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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Intrado Inc.
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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
SCC Communications Corp.
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(Former name or former address, if changed since last report)
ITEM 5. OTHER INFORMATION.
As previously reported in a Form 8-K filed with the Securities and Exchange
Commission on May 14, 2001 (the "Initial Form 8-K"), Intrado Inc. (formerly
known as SCC Communications Corp.) 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"). The Initial Form 8-K included a description of
the transaction and audited financial statements for LPSS for the fiscal year
ended Decmeber 31, 2000 and unaudited pro forma financial statements for the
fiscal year ended December 31, 2000. The purpose of this report on Form 8-K
is to provide unaudited financial statements for LPSS for the three months
ended March 31, 2001 and 2000, and unaudited pro forma financial statements
for the three months ended March 31, 2001. Please refer to Item 7 below.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired
The following financial statements of LPSS are included in this
report:
(i) Statements of Net Assets to be Sold as of March 31, 2001
and 2000. (Unaudited)
(ii) Statements of Net Sales, Cost of Sales, and Direct Operating
Expenses for the three months ended March 31, 2001 and 2000.
(Unaudited)
(iii) Notes to the Financial Statements. (Unaudited)
(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 March 31,
2001.
(ii) Unaudited Pro Forma Combined Statement of Operations for the
three months ended March 31, 2001.
(iii) Notes to the unaudited Pro Forma Combined Financial
Information.
(c) Exhibits.
Exhibit
Number Description
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4.1 Registration Rights Agreement (1)
4.2 Certificate of Designation of the Preferred Stock of SCC
Communications Corp. to be Designated Series A Preferred Stock (1)
10.1 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 (1)
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(1) Previously filed with Intrado's Current Report on Form 8-K, as filed
with the SEC on May 14, 2001.
ITEM 7 (a). FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
LUCENT TECHNOLOGIES INC.
CALL HANDLING AND DATABASE PRODUCT LINES
STATEMENTS OF NET ASSETS TO BE SOLD
MARCH 31, 2001 AND 2000 (UNAUDITED)
(DOLLARS IN THOUSANDS)
MARCH 31,
------------------
2001 2000
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ASSETS:
Current assets:
Inventories .................................... $4,790 $4,790
Prepaid maintenance expenses ................... 760 588
Deferred costs ................................. 1,460 538
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Total current assets to be sold ........ 7,010 5,916
Property and equipment, net .................... 1,036 1,251
Other assets ................................... 37 71
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Total assets to be sold ................ $8,083 $7,238
====== ======
LIABILITIES:
Current liabilities:
Deferred revenue ............................... $4,098 $3,179
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Total liabilities to be assumed ........ 4,098 3,179
------ ------
Commitments and contingencies .................... -- --
------ ------
Net assets to be sold .................. $3,985 $4,059
====== ======
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
THREE MONTHS ENDED MARCH 31, 2001 AND 2000 (UNAUDITED)
(DOLLARS IN THOUSANDS)
THREE MONTHS ENDED
MARCH 31,
---------------------
2001 2000
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Net sales ............................................ $ 1,517 $19,219
Cost of sales ........................................ 2,294 7,373
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Gross margin ......................................... (777) 11,846
Direct operating expenses:
Research and development ........................ 1,910 1,506
Selling, general and administrative ............. 1,515 2,088
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Total direct operating expenses ......... 3,425 3,594
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Excess (deficit) of net sales over cost of sales
and direct operating expenses ...................... $(4,202) $ 8,252
======= =======
The accompanying notes are an integral part of these financial statements.
LUCENT TECHNOLOGIES INC.
CALL HANDLING AND DATABASE PRODUCT LINES
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
(DOLLARS IN THOUSANDS)
1. BACKGROUND, NATURE OF BUSINESS AND BASIS OF PRESENTATION
On May 11, 2001, Intrado Inc (formerly SCC Communications, Corp.) acquired
the Call Handling and Database product lines ("Acquired Business") of
Lucent Technologies Inc. ("Lucent"). The accompanying financial statements
have been prepared pursuant to that 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 Acquired Business, which was formerly
known as Lucent Public Safety Systems ("LPSS"), which was a part of
Lucent's New Ventures Group ("NVG").
LPSS, which was headquartered in Lisle, Illinois, designed, built and
delivered 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 transaction consisted of 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, was 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 Acquired Business as a separate business unit
and external financial statements historically have not been prepared.
Therefore, the accompanying financial statements were derived from the
historical accounting records of LPSS in order to present the net assets to
be sold as of March 31, 2001 and 2000, and the statement of net sales, cost
of sales and direct operating expenses for the three months ended March 31,
2001 and 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 Acquired
Business. A portion of the Acquired Business' sales were 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 consisted
principally of research and development, marketing and selling expenses and
general and administrative expenses. These direct operating expenses have
been allocated to the Acquired Business based upon the number of full-time
equivalent employees estimated by management to be dedicated to the
Acquired Business as a component of the total LPSS employees.
Lucent and NVG provided LPSS with various infrastructure and support
services, which among other things included computer and network systems,
human resources, payroll services, accounting and cash management services
and legal support. These direct operating expenses were allocated to the
Acquired Business based upon the number of full-time equivalent employees
estimated to be dedicated to the Acquired Business 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 Acquired Business
was not a separate business unit, Lucent had never segregated indirect
operating cost information relative to the Acquired Business for external
financial reporting purposes. Accordingly, it was not practical to isolate
or allocate such indirect Lucent operating costs to the Acquired Business
A statement of cash flows is not presented as the Acquired Business did not
maintain a cash balance. All cash flow activities were funded by Lucent and
were primarily comprised of amounts for capital expenditures and any
operational cost requirements of the Acquired Business. These statements
are not intended to be a complete presentation of the Acquired Business'
financial position, results of operations and cash flows.
Management believed the methods used to allocate the direct operating
expenses and infrastructure and support services were reasonable. The
historical operating results may not be indicative of the results of
operations of the Acquired Business in the future.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
REVENUE RECOGNITION
Revenue was recognized in accordance with American Institute of Certified
Public Accountants Statement of Position 97-2, "Software Revenue
Recognition", as amended.
Revenue was 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 were recognized upon
execution of a contract and completion of delivery obligations, provided
that no uncertainties existed regarding customer acceptance and that
collection of the related receivable was reasonably assured. In instances
where the Acquired Business had received payment from customers for
products sold and/or services rendered but had yet to obtain evidence of an
arrangement, or evidence of delivery or evidence of customer acceptance,
the revenue and related costs were deferred until the required evidence was
obtained. Payments for supported maintenance fees were generally made in
advance and were nonrefundable. Support and maintenance services revenue
was recognized ratably over the contractual period. Education and
consulting services revenue was recognized as the related services were
performed.
RESEARCH AND DEVELOPMENT
Costs incurred in the research and development of the products of the
Acquired Business were expensed as incurred, except for certain software
development costs. Costs associated with the development of computer
software were expensed prior to establishment of technological feasibility
and capitalized thereafter until the product was available for general
release to customers. No software development costs were capitalized during
the three months ended March 31, 2001 and 2000.
SELLING, GENERAL AND ADMINISTRATIVE
Selling, general and administrative expense included costs resulting from:
o Direct expenses for customer needs and sales support;
o Expenses associated with market planning, market operations and
product line planning and management; and
o Employee salaries.
INVENTORIES
Inventories consisted primarily of computer hardware and ancillary
components and were stated at the lower of cost or market value. Cost was
determined using the first-in first-out method. In March 31, 2001 and 2000,
inventories represented Sequent Equipment. The Acquired Business will sell
the Sequent Equipment, pursuant to the transaction described in Note 1, not
later than May 11, 2002. 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 required management to make estimates and
assumptions that affected 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 were recorded at cost and depreciated over their
estimated useful lives of 5 years using the straight-line method.
Depreciation expense for the quarters ended March 31, 2001 and 2000
amounted to $105 and $105, respectively. Repairs and maintenance costs were
expensed as incurred.
March 31, March 31,
2001 2000
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Computer equipment
and software .................... $ 4,492 $ 4,293
Less: accumulated depreciation
and amortization ................ (3,456) (3,042)
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$ 1,036 $ 1,251
======= =======
4. EMPLOYEE BENEFIT PLANS
The Acquired Business participated in various employee benefit plans,
including pension, savings, post-retirement and post-employment plans as
part of LPSS, which were sponsored by Lucent. Detailed information
concerning the costs of these plans is not available for LPSS but was
included as part of the labor costs allocated by Lucent. The specific
charges and obligations under these plans related to the Acquired Business
were not separately identifiable.
5. SEGMENT INFORMATION
The Acquired Business operated in two product segments which were sold in
the transaction, Call Handling and Database. The Call Handling products
involved software and hardware which allowed the Acquired Business' primary
customer base of communications service providers to help municipalities
and other agencies respond to 911 emergency calls. The Database products
allowed the Acquired Business' customer base to provide agencies with the
necessary hardware and software-based resources to maintain caller location
records.
Cost of sales included 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
----------------------- ----------------------- -----------------------
Three Months Three Months Three Months
Ended March 31, Ended March 31, Ended March 31,
----------------------- ----------------------- -----------------------
2001 2000 2001 2000 2001 2000
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Net sales ........ $ 671 $ 1,474 $ 846 $17,745 $ 1,517 $19,219
Cost of sales .... 1,329 950 965 6,423 2,294 7,373
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Gross margin ..... $ (658) $ 524 $ (119) $11,322 $ (777) $11,846
======= ======= ======= ======= ======= =======
Actual operating expenses and long lived assets were 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 Intrado Inc. (formerly SCC
Communications Corp.) ("Intrado") 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, Intrado 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 March 31, 2001, combining the balance sheet of Intrado with the
statement of net assets to be sold 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, 2001, combining the results of Intrado and LPSS
for the three months ended March 31, 2001.
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 Intrado 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 inventory,
deferred revenue and deferred costs, approximate fair market value. The
allocation of purchase price in excess of net tangible assets acquired is
based on Intrado'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 Intrado, included in its annual report on Form 10-K
for the year ended December 31, 2000, and the unaudited historical financial
statements and notes thereto of LPSS for the three months ended March 31,
2001, included elsewhere in this current report.
INTRADO INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEETS
MARCH 31, 2001
(DOLLARS IN THOUSANDS)
PRO FORMA PRO
INTRADO LPSS ADJUSTMENTS FORMA
-------- -------- ----------- --------
ASSETS:
CURRENT ASSETS:
Cash and cash equivalents ........................... $ 5,694 $ -- $ (1,677)(a) $ 4,017
Short-term investments in marketable securities ..... 2,982 -- -- 2,982
Accounts receivable, net ............................ 8,124 -- -- 8,124
Unbilled revenue .................................... 358 -- -- 358
Inventories ......................................... -- 4,790 (660)(a) 4,130
Prepaids and other .................................. 894 2,220 (1,460)(c) 1,654
Deferred acquisition costs .......................... 1,088 -- (1,088)(a) --
Deferred income taxes ............................... 869 -- -- 869
-------- -------- -------- --------
Total current assets ........................ 20,009 7,010 (4,885) 22,134
-------- -------- -------- --------
PROPERTY AND EQUIPMENT, at cost:
Computer hardware and equipment ..................... 31,516 4,492 (3,456)(a) 32,552
Furniture and fixtures .............................. 2,013 -- -- 2,013
Leasehold improvements .............................. 1,069 -- -- 1,069
-------- -------- -------- --------
34,598 4,492 (3,456) 35,634
Less-- Accumulated depreciation ..................... (22,267) (3,456) 3,456 (a) (22,267)
-------- -------- -------- --------
Total property and equipment, net ........... 12,331 1,036 -- 13,367
OTHER ASSETS ......................................... 107 37 -- 144
GOODWILL AND OTHER INTANGIBLES ....................... -- -- 25,043 (a,b,c) 25,043
DEFERRED INCOME TAXES ................................ 3,206 -- -- 3,206
DEFERRED COSTS ....................................... 5,126 -- -- 5,126
SOFTWARE DEVELOPMENT COSTS, net ...................... 940 -- -- 940
-------- -------- -------- --------
$ 41,719 $ 8,083 $ 20,158 $ 69,960
======== ======== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
CURRENT LIABILITIES:
Accounts payable .................................... $ 3,096 $ -- $ -- $ 3,096
Payroll-related accruals ............................ 1,318 -- -- 1,318
Other accrued liabilities ........................... 1,602 -- 5,944 (a,b) 7,546
Property and other taxes ............................ 974 -- -- 974
Current portion of capital lease obligations ........ 1,836 -- -- 1,836
Deferred revenue .................................... 219 4,098 (4,098)(b) 219
-------- -------- -------- --------
Total current liabilities ................... 9,045 4,098 1,846 14,989
CAPITAL LEASE OBLIGATIONS, net of current portion
1,154 -- -- 1,154
DEFERRED REVENUE ..................................... 9,811 -- -- 9,811
-------- -------- -------- --------
Total liabilities ........................... 20,010 4,098 1,846 25,954
COMMITMENTS AND CONTINGENCIES
NET ASSETS TO BE SOLD ................................ -- $ 3,985 (3,985)(a) --
========
STOCKHOLDERS' EQUITY:
Preferred stock ..................................... -- -- --
Common stock ........................................ 11 2 (a) 13
Additional paid-in capital .......................... 45,001 22,295 (a) 67,296
Common stock options and warrants ................... 373 -- 373
Stock subscriptions receivable ...................... (33) -- (33)
Accumulated deficit ................................. (23,643) -- (23,643)
-------- -------- --------
Total stockholders' equity .................. 21,709 22,297 44,006
-------- -------- --------
$ 41,719 $ 20,158 $ 69,960
======== ======== ========
See Notes to Unaudited Pro Forma Combined Financial Statements.
INTRADO INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2001
(DOLLARS IN THOUSANDS)
PRO FORMA PRO
INTRADO LPSS ADJUSTMENTS FORMA
-------- -------- ----------- --------
TOTAL REVENUE ......................................... $ 13,189 $ 1,517 $ -- $ 14,706
COSTS AND EXPENSES:
Direct costs ........................................ 9,865 2,294 -- 12,159
Sales, general and administrative ................... 5,342 1,515 1,142 (d) 7,999
Research and development ............................ 1,226 1,910 -- 3,136
-------- -------- -------- --------
Total costs and expenses ..................... 16,433 5,719 1,142 23,294
-------- -------- -------- --------
LOSS FROM OPERATIONS .................................. (3,244) (4,202) (1,142) (8,588)
OTHER INCOME (EXPENSE):
Interest and other income ........................... 157 -- -- 157
Interest and other expense .......................... (88) -- -- (88)
-------- -------- -------- --------
NET LOSS FROM CONTINUING OPERATIONS ................... $ (3,175) $ (4,202) $ (1,142) $ (8,519)
======== ======== ======== ========
BASIC AND DILUTED LOSS PER SHARE FROM CONTINUING
OPERATIONS ......................................... $ (0.62)
========
SHARES USED IN COMPUTING NET LOSS PER SHARE, BASIC
AND DILUTED .......................................... 11,505,889 (e) 13,755,889
========== ==========
See Notes to Unaudited Pro Forma Combined Financial Statements.
INTRADO INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
The unaudited pro forma combined balance sheet as of March 31, 2001 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 March 31, 2001. The purchase price included 2,250,000 shares of
common stock valued at $9.91 per share, issuance of a commitment to purchase
inventory at $4.1 million within one year, approximately $0.9 million of
transition liabilities, acquisition fees of approximately $1.5 million paid to
investment bankers and other transaction costs of approximately $1.2 million.
The total purchase price was approximately $30.1 million. The excess of the
purchase price over the estimated fair value of net tangible assets acquired of
approximately $25.0 million 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 8,250,000 7 Years
Goodwill 11,597,000 7 Years
------------
$ 25,043,000
============
The pro forma adjustments are as follows:
(a) The recording of the issuance of the common stock, payments of direct
acquisition costs, recording of transition liabilities and recording of a
commitment to purchase inventory included in the statement of net assets
to be sold at its fair value.
(b) 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 Intrado.
(c) 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
Intrado.
The unaudited pro forma statement of operations for the three months ended March
31, 2001 reflects the following adjustments as if the transaction occurred on
January 1, 2001.
(d) The additional amortization of assets recognized upon the acquisition of
LPSS of $1,142,000.
(e) Pro forma weighted average shares outstanding for the three months ended
March 31, 2001 assumes the 2,250,000 shares of common stock issued in
connection with the LPSS acquisition were issued on January 1, 2001.
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.
Intrado Inc.
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(Registrant)
Date: July 26, 2001 By: /s/ MICHAEL D. DINGMAN, JR.
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Michael D. Dingman, Jr.
Chief Financial Officer