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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): SEPTEMBER 29, 1997
DATAWORKS CORPORATION
(Exact name of registrant as specified in its charter)
CALIFORNIA
(State or other jurisdiction of incorporation)
0-26814 33-0209937
(Commission File No.) (IRS Employer Identification No.)
5910 PACIFIC CENTER BLVD., SUITE 300
SAN DIEGO, CALIFORNIA 92121
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (619) 546-9600
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
THIS CURRENT REPORT ON FORM 8-K CONTAINS FORWARD-LOOKING STATEMENTS THAT
INVOLVE RISKS AND UNCERTAINTIES, INCLUDING RISKS THAT THE INTEGRATION OF THE
OPERATIONS, TECHNOLOGIES, PRODUCTS AND EMPLOYEES OF DATAWORKS CORPORATION, A
CALIFORNIA CORPORATION ("DATAWORKS" OR THE "REGISTRANT"), AND INTERACTIVE GROUP,
INC., A DELAWARE CORPORATION ("INTERACTIVE"), MIGHT NOT OCCUR AS ANTICIPATED;
THAT THE SYNERGIES EXPECTED TO RESULT FROM THE MERGER DESCRIBED BELOW MIGHT NOT
OCCUR AS ANTICIPATED; AND THAT MANAGEMENT'S ATTENTION MIGHT BE DIVERTED FROM
DAY-TO-DAY BUSINESS ACTIVITIES. ACTUAL RESULTS AND DEVELOPMENTS MAY DIFFER
MATERIALLY FROM THOSE DESCRIBED IN THIS CURRENT REPORT. FOR MORE INFORMATION
ABOUT DATAWORKS AND RISKS RELATING TO INVESTING IN DATAWORKS, REFER TO
DATAWORKS' MOST RECENT REPORTS ON FORM 10-K AND FORM 10-Q, AND THE RECENT
REGISTRATION STATEMENT ON FORM S-4 RELATED TO THE MERGER DESCRIBED BELOW, AS
FILED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION.
On September 29, 1997, DataWorks Acquisition Sub, Inc. ("DataWorks Sub"),
which was a Delaware corporation and a wholly owned subsidiary of DataWorks, was
merged with and into Interactive, pursuant to an Agreement and Plan of Merger
and Reorganization, dated July 31, 1997, among DataWorks, DataWorks Sub and
Interactive (the "Merger Agreement").
The merger of DataWorks Sub with and into Interactive (the "Merger") became
effective at the time of the filing of a Certificate of Merger with the Delaware
Secretary of State on September 29, 1997 (the "Effective Time"). At the
Effective Time: (i) DataWorks Sub ceased to exist; (ii) Interactive, as the
surviving corporation in the Merger, became a wholly owned subsidiary of
DataWorks; and (iii) subject to the provisions of the Merger Agreement relating
to the payment of cash in lieu of fractional shares, each share of Interactive
Common Stock, $.001 par value ("Interactive Common Stock"), outstanding
immediately prior to the Effective Time (except for any such shares held by
Interactive as treasury stock and any such shares held by DataWorks or any
subsidiary of DataWorks or Interactive, which shares, if any, were canceled) was
converted into the right to receive 0.8054 of a share (the "Exchange Ratio") of
Common Stock, no par value, of DataWorks ("DataWorks Common Stock").
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In addition, pursuant to the Merger Agreement, at the Effective Time, all
outstanding options and the outstanding warrant to acquire Interactive Common
Stock were converted into and became equivalent options and an equivalent
warrant for DataWorks Common Stock. By virtue of the assumption by DataWorks of
such Interactive stock options and the warrant, from and after the Effective
Time: (i) each Interactive stock option and warrant assumed by DataWorks may be
exercised solely for DataWorks Common Stock; (ii) the number of shares of
DataWorks Common Stock subject to each such Interactive stock option and warrant
is equal to the number of shares of Interactive Common Stock subject to such
Interactive stock option or warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole share; and
(iii) the per share exercise price under each such Interactive stock option and
warrant was adjusted by dividing the per share purchase price under such
Interactive stock option or warrant by the Exchange Ratio and rounding up to the
nearest cent.
The former holders of Interactive are receiving approximately 3,700,000
shares of DataWorks Common Stock pursuant to the Merger, which represents
approximately 26.8% of the shares of DataWorks Common Stock outstanding
immediately after consummation of the Merger. Cash payments will be made for
fractional shares resulting from the conversion. DataWorks will use its current
cash resources to fund the payments for fractional shares. In addition,
approximately 526,000 shares of DataWorks Common Stock may be issued in
connection with the exercise of the Interactive stock options and the
Interactive warrant assumed by DataWorks.
Robert C. Vernon, the former Chairman of the Board and Chief Executive
Officer of Interactive, a former stockholder of Interactive and the President,
International Operations of DataWorks as of the Effective Time, will receive
848,426 shares of DataWorks Common Stock and $1.30 in lieu of fractional shares
in exchange for his Interactive Common Stock in the Merger; and Mark Hellinger,
the former President and Chief Operating Officer--North American Operations and
a former director of Interactive, a former stockholder of Interactive and the
President, Mid-Tier Division of DataWorks as of the Effective Time, will receive
269,626 shares of DataWorks Common Stock and $17.95 in lieu of fractional shares
in exchange for his Interactive Common Stock in the Merger.
Upon consummation of the Merger, DataWorks anticipates incurring a pre-tax
charge of approximately $14.0 million to reflect direct transaction costs. This
amount is a preliminary estimate, and there can be no assurance that DataWorks
will not incur additional charges to reflect costs associated with the Merger.
The Merger is intended to qualify as a tax-free reorganization within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended, and
is to
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be accounted for by DataWorks as a pooling of interests for financial reporting
purposes.
Interactive develops, markets, implements and supports integrated business
information systems that enable discrete manufacturers to manage their
enterprise-wide information requirements. A copy of the press release announcing
the consummation of the Merger is attached hereto as Exhibit 99.1.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
(i) Financial Statements of Interactive at December 31, 1996 and
1995, and for each of the years in the three-year period ended
December 31, 1996, with an audit report by Ernst & Young LLP, are
incorporated by reference to pages F-2 through F-17 of
Registrant's Registration Statement on Form S-4 (No. 333-33451),
as amended (the "Registration Statement").
(ii) Unaudited interim financial statements of Interactive at June 30,
1997 and for the six-month periods ended June 30, 1997 and 1996
are incorporated by reference to pages F-18 through F-22 of the
Registration Statement.
(B) PRO FORMA FINANCIAL INFORMATION.
The pro forma financial information at June 30, 1997, for each of the
years in the three-year period ended December 31, 1996 and for the
six-month periods ended June 30, 1997 and 1996 is incorporated by
reference to the Unaudited Pro Forma Combined Condensed Financial
Information at pages 63 through 66 of the Registration Statement.
(C) EXHIBITS.
2.1 Agreement and Plan of Merger and Reorganization dated July 31,
1997 among the Registrant, DataWorks Acquisition Sub, Inc. and
Interactive Group, Inc.*
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Romito, Tomasetti & Associates, P.C., Independent
Auditors.
99.1 Press release, dated September 29, 1997.
* Incorporated by reference to Interactive Group, Inc.'s Current Report on
Form 8-K dated August 11, 1997.
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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.
DATAWORKS CORPORATION
Dated: October 9, 1997 By: /s/ NORMAN R. FARQUHAR
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Norman R. Farquhar
Executive Vice President, Chief
Financial Officer and Director
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INDEX TO EXHIBITS
2.1 Agreement and Plan of Merger and Reorganization dated July 31,
1997 among the Registrant, DataWorks Acquisition Sub, Inc. and
Interactive Group, Inc.*
23.1 Consent of Ernst & Young LLP, Independent Auditors.
23.2 Consent of Romito, Tomasetti & Associates, P.C., Independent
Auditors.
99.1 Press release, dated September 29, 1997.
* Incorporated by reference to Interactive Group, Inc.'s Current Report on
Form 8-K dated August 11, 1997.
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