 177 55
------- ------- ------- -------- -------- -------- -------- -------- --------
Total net
sales 4,541 9,562 4,177 20,287 28,813 12,540 24,828 38,375 16,717
------- ------- ------- -------- -------- -------- -------- -------- --------
Cost of sales 5,796 7,654 1,039 9,198 17,230 7,179 14,994 24,884 8,218
Cost of sales
related party 1 83 38 -- -- -- 1 83 38
------- ------- ------- -------- -------- -------- -------- -------- --------
Total cost
of sales 5,797 7,737 1,077 9,198 17,230 7,179 14,995 24,967 8,256
------- ------- ------- -------- -------- -------- -------- -------- --------
Gross profit $(1,256) $ 1,825 $ 3,100 $ 11,089 $ 11,583 $ 5,361 $ 9,833 $ 13,408 $ 8,461
======= ======= ======= ======== ======== ======== ======== ======== ========
Actual operating expenses and long lived assets are not prepared or
evaluated separately at this product segment level. All sales are to
customers located in the United States of America.
ITEM 7 (b). PRO FORMA FINANCIAL INFORMATION.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following tables set forth certain unaudited pro forma combined financial
information giving effect to the acquisition by SCC Communications Corp. ("SCC")
of certain assets and assumption of certain liabilities associated with the Call
Handling and Database Product Lines of Lucent Public Safety Systems ("LPSS"), an
internal venture of Lucent Technologies, Inc. ("Lucent"). As part of the
transaction, SCC issued 2.25 million shares of common stock to Lucent.
The pro forma combined balance sheet gives effect to the acquisition as if it
had occurred on December 31, 2000, combining the balance sheet of SCC with the
statement of net assets (liabilities) to be sold (assumed) of LPSS as of that
date. The pro forma combined statement of operations gives effect to the
acquisition of LPSS as if it had occurred on January 1, 2000, combining the
results of SCC and LPSS for the year ended December 31, 2000.
The unaudited pro forma adjustments and pro forma combined financial
statements included herein were prepared using the purchase method of
accounting for the acquisition. The pro forma adjustments are based on
preliminary estimates and certain assumptions that SCC believes are
reasonable under the circumstances. The preliminary allocation of the
purchase price to assets acquired and liabilities assumed reflects the
assumptions that the assets and liabilities are carried at historical amounts
which, other than deferred revenue and deferred costs, approximate fair
market value. The allocation of purchase price in excess of net tangible
assets acquired is based on SCC's estimated fair value of the other
intangibles acquired. The actual allocation of the consideration paid may
differ from that reflected in the unaudited pro forma combined financial
statements after a more extensive review of the fair market values of the
assets acquired and liabilities assumed has been completed.
The pro forma combined financial information is unaudited and does not purport
to represent the consolidated results that would have been obtained had the
transactions occurred at the dates indicated, as assumed, nor does it purport to
represent the results which may be obtained in the future.
The unaudited pro forma financial statements should be read in conjunction with,
the historical financial statements and notes thereto as of and for the year
ended December 31, 2000 of SCC, included in its annual report on Form 10-K for
the year ended December 31, 2000, and the historical financial statements and
notes thereto of LPSS included elsewhere in this current report.
SCC COMMUNICATIONS CORP.
UNAUDITED PRO FORMA COMBINED BALANCE SHEETS
DECEMBER 31, 2000
(DOLLARS IN THOUSANDS)
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PRO FORMA PRO
SCC LPSS ADJUSTMENTS FORMA
----------- ---------- ---------------- -----------
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents........................ $ 5,036 $ -- $(1,717) (a) $ 3,319
Short-term investments in marketable securities.. 6,939 -- -- 6,939
Accounts receivable, net......................... 7,166 -- -- 7,166
Unbilled revenue................................. 574 -- -- 574
Inventories...................................... -- 4,790 -- 4,790
Prepaids and other............................... 892 1,593 (452) (d) 2,033
Deferred acquisition costs....................... 1,054 -- (1,054) (a) --
Deferred income taxes............................ 869 -- -- 869
-------- -------- -------- --------
Total current assets..................... 22,530 6,383 (3,223) 25,690
-------- -------- -------- --------
PROPERTY AND EQUIPMENT, at cost:
Computer hardware and equipment.................. 30,259 4,482 (3,351) (a) 31,390
Furniture and fixtures........................... 1,987 -- -- 1,987
Leasehold improvements........................... 1,049 -- -- 1,049
-------- -------- -------- --------
33,295 4,482 (3,351) 34,426
Less Accumulated depreciation.................. (20,820) (3,351) 3,351 (a) (20,820)
-------- -------- -------- --------
Total property and equipment, net........ 12,475 1,131 -- 13,606
OTHER ASSETS...................................... 107 46 -- 153
GOODWILL AND OTHER INTANGIBLES.................... -- -- 23,755 (a,b,c,d) 23,755
DEFERRED INCOME TAXES............................. 3,206 -- -- 3,206
DEFERRED COSTS.................................... 5,363 -- -- 5,363
SOFTWARE DEVELOPMENT COSTS, net................... 988 -- -- 988
-------- -------- -------- --------
$44,669 $ 7,560 $20,532 $72,761
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable................................. $ 1,226 $ -- $ -- $ 1,226
Payroll-related accruals......................... 1,144 -- -- 1,144
Other accrued liabilities........................ 2,688 -- 6,604 (b,c) 9,292
Property and other taxes......................... 1,026 -- -- 1,026
Current portion of capital lease obligations..... 2,107 -- -- 2,107
Deferred revenue................................. 1,596 4,374 (4,374) (c) 1,596
-------- -------- --------- --------
Total current liabilities................ 9,787 4,374 2,230 16,391
CAPITAL LEASE OBLIGATIONS, net of current
portion......................................... 1,511 -- -- 1,511
DEFERRED REVENUE.................................. 8,674 -- -- 8,674
-------- -------- --------- --------
Total liabilities........................ 19,972 4,374 2,230 26,576
--------
COMMITMENTS AND CONTINGENCIES..................... -- -- -- --
NET ASSETS TO BE SOLD ............................ -- $ 3,186 (3,186) (a) --
========
STOCKHOLDERS' EQUITY:
Preferred stock................................. -- -- --
Common stock.................................... 11 2 (a) 13
Additional paid-in capital...................... 44,814 21,486 (a) 66,300
Common stock options and warrants............... 373 -- 373
Stock subscriptions receivable.................. (33) -- (33)
Accumulated deficit............................. (20,468) -- (20,468)
-------- --------- --------
Total stockholders' equity............... 24,697 21,488 46,185
-------- --------- --------
$ 44,669 $ 20,532 $ 72,761
======== ========= ========
See Notes to Unaudited Pro Forma Combined Financial Statements.
SCC COMMUNICATIONS CORP.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 2000
(DOLLARS IN THOUSANDS)
- --------------------------------------------------------------------------------
PRO FORMA PRO
SCC LPSS ADJUSTMENTS FORMA
---------- ---------- ------------------ ----------
TOTAL REVENUE................................. $ 43,124 $ 24,828 $ -- $ 67,952
COSTS AND EXPENSES:
Direct costs................................ 28,868 14,995 -- 43,863
Sales, general and administrative........... 17,212 6,835 4,383 (e) 28,430
Research and development.................... 4,174 6,683 -- 10,857
---------- -------- ---------- ----------
Total costs and expenses............. 50,254 28,513 4,383 83,150
---------- -------- ---------- ----------
LOSS FROM OPERATIONS.......................... (7,130) (3,685) (4,383) (15,198)
OTHER INCOME (EXPENSE):
Interest and other income................... 1,147 -- -- 1,147
Interest and other expense.................. (435) -- -- (435)
---------- -------- ---------- ----------
NET LOSS FROM CONTINUING OPERATIONS........... $ (6,418) $ (3,685) $ (4,383) $ (14,486)
========== ======== ========== ==========
BASIC AND DILUTED LOSS PER SHARE FROM
CONTINUING OPERATIONS....................... $ (0.57) $ (1.07)
========== ==========
SHARES USED IN COMPUTING NET LOSS PER SHARE,
BASIC AND DILUTED............................ 11,257,718 (f) 13,507,718
========== ==========
See Notes to Unaudited Pro Forma Combined Financial Statements.
SCC COMMUNICATIONS CORP.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The unaudited pro forma combined balance sheet as of December 31, 2000
reflects the acquisition of certain assets and the assumption of certain
liabilities of the Call Handling and Database Product Lines business of
Lucent Public Safety Systems ("LPSS") using the purchase method of
accounting as if the transaction occurred on December 31, 2000. The
purchase price included 2,250,000 shares of common stock valued at $9.55
per share, issuance of a commitment to purchase inventory at $4.8 million
within one year, acquisition fees of approximately $1,575,000 paid to
investment bankers and other transaction costs of approximately $1,200,000.
The total purchase price was approximately $29,100,000. The excess of the
purchase price over the estimated fair value of net tangible assets
acquired of $23,755,000 was allocated, on a preliminary basis, to the
following identifiable intangible assets with the following amortization
lives:
Workforce $ 1,689,000 3 Years
Contracts in process 3,507,000 3 Years
Acquired technology 7,950,000 7 Years
Goodwill 10,609,000 7 Years
------------
$ 23,755,000
============
The pro forma adjustments are as follows:
(a) The recording of the issuance of the common stock, payments of direct
acquisition costs, and issuance of a commitment to purchase inventory
for the net tangible assets included in the statement of net assets
(liabilities) to be sold (assumed).
(b) The recording of an estimated $900,000 of restructuring liabilities
that qualify as liabilities assumed during a purchase business
combination.
(c) Deferred revenues have been reduced to approximately $914,000 and
reclassified as other liabilities to reflect the estimated fair value
of the obligation assumed by SCC.
(d) Deferred costs, which have been included in prepaids, have been
reduced to $0 to reflect the estimated fair value of the future benefit
assumed by SCC.
The unaudited pro forma statement of operations for the year ended
December 31, 2000 reflects the following adjustments as if the
transaction occurred on January 1, 2000.
(e) The additional amortization of assets recognized upon the
acquisition of LPSS of $4,383,000.
(f) Pro forma weighted average shares outstanding for the year
ended December 31, 2000 assumes the 2,250,000 shares of common stock
issued in connection with the LPSS acquisition were issued on
January 1, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SCC Communications Corp.
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(Registrant)
Date: May 11, 2001 By: /s/ MICHAEL D. DINGMAN, JR.
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Michael D. Dingman, Jr.
Chief Financial Officer