1 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, 2000 HNC SOFTWARE INC. (Exact name of Registrant as Specified in its Charter) DELAWARE (State or Other Jurisdiction of Incorporation) 0-26146 33-0248788 (Commission File Number) (I.R.S. Employer Identification Number) 5935 CORNERSTONE COURT WEST, SAN DIEGO, CA 92121 (Address of Principal Executive Offices) (858) 546-8877 (Registrant's Telephone Number, Including Area Code) 1 2 ITEM 2: ACQUISITION OR DISPOSITION OF ASSETS On September 29, 2000, HNC Software Inc. ("HNC") distributed 40 million shares of the outstanding common stock of Retek Inc. (Nasdaq: RETK) ("Retek") then owned by HNC as a dividend (the "Retek Spin-off") to HNC shareholders who were record holders of HNC common stock on September 15, 2000. Pursuant to the Retek Spin-off, each holder of record of HNC common stock on September 15, 2000 was distributed as a dividend 1.243 shares of Retek Inc. common stock for each share of HNC common stock held on September 15, 2000. Cash will be issued in lieu of fractional shares. The shares of Retek common stock that were distributed by HNC to its shareholders in the Retek Spin-off constituted all of the shares of Retek owned by HNC and represented approximately 83.9% of Retek's outstanding shares as of September 29, 2000. As a result of HNC's distribution of its shares of Retek Inc. common stock, Retek is no longer affiliated with HNC. For more information about the Retek dividend, see the Information Statement filed on Form 8-K on September 22, 2000 listed herein as Exhibit 99.1. Retek provides Internet-based, business-to-business software solutions for retailers and their trading partners. Its software solutions enable retailers to use the Internet to communicate and collaborate efficiently with their suppliers, distributors, wholesalers, logistics providers, brokers, transportation companies, consolidators and manufacturers. Prior to the completion of its initial public offering on November 23, 1999, Retek was a wholly-owned subsidiary of HNC. The completion of the Retek Spin-off represents the completion of the separation of the businesses of HNC and Retek. ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. (a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED. Not applicable. (b) PRO FORMA FINANCIAL INFORMATION. (1) UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS OF HNC SOFTWARE INC. The following unaudited pro forma consolidated financial information is being filed herewith: Page ---- Unaudited pro forma balance sheet of HNC Software Inc. as of June 30, 2000 4 Unaudited pro forma statement of operations of HNC Software Inc. for the six months ended June 30, 2000 5 Unaudited pro forma statement of operations of HNC Software Inc. for the year ended December 31, 1999 6 Notes to unaudited pro forma financial information 7 (c) EXHIBITS. INFORMATION STATEMENT The Information Statement related to the Retek dividend is listed as Exhibit 99.1 to this Form 8-K. UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS The following unaudited pro forma consolidated financial information has been prepared to give retroactive effect to the distribution of our wholly owned subsidiary, Retek Inc. (Retek) to our stockholders. The financial information is based on our unaudited historical condensed consolidated financial statements as of June 30, 2000 and for the six month period then ended and on our audited historical consolidated financial statements for the fiscal year ended December 31, 1999. The pro forma condensed consolidated statements of income for the six months ended June 30, 2000 and the fiscal year ended December 31, 1999 give effect to the distribution and the transactions described below as if they occurred as of January 1, 1999 and 2000, respectively. The related adjustments are described in the accompanying notes. The unaudited pro forma consolidated financial information is based upon available information and certain assumptions set forth in the notes to the unaudited pro forma consolidated financial information, which have been made solely for purposes of developing such pro forma financial information. The distribution of Retek common stock to our stockholders occurred on September 29, 2000. For more information on the final distribution, please see the Form 8-K filed on October 6, 2000 listed as Exhibit 99.2 to this Form 8-K. The 2 3 unaudited pro forma consolidated financial information does not purport to represent what our results of operations or financial condition would actually have been had the distribution of our investment in Retek to our stockholders and the transactions described below occurred as of January 1, 1999 or 2000, respectively, or to project our results of operations or financial condition for any future period or date. 3 4 HNC SOFTWARE INC. UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 2000 (IN THOUSANDS) HNC DISTRIBUTION AS REPORTED OF RETEK PRO FORMA ----------- ------------ --------- ASSETS Current assets: Cash and cash equivalents $ 80,983 $ (38,379)(a) $ 42,604 Short-term investments available for sale-debt 55,397 (3,898)(a) 51,499 Short-term investments available for sale-equity 1,833 -- 1,833 Trade accounts receivable, net 62,938 (22,044)(a) 40,894 Current portion of deferred income taxes 1,454 (1,589)(a) 1,333 1,468 (b) Other current assets 16,040 (9,861)(a) 6,179 --------- --------- --------- Total current assets 218,645 (74,303) 144,342 --------- --------- --------- Long term investments available for sale-debt 76,654 (6,045)(a) 70,609 Equity investments 11,469 -- 11,469 Property and equipment, net 34,585 (17,078)(a) 17,507 Intangible assets, net 137,501 (32,978)(a) 104,523 Deferred income taxes, less current portion 54,719 (34,746)(a) 18,031 (1,942)(b) Other assets 4,883 (59)(a) 5,298 474 (b) --------- --------- --------- Total assets $ 538,456 $(166,677) $ 371,779 ========= ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable and accrued liabilities $ 33,276 $ (9,094)(a) $ 24,182 Deferred revenue 45,286 (33,766)(a) 11,520 Other current liabilities 3,539 (4,256)(a) (717) --------- --------- --------- Total current liabilities 82,101 (47,116) 34,985 --------- --------- --------- Noncurrent liabilities 5,325 -- 5,325 --------- --------- --------- Convertible Subordinated Notes 100,000 -- 100,000 --------- --------- --------- Deferred revenue, net of current portion -- -- -- --------- --------- --------- Contingencies Minority interest in consolidated subsidiaries 14,855 (14,855)(a) -- --------- --------- --------- Total liabilities 202,281 (61,971) 140,310 --------- --------- --------- Stockholders' equity: Preferred stock, $0.001 par value --- 4,000 shares authorized: no shares issued or outstanding -- -- -- Common stock, $0.001 par value --- 120,000 shares authorized: 27,180 and 25,704 shares issued and outstanding, respectively 27 -- 27 Common stock in treasury at cost --- 233 and 882 shares, respectively (15,507) -- (15,507) Paid-in capital 389,214 (120,500)(a) 268,714 Retained earnings (deficit) (20,152) -- (20,152) Accumulated other comprehensive income (loss) (2,120) 1,240 (a) (880) Unearned stock-based compensation (15,287) 14,554 (a) (733) --------- --------- --------- Total stockholders' equity 336,175 (104,706) 231,469 --------- --------- --------- Total liabilities and stockholders' equity $ 538,456 $(166,677) $ 371,779 ========= ========= ========= See accompanying notes to unaudited pro forma consolidated financial information. 4 5 HNC SOFTWARE INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2000 (IN THOUSANDS, EXCEPT PER SHARE DATA) HNC DISTRIBUTION AS REPORTED OF RETEK PRO FORMA ----------- ------------ --------- Revenues: License and maintenance $ 74,184 $ (17,938)(c) $ 56,246 Services and other 47,811 (15,615)(c) 32,196 --------- --------- --------- Total revenues 121,995 (33,553) 88,442 ========= ========= ========= Operating expenses: License and maintenance 26,288 (9,473)(c) 16,815 Services and other 33,462 (11,387)(c) 22,075 Research and development 35,186 (16,794)(c) 18,392 Sales and marketing 35,160 (18,313)(c) 16,847 General and administrative 16,832 (5,018)(c) 11,814 Stock-based compensation 4,537 (5,424)(c) (887) Acquisiton-related amortization 15,512 (2,542)(c) 12,970 Acquired in-process research and development 6,472 (4,000)(c) 2,472 --------- --------- --------- Total operating expenses 173,449 (72,951) 100,498 Operating income (loss) (51,454) 39,398 (12,056) Other income (expense): Interest and other income, net 6,335 (1,451)(c) 4,884 Interest expense (2,684) -- (2,684) Minority interest in income (loss) of consolidated subsidiary 5,419 (5,419)(c) -- --------- --------- --------- Income (loss) before income taxes (42,384) 32,528 (9,856) Income tax provision (benefit) (10,023) 11,447 (c) 1,426 2 (c) --------- --------- --------- Net income (loss) $ (32,361) $ 21,079 $ (11,282) ========= ========= ========= Earnings per share: Basic net income (loss) per common share $ (1.22) $ (0.43) ========= ========= Diluted net income (loss) per common share $ (1.22) $ (0.43) ========= ========= Shares used in computing basic net income (loss) per common share 26,529 26,529 ========= ========= Shares used in computing diluted net income (loss) per common share 26,529 26,529 ========= ========= See accompanying notes to unaudited pro forma consolidated financial information. 5 6 HNC SOFTWARE INC. UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1999 (IN THOUSANDS, EXCEPT PER SHARE DATA) HNC DISTRIBUTION AS REPORTED OF RETEK PRO FORMA ----------- ------------ --------- Revenues: License and maintenance $ 155,948 $ (45,965)(d) $ 109,983 Services and other 60,941 (23,194)(d) 37,747 --------- --------- --------- Total revenues 216,889 (69,159) 147,730 ========= ========= ========= Operating expenses: License and maintenance 41,272 (6,358)(d) 34,914 Services and other 40,917 (16,625)(d) 24,292 Research and development 49,055 (22,612)(d) 26,443 Sales and marketing 45,818 (19,625)(d) 26,193 General and administrative 24,547 (6,257)(d) 18,290 Stock-based compensation 11,985 (1,908)(d) 10,077 Acquisiton-related amortization 8,599 (1,390)(d) 7,209 Acquired in-process research and development 1,480 (1,480)(d) -- --------- --------- --------- Total operating expenses 223,673 (76,255) 147,418 Operating income (loss) (6,784) 7,096 312 Other income (expense): Interest and other income, net 6,149 (30)(d) 6,119 Interest expense (5,823) -- (5,823) Minority interest in income (loss) of consolidated subsidiary 722 (722)(d) -- --------- --------- --------- Income (loss) before income taxes (5,736) 6,344 608 Income tax provision (benefit) 536 1,697 (d) 2,648 415 (d) --------- --------- --------- Net income (loss) $ (6,272) $ 4,232 $ (2,040) ========= ========= ========= Earnings per share: Basic net income (loss) per common share $ (0.25) $ (0.08) ========= ========= Diluted net income (loss) per common share $ (0.25) $ (0.08) ========= ========= Shares used in computing basic net income (loss) per common share 24,969 24,969 ========= ========= Shares used in computing diluted net income (loss) per common share 24,969 24,969 ========= ========= See accompanying notes to unaudited pro forma consolidated financial information. 6 7 HNC SOFTWARE INC. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION (IN THOUSANDS) (a) Reflects the distribution to our stockholders of Retek common stock in the form of a dividend. (b) Reflects pro forma income tax adjustments to present HNC Software Inc. on a stand-alone basis. (c) Reflects the reported results of operations of Retek Inc. as if our distribution of Retek Inc. common stock to our stockholders occurred as of January 1, 2000. (d) Reflects the reported results of operations of Retek Inc. as if our distribution of Retek Inc. common stock to our stockholders occurred as of January 1, 1999. 7 8 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. HNC SOFTWARE INC. Date: October 13, 2000 By: /s/ Kenneth J. Saunders ------------------------------------ Kenneth J. Saunders, Chief Financial Officer and Secretary By: /s/ Russell C. Clark ------------------------------------ Russell C. Clark, Vice President, Corporate Finance and Assistant Secretary 8 9 EXHIBIT INDEX Exhibit Description Page - ------- ----------- ---- 99.1 Information Statement dated September 22, 2000 (Incorporated by reference to Exhibit 99 of HNC Software Inc.'s Form 8-K filed on September 22, 2000). 99.2 Final distribution release dated October 2, 2000 (Incorporated by reference to Exhibit 99.1 of HNC Software Inc.'s Form 8-K filed on October 6, 2000).