0000950142-19-000172.txt : 20190206 0000950142-19-000172.hdr.sgml : 20190206 20190205183952 ACCESSION NUMBER: 0000950142-19-000172 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20190201 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190206 DATE AS OF CHANGE: 20190205 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Nuance Communications, Inc. CENTRAL INDEX KEY: 0001002517 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 943156479 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36056 FILM NUMBER: 19569338 BUSINESS ADDRESS: STREET 1: 1 WAYSIDE ROAD CITY: BURLINGTON STATE: MA ZIP: 01803 BUSINESS PHONE: 781-565-5000 MAIL ADDRESS: STREET 1: 1 WAYSIDE ROAD CITY: BURLINGTON STATE: MA ZIP: 01803 FORMER COMPANY: FORMER CONFORMED NAME: SCANSOFT INC DATE OF NAME CHANGE: 19990312 FORMER COMPANY: FORMER CONFORMED NAME: VISIONEER INC DATE OF NAME CHANGE: 19951020 8-K 1 eh1900206_8k.htm FORM 8-K
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): February 1, 2019
  _________________________________
NUANCE COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
 _________________________________
 
 
 
 
 
Delaware
 
001-36056
 
94-3156479
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
1 Wayside Road
Burlington, Massachusetts
 
01803
(Address of principal executive offices)
(Zip Code)

Registrant’s telephone number, including area code: (781) 565-5000

(Former name or former address, if changed since last report)
 _________________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17CFR 240.14d-2(b))
   
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.01. Completion of Acquisition or Disposition of Assets.

On February 1, 2019, Nuance Communications, Inc. (the “Company”) completed the previously announced sale to Project Leopard AcquireCo Limited, a private limited company incorporated under the laws of England and Wales (and an affiliate of Kofax, Inc.) (the “Buyer”), of the Company’s Document Imaging division (the “Business”). The sale of the Business was consummated pursuant to the terms of the Sale Agreement, dated as of November 11, 2018, between the Company and the Buyer (the “Sale Agreement”), which provided for a purchase price of $400 million in cash, subject to customary purchase price adjustments as set forth in the Sale Agreement. The Company previously disclosed its entry into the Sale Agreement in the Company’s Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”) on November 14, 2018 (the “Prior 8-K”).

Pursuant to the Sale Agreement, the Company sold and transferred, and the Buyer purchased and acquired, (i) the shares of certain subsidiaries through which the Company operated a portion of the Business and (ii) certain assets used in or related to the Business; and the Buyer assumed certain liabilities related to such assets or the Business, subject to certain exclusions and indemnities as set forth in the Sale Agreement (the “Transaction”).  At closing, the Company received net proceeds of approximately $390 million after estimated transaction and tax expenses, subject to post-closing finalization of those adjustments as set forth in the Sale Agreement.

No material relationship exists between the Company or any of its affiliates, directors or officers or any associate of any such director or officer, on one hand, and the Buyer or its affiliates, on the other hand, other than in respect of the Sale Agreement. Pursuant to the Sale Agreement and in accordance with the description in the Prior 8-K, at closing the parties entered into certain ancillary agreements including: (i) a transition services agreement relating to the continued provision of certain services by the Company to the Buyer and its applicable affiliates for a period of up to 18 months, (ii) assignment agreements, pursuant to which certain intellectual property rights were assigned to the Buyer, and (iii) a shared location agreement, pursuant to which the Buyer will temporarily occupy certain real property leased by the Company following the closing of the Transaction.

The foregoing description of the Transaction is only a summary, does not purport to be complete and is qualified in its entirety by reference to, and should be read in conjunction with, the full text of the Prior 8-K and the full text of the Sale Agreement (which was filed as Exhibit 2.1 thereto), both of which are incorporated in this Item 2.01 by reference.

Item 9.01. Financial Statements and Exhibits.

(b) Pro forma financial information.

Unaudited Pro Forma Condensed Consolidated Financial Information of the Company for the fiscal years ended September 30, 2018, September 30, 2017 and September 30, 2016 are filed as Exhibit 99.1 to this Current Report on Form 8-K and are incorporated in this Item 9.01(b) by reference.

(d) Exhibits.

The following exhibits are filed herewith:

2.1
 
     
99.1
  

* Schedules and similar attachments omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company has undertaken to furnish supplemental copies of any of the omitted schedules upon request by the SEC.
 

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.
 

 
NUANCE COMMUNICATIONS, INC.
  
 
 
 
 
       
Date: February 5, 2019
By:
/s/ Wendy Cassity
  
 
 
Wendy Cassity
  
 
  
Executive Vice President and
  
 
  
Chief Legal Officer
  

 

 

 EX-99.1 2 eh1900206_ex9901.htm EXHIBIT 99.1
EXHIBIT 99.1
 
NUANCE COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On February 1, 2019, we completed the previously announced sale of our Document Imaging division (the "Business") to Project Leopard AcquireCo Limited (the “Buyer”), an affiliate of Kofax, Inc. The net proceeds received at the closing for the Business were approximately $390 million, after estimated transaction and tax expenses, subject to post-closing finalization of those adjustments as set forth in the Sale Agreement dated November 11, 2018, between us and the Buyer. In addition, pursuant to the call notice we issued on February 1, 2019, we are committed to use $300 million of the net proceeds to redeem our 5.375% Senior Notes due 2020 (the "5.375% Senior Notes").

The following unaudited pro forma condensed consolidated financial statements are based on our historical financial statements included within the Company's Annual Report on Form 10-K for fiscal year 2018, as adjusted to give effect to the disposition of the Business. The unaudited pro forma condensed statements of operations for fiscal years 2018, 2017, and 2016 give effect to the disposition of the Business as if it had occurred on October 1, 2016. Additionally, the unaudited pro forma condensed statements of operations for fiscal year 2018 gives effect to the repayment of the 5.375% Senior Notes as if it had occurred on October 1, 2017. The unaudited pro forma condensed balance sheet as of September 30, 2018 gives effect to the disposition of the Business and the redemption of the 5.375% Senior Notes as if they had occurred on September 30, 2018. The unaudited pro forma condensed consolidated financial information does not reflect nonrecurring charges resulting from this disposition (such as proceeds from our transition service agreement and gain or loss recognized from the disposition), or future transactions that are not directly attributable to the disposition (such as restructuring activities and the realization of operating costs reductions).

The unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and do not purport to indicate the financial condition or results of operations of future periods or the financial condition for results of operations that actually would have been realized had the disposition occurred on the date or for the periods presented. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable under the circumstances. The unaudited pro forma condensed consolidated financial statement should be read in conjunction with the Company's historical financial statements and notes included in the Company's Annual Report on Form 10-K for fiscal year 2018.

Our actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to the following factors:
 
—
The pro forma adjustments are estimated based on the operating structure of the Business during each of the historical periods presented, which may differ from the operating structure at the closing;
—
We did not track the assets and liabilities of the Business historically. The pro forma adjustments are based on our estimates of the assets, liabilities and employees related to the Business in each historical period presented, which may differ from the assets, liabilities and employees assumed by the Buyer at the closing;
—
The adjustments to the unaudited pro forma results of operations reflect our estimates of operating costs and expenses that we consider directly related to the Business for each historical period, which may differ from the actual amounts eliminated after the disposition; and
—
The estimated net proceeds are subject to certain customary post-closing adjustments.

NUANCE COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
As of September 30, 2018

 
    Pro Forma Adjustments  
    As Reported    
Removal of
Imaging balance sheet items (A)
    
Use of proceeds
paid at the
closing (B) 
      
Pro Forma
Amounts
  
    (In thousands)  
ASSETS 
                                
Current assets: 
                                
Cash and cash equivalents
  
$
315,963
    
$
—
    
$
90,000
    
$
405,963
  
Marketable securities
      135,579        —                135,579  
Accounts receivable, net
      378,832        (30,959 )               347,873  
Prepaid expenses and other current assets
      98,257        (3,443 )               94,814  
Total current assets
      928,631      
(34,402
 )     
90,000
        984,229  
 
                                
Marketable securities
      21,932        —                21,932  
Land, building and equipment, net
      155,894        (2,442 )               153,452  
Goodwill
      3,504,457        (257,352 )               3,247,105  
Intangible assets, net 
      549,508        (99,507 )               450,001  
Other assets
      141,957        (196 )               141,761  
Total assets 
   $   5,302,379     $   (393,899 )    $   90,000     $   4,998,480  
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY 
                                
                                 
Current liabilities: 
                                
Current portion of long-term debt 
   $   —     $  —     $  —     $  —  
Contingent and deferred acquisition payments 
      14,211        —                14,211  
Accounts payable, accrued expenses and other current liabilities 
      366,160        (15,909 )       —        350,251  
Deferred revenue 
      383,793        (53,104 )               330,689  
Total current liabilities 
      764,164        (69,013 )       —        695,151  
                                 
Long-term debt 
      2,185,361        —        (300,000 )       1,885,361  
Deferred revenue, net of current portion 
      489,177        (54,861 )               434,316  
Other liabilities 
      146,181        (2,657 )       —        143,524  
Total liabilities 
      3,584,883        (126,531 )       (300,000 )       3,158,352  
                                 
Stockholders' equity 
      1,717,496        (267,368 )       390,000        1,840,128  
Total liabilities and stockholders' equity 
   $  5,302,379     $   (393,899 )    $   90,000     $   4,998,480  
 

See accompanying notes.
NUANCE COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the fiscal year ended September 30, 2018
 
 
   
As Reported
    
Removal of Income
    
Pro Forma
  
   
Fiscal Year 2018
    
Statement Items (C)
    
Fiscal Year 2018
  
Revenues:
  
(In thousands, except per share amounts)
  
Professional services and hosting
  
$
  1,049,448    
$
  (3,726 )   
$
  1,045,722  
Product and licensing
    
684,230
      
(140,211
 )    
544,019
  
Maintenance and support
    
317,983
      
(65,426
 )    
252,557
  
Total revenues
    
2,051,661
      
(209,363
 )    
1,842,298
  
Cost of revenues:
                        
Professional services and hosting
    
681,516
      
(3,138
 )    
678,378
  
Product and licensing
    
77,086
      
(20,287
 )    
56,799
  
Maintenance and support
    
58,095
      
(18,771
 )    
39,324
  
Amortization of intangible assets
    
56,873
      
(5,987
 )    
50,886
  
Total cost of revenues
    
873,570
      
(48,183
 )    
825,387
  
Gross profit
    
1,178,091
      
(161,180
 )    
1,016,911
  
Operating expenses:
                        
Research and development
    
305,323
      
(26,588
 )    
278,735
  
Sales and marketing
    
388,305
      
(76,593
 )    
311,712
  
General and administrative
    
229,774
      
(3,890
 )    
225,884
  
Amortization of intangible assets
    
91,093
      
(17,096
 )    
73,997
  
Acquisition-related costs, net
    
16,101
      
(8
 )    
16,093
  
Restructuring and other charges, net
    
63,498
      
(6,472
 )    
57,026
  
Impairment of goodwill and other intangible assets
    
170,941
      
—
      
170,941
  
Total operating expenses
    
1,265,035
      
(130,647
 )    
1,134,388
  
(Loss) income from operations
    
(86,944
 )    
(30,533
 )    
(117,477
 )
Other income (expense):
                        
Interest income
    
9,327
      
—
      
9,327
  
Interest expense
    
(137,253
 )    
16,125
      
(121,128
 )
Other expense, net
    
(1,865
 )    
44
      
(1,821
 )
(Loss) income before income taxes
    
(216,735
 )    
(14,364
 )    
(231,099
 )
(Benefit) provision for income taxes
    
(56,807
 )    
(5,513
 )    
(62,320
 )
Net loss
  
$
  (159,928 )   
$
  (8,851 )   
$
  (168,779 ) 
Net loss per share:
                        
Basic
   $   (0.55 )         
$
  (0.58 ) 
Diluted
   $   (0.55 )         
$
  (0.58 ) 
Weighted average common shares outstanding:
                  
Basic
    
291,318
              
291,318
  
Diluted
    
291,318
              
291,318
  
 

See accompanying notes.
NUANCE COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the fiscal year ended September 30, 2017
 

   
As Reported
    
Removal of Income
    
Pro Forma
  
   
Fiscal Year 2017
    
Statement Items (C)
    
Fiscal Year 2017
  
Revenues:
  
(In thousands, except per share amounts)
  
Professional services and hosting
  
$
  976,893    
$
  (10,327 )   
$
  966,566  
Product and licensing
    
635,391
      
(141,480
 )    
493,911
  
Maintenance and support
    
327,078
      
(59,380
 )    
267,698
  
Total revenues
    
1,939,362
      
(211,187
 )    
1,728,175
  
Cost of revenues:
                        
Professional services and hosting
    
660,849
      
(6,250
 )    
654,599
  
Product and licensing
    
74,004
      
(19,900
 )    
54,104
  
Maintenance and support
    
54,094
      
(16,851
 )    
37,243
  
Amortization of intangible assets
    
64,853
      
(6,961
 )    
57,892
  
Total cost of revenues
    
853,800
      
(49,962
 )    
803,838
  
Gross profit
    
1,085,562
      
(161,225
 )    
924,337
  
Operating expenses:
                        
Research and development
    
266,097
      
(26,172
 )    
239,925
  
Sales and marketing
    
398,130
      
(73,760
 )    
324,370
  
General and administrative
    
166,677
      
(3,612
 )    
163,065
  
Amortization of intangible assets
    
113,895
      
(21,056
 )    
92,839
  
Acquisition-related costs, net
    
27,740
      
(32
 )    
27,708
  
Restructuring and other charges, net
    
61,054
      
(1,131
 )    
59,923
  
Impairment of goodwill and other intangible assets
    
—
      
—
      
—
  
Total operating expenses
    
1,033,593
      
(125,763
 )    
907,830
  
(Loss) income from operations
    
51,969
      
(35,462
 )    
16,507
  
Other income (expense):
                        
Interest income
    
6,922
      
—
      
6,922
  
Interest expense
    
(156,889
 )    
—
      
(156,889
 )
Other expense, net
    
(21,017
 )    
(193
 )    
(21,210
 )
(Loss) income before income taxes
    
(119,015
 )    
(35,655
 )    
(154,670
 )
(Benefit) provision for income taxes
    
31,981
      
(8,310
 )    
23,671
  
Net loss
  
$
  (150,996 )   
$
  (27,345 )   
$
  (178,341 ) 
Net loss per share:
                        
Basic
   $  (0.52 )         
$
  (0.62 ) 
Diluted
   $  (0.52 )         
$
  (0.62 ) 
Weighted average common shares outstanding:
                  
Basic
    
289,348
              
289,348
  
Diluted
    
289,348
              
289,348
  


See accompanying notes.
NUANCE COMMUNICATIONS, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
For the fiscal year ended September 30, 2016
 
   
As Reported
    
Removal of Income
    
Pro Forma
  
   
Fiscal Year 2016
    
Statement Items (C)
    
Fiscal Year 2016
  
Revenues:
  
(In thousands, except per share amounts)
  
Professional services and hosting
   $  955,329     $  (5,699 )    $  949,630  
Product and licensing
    
669,227
      
(167,114
 )    
502,113
  
Maintenance and support
    
324,347
      
(55,763
 )    
268,584
  
Total revenues
    
1,948,903
      
(228,576
 )    
1,720,327
  
Cost of revenues:
                        
Professional services and hosting
    
626,168
      
(5,108
 )    
621,060
  
Product and licensing
    
86,379
      
(24,795
 )    
61,584
  
Maintenance and support
    
54,077
      
(16,084
 )    
37,993
  
Amortization of intangible assets
    
62,876
      
(8,617
 )    
54,259
  
Total cost of revenues
    
829,500
      
(54,604
 )    
774,896
  
Gross profit
    
1,119,403
      
(173,972
 )    
945,431
  
Operating expenses:
                        
Research and development
    
271,130
      
(24,304
 )    
246,826
  
Sales and marketing
    
390,866
      
(71,295
 )    
319,571
  
General and administrative
    
168,473
      
(4,138
 )    
164,335
  
Amortization of intangible assets
    
108,021
      
(22,498
 )    
85,523
  
Acquisition-related costs, net
    
17,166
      
(343
 )    
16,823
  
Restructuring and other charges, net
    
25,224
      
(1,019
 )    
24,205
  
Impairment of goodwill and other intangible assets
    
—
      
—
      
—
  
Total operating expenses
    
980,880
      
(123,597
 )    
857,283
  
(Loss) income from operations
    
138,523
      
(50,375
 )    
88,148
  
Other income (expense):
                        
Interest income
    
4,438
      
—
      
4,438
  
Interest expense
    
(132,732
 )    
—
      
(132,732
 )
Other expense, net
    
(8,490
 )    
163
      
(8,327
 )
(Loss) income before income taxes
    
1,739
      
(50,212
 )    
(48,473
 )
(Benefit) provision for income taxes
    
14,197
      
(3,967
 )    
10,230
  
Net loss
   $  (12,458 )    $  (46,245 )    $  (58,703 ) 
Net loss per share:
                        
Basic
   $  (0.04 )          $  (0.20 ) 
Diluted
   $  (0.04 )          $  (0.20 ) 
Weighted average common shares outstanding:
                  
Basic
    
292,129
              
292,129
  
Diluted
    
292,129
              
292,129
  
 

See accompanying notes.

NUANCE COMMUNICATIONS, INC.
NOTES TO THE UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Basis of Presentation

The unaudited pro forma condensed consolidated financial statements are based on our historical financial statements included within our Annual Report on Form 10-K for fiscal year 2018, as adjusted to give effect to the disposition of the Business. The unaudited pro forma condensed statements of operations for fiscal years 2018, 2017, and 2016 give effect to the disposition of the Business as if it had occurred on October 1, 2016. Additionally, the unaudited pro forma condensed statements of operations for fiscal year 2018 gives effect to the repayment of the 5.375% Senior Notes as if it had occurred on October 1, 2017. The unaudited pro forma condensed balance sheet as of September 30, 2018 gives effect to the disposition of the Business and the repayment of 5.375% Senior Notes as if they had occurred on September 30, 2018.

The unaudited pro forma condensed consolidated financial statements have been prepared in accordance with Article 11 of Regulation S-X and, in the opinion of management, reflect all necessary adjustments that are: (i) directly attributable to the disposition; (ii) factually supportable; and (iii) with respect to the unaudited pro forma condensed consolidated statements of operations, expected to have a continuing impact on the results of the Company.

Note 2. Pro Forma Adjustments

Adjustments to the pro forma condensed consolidated balance sheet:

(A) Removal of the assets and liabilities of the Business from the consolidated balance sheet as of September 30, 2018.
(B) Reflects receipt of net proceeds of approximately $390 million, after estimated transaction and tax expenses, subject to post-closing finalization of those adjustments as set forth in the Sale Agreement. Pursuant to the call notice issued on February 1, 2019, we are committed to use $300 million of the net proceeds to redeem the 5.375% Senior Notes.
Adjustments to the pro forma consolidated statements of operations:

(C) The pro forma adjustments for each of fiscal years 2018, 2017 and 2016 reflect the removal of the estimated revenue, costs and direct expenses of the Business and the related tax effects. The pro forma adjustments for fiscal year 2018 also reflect the reduction of interest expense had we redeemed the remaining $300 million of the 5.375% Senior Notes on October 1, 2017.

The pro forma adjustments above do not reflect the income taxes related to the disposition as we are still in the process of estimating the resulting tax impact.