SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Earliest Event Reported
November 5, 2001
eBenX, Inc.
(Exact name of registrant as specified in its charter)
MINNESOTA
(State or other jurisdiction of incorporation of organization)
0-28365 41-1758843
(Commission File Number) (IRS Employer Identification Number)
605 North Highway 169 Suite LL
Minneapolis, Minnesota 55441-6465
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (763) 614-2000
Item 2. Acquisition or Disposition of Assets.
On November 5, 2001, the Company completed the previously announced
acquisition of the assets of the health and welfare business unit of Howard
Johnson & Company, a wholly owned subsidiary of Merrill Lynch & Company, Inc.
("Howard Johnson"), for a final purchase price of approximately $12.0 million,
including approximately $11.3 million paid in cash at closing and approximately
$0.7 million in assumed obligations to employees, pursuant to the terms of an
Asset Purchase Agreement between Howard Johnson and the Company dated as of
October 19, 2001 (the "Asset Purchase Agreement"). The purchase price was funded
from the Company's existing cash.
The assets acquired primarily consist of contracts and arrangements for
the provision of health and welfare benefits administration services.
The Company expects that this acquisition will contribute go-forward
annualized revenues of approximately $13.75 million and EBITDA of approximately
$2.0 million on commitments of approximately 210,000 employees. Fiscal 2002
revenues, EBITDA and enrolled employees may be higher, reflecting provision of
services to current Howard Johnson clients who have indicated that they intend
to terminate their agreements with Howard Johnson and that the Company therefore
does not anticipate retaining beyond 2002. The Company does not expect
significant increases in SG&A or research and development spending as a result
of this acquisition.
In line with the Company's strategy of improving performance, reducing
costs and instilling financial discipline, the Company is completing a detailed
integration plan. While the Company believes it is premature to speculate on
revenue and cost synergies, it does believe these synergies will have a material
and positive impact on its operating results.
In connection with the consummation of this acquisition, the Company
entered into a Shared Services Agreement with Howard Johnson pursuant to which
Howard Johnson will provide agreed upon services to eBenX in connection with
eBenX's health and welfare business for up to 24 months. The Company is
obligated to pay Howard Johnson a monthly fee of $187,500, subject to reduction
as responsibility for providing these services to each client is transferred to
the Company.
In connection with the consummation of this acquisition, the Company
also entered into a Marketing Agreement with Howard Johnson pursuant to which
Howard Johnson may refer potential and existing clients requiring health and
welfare benefits services to the Company in exchange for a percentage of
revenues from such referrals.
This document contains various "forward-looking statements" within the
meaning of Section 27A of the Securities act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. These forward-looking
statements involve risks and uncertainties, including, among other things,
statements regarding anticipated revenues and cash flow, revenue mix,
anticipated costs and expenses and relationships with clients. These
forward-looking statements include declarations regarding our belief or current
expectations of management, such as statements indicating that the Company
"expects," "believes," and similar
language. We caution that any forward-looking statement made by us in this
Report on Form 8-K or in other announcements made by us are further qualified by
important factors that could cause actual results to differ materially from
those projected in the forward-looking statements, including without limitation
greater than anticipated loss of new clients acquired in the transactions
described in this document, greater than anticipated expenses in providing
services to those clients, unanticipated transition expenses or other
integration delays or problems, a well as the risks discussed in our Annual
Report on Form 10-K filed on March 23, 2001.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired
Not applicable.
(b) Pro Forma Financial Statements of Business Acquired
Not applicable.
(c) Exhibits.
10.1 Asset Purchase Agreement Between Howard Johnson &
Company and eBenX, Inc. Dated as of October 19, 2001.
10.2 Shared Services Agreement By and Between Howard
Johnson & Company and eBenX, Inc. Dated as of
November 1, 2001.
10.3 Transition Services Agreement By and Between Howard
Johnson & Company and eBenX, Inc. Dated as of
November 1, 2001.
10.4 Marketing Agreement By and Between Howard Johnson &
Company and eBenX, Inc. Dated as of November 5, 2001.
SIGNATURES
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 thereunto duly authorized.
EBENX, INC.
Registrant
Date: November 20, 2001 By: /s/ Thomas E. Kelly
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Thomas E. Kelly
Chief Financial Officer and Secretary