8-K/A 1 a2167064z8-ka.htm FORM 8-K/A
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K/A
(Amendment No. 1)

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of report (Date of earliest event reported): January 31, 2006 (January 13, 2006)

Kenexa Corporation



(Exact Name of Registrant as Specified in Charter)

Pennsylvania
  001-51358
  23-3024013
(State or Other Jurisdiction
of Incorporation)
  (Commission File Number)   (IRS Employer Identification No.)
650 East Swedesford Rd
Wayne, PA 19087

  19087
(Address of Principal Executive Offices)   (Zip Code)

Registrant's telephone number, including area code: (610) 971-9171

N/A



(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:

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))




Item 2.01    Completion of Acquisition or Disposition of Assets

        On January 17, 2006, Kenexa Corporation ("Kenexa") filed with the Securities and Exchange Commission (the "Commission") a Report on Form 8-K (the "Initial 8-K Report") with respect to its acquisition of Webhire, Inc., a Delaware corporation ("Webhire") pursuant to the terms of that certain Agreement and Plan of Merger dated as of December 21, 2005, by and among Kenexa, Kenexa Technology, Inc., a Pennsylvania corporation ("Kenexa Technology"), Kenexa Acquisition Corp., a Delaware corporation ("Acquisition Sub"), Webhire and Gazaway L. Crittenden, as Representative of the equityholders of Webhire (the "Merger Agreement"). Webhire is a provider of end-to-end talent management solutions for recruitment and human resource professionals across all industries. The acquisition was completed on January 13, 2006.

        As permitted under Items 9.01(a) and (b) of Form 8-K, Kenexa indicated that it would file financial statements and pro forma financial information required under Item 9.01 of Form 8-K no later than the date required. This Amendment No. 1 of the Current Report on Form 8-K/A provides the required financial information and amends Item 9.01(a) and (b) of the Initial 8-K Report filed by Kenexa on January 17, 2006.

Item 9.01    Financial Statements and Exhibits

(a)   Financial Statements of Businesses Acquired.

    Webhire, Inc.

    Attached as Exhibit 99.1 hereto are the consolidated balance sheets of Webhire, Inc. as of September 30, 2005 and 2004 and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended September 30, 2005 and the related notes to consolidated financial statements.

(b)   Pro Forma Financial Information.

        Attached hereto is the:

    Kenexa Corporation and Subsidiaries Pro Forma Consolidated Financial Statement (unaudited)

    Pro Forma Consolidated balance sheets for the nine months ended September 30, 2005 (unaudited)

    Pro Forma Consolidated statements of operations for the nine months ended September 30, 2005 (unaudited)

    Notes to Pro Forma Consolidated financial statements (unaudited)

        The unaudited pro forma condensed combined financial information is presented for informational purposes only. The pro forma data is not necessarily indicative of what Kenexa's financial position or results of operations actually would have been had Kenexa completed the acquisition at the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or operating results of the combined company.

(c)   Exhibits

        Exhibit 23.1—Consent of Brown & Brown, LLP

        Exhibit 99.1—Webhire, Inc.: Consolidated Financial Statements and Report of Independent Auditors

    Consolidated Financial Statements:

    Consolidated Balance sheets as of September 30, 2005 and September 30, 2004

    Consolidated Statements of operations for the years ended September 30, 2005, 2004 and 2003

      Consolidated Statements of stockholders' equity for the years ended September 30, 2005, 2004 and 2003

      Consolidated Statements of cash flows for the years ended September 30, 2005, 2004 and 2003

    Notes to Consolidated Financial Statements


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.

    Kenexa Corporation

Date: January 31, 2006

 

By:

 

/s/  
DONALD F. VOLK      
Name: Donald F. Volk
Title: Chief Financial Officer


Index to Unaudited Pro Forma Consolidated Financial Statements

 
  Page

Kenexa Corporation and Subsidiaries Pro Forma Consolidated Financial Statements (Unaudited)

 

P-2

Pro Forma Consolidated balance sheets as of September 30, 2005 (unaudited)

 

P-3

Pro Forma Consolidated statements of operations for the nine months ended September 30, 2005 (unaudited)

 

P-4

Pro Forma Consolidated statement of operations for the twelve months ended December 31, 2004 (unaudited)

 

P-5

Notes to Pro Forma Consolidated financial statements (unaudited)

 

P-6

P-1



Kenexa Corporation and Subsidiaries

Pro Forma Consolidated Financial Statements

(Unaudited)

        On January 13, 2006, Kenexa Corporation, a Pennsylvania corporation (the "Company"), completed its acquisition of Webhire, Inc., a Delaware corporation ("Webhire") pursuant to the terms of that certain Agreement and Plan of Merger dated as of December 21, 2005, by and among the Company, Kenexa Technology, Inc., a Pennsylvania corporation ("Kenexa Technology"), Kenexa Acquisition Corp., a Delaware corporation ("Acquisition Sub"), Webhire and Gazaway L. Crittenden, as Representative of the equity holders of Webhire (the "Merger Agreement"). Webhire is a provider of end-to-end talent management solutions for recruitment and human resource professionals across all industries.

        The unaudited pro forma consolidated balance sheet of the Company as of September 30, 2005, has been prepared as if the Company's acquisition of Webhire had been consummated on September 30, 2005. The unaudited pro forma consolidated income statements for the year ended December 31, 2004 and for the nine months ended September 30, 2005, are presented as if the Company's acquisition of Webhire had occurred on January 1, 2004 and the effect was carried forward through the year ended December 31, 2004 and nine month period ended September 30, 2005.

        The pro forma consolidated financial statements do not purport to represent what the Company's financial position or results of operations would have been assuming the completion of the Company's acquisition of Webhire had occurred on January 1, 2004, nor do they purport to project the Company's financial position or results of operations at any future date or for any future period.

        These pro forma consolidated financial statements should be read in conjunction with:

    (a)
    the Company's Form S-1 registration statement filed June 24, 2005.

    (b)
    the Company's Quarterly report on Form 10-Q for the period ended September 30, 2005.

    (c)
    the Company's Form 8-K filed on December 23, 2005.

P-2



Kenexa Corporation and Subsidiaries

Pro forma Consolidated Balance Sheets (unaudited)
as of September 30, 2005
(in thousands)

 
  Webhire, Inc.
(A)

  Kenexa
(B)

  Pro forma
Adjustments

  F/N
  Pro forma
as Adjusted

 
Assets                              
Current Assets                              
  Cash and cash equivalents   $ 3,054   $ 39,093   $ (34,400 ) (C)   $ 7,747  
  Accounts receivable, net of allowance for doubtful accounts     1,193     10,426             11,619  
  Unbilled receivables         903             903  
  Deferred income taxes         2,016             2,016  
  Prepaid expenses and other current assets     613     2,245             2,858  
   
 
 
     
 
Total current assets     4,860     54,683     (34,400 )       25,143  
  Property and equipment, net of accumulated depreciation     675     4,396     75   (C)     5,146  
  Software, net of accumulated depreciation     1,024     765               1,789  
  Goodwill         8,811     34,307   (C)     43,118  
  Intangible assets, net of accumulated amortization         139     900   (C)     1,039  
  Deferred financing costs, net of accumulated amortization         73       (C)     73  
  Other assets     210     462             672  
   
 
 
     
 
Total assets   $ 6,769   $ 69,329   $ 82       $ 76,180  
   
 
 
     
 

Liabilities and Shareholders' (Deficiency) Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Current liabilities                              
  Accounts payable     554     2,993             3,547  
  Notes payable, current     51     93             144  
  Commissions payable         807             807  
  Other accrued liabilities     666     2,456             3,122  
  Accrued compensation and benefits         3,795     740   (D)     4,535  
  Unearned revenue     4,368     11,031             15,399  
  Capital lease obligations     216     211             427  
   
 
 
     
 
Total current liabilities     5,855     21,386     740         27,981  
  Capital lease obligations, less current portion     34     215             249  
  Notes payable, less current portion         132             132  
  Deferred Taxes     222                 222  
  Other liabilities         66             66  
   
 
 
     
 
Total liabilities     6,111     21,799     740         28,650  

Shareholders' (deficiency) equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
  Common stock     47     174     (47 ) (E)     174  
  Additional paid-in capital     70,217     97,088     (70,217 ) (E)     97,088  
  Deferred Compensation         (1,160 )           (1,160 )
  Notes receivable for class A common stock         (208 )           (208 )
  Treasury stock     (831 )       831   (E)      
  Accumulated other comprehensive (loss) income         35             35  
  Accumulated deficit     (68,775 )   (48,399 )   68,775   (E)     (48,399 )
   
 
 
     
 
Total shareholders' (deficiency) equity     658     47,530     (658 )       47,530  
Total liabilities and shareholders' (deficiency) equity   $ 6,769   $ 69,329   $ 82       $ 76,180  
   
 
 
     
 

P-3



Kenexa Corporation and Subsidiaries

Pro forma Consolidated Statements of Operations (unaudited)
For the Nine Months Ended September 30, 2005
(in thousands, except share and par share data)

 
  Webhire, Inc.
(A)

  Kenexa
(B)

  Pro forma
Adjustments

  F/N
  Pro forma
as Adjusted

 
Revenue                              
Subscription revenue   $ 6,628   $ 36,371   $       $ 42,999  
Other revenue     2,442     11,200             13,642  
   
 
 
     
 
Total revenue     9,070     47,571             56,641  
Cost of revenue (exclusive of depreciation, shown separately below)     1,998     13,592     (221 ) (C)     15,369  
   
 
 
     
 
Gross profit     7,072     33,979     221         41,272  
Operating expenses:                              
Sales and marketing     2,668     11,749     (419 ) (C)     13,998  
General and administrative     3,462     10,911     (778 ) (C)     13,595  
Research and development     1,312     3,038     (168 ) (C)     4,182  
Depreciation and amortization     1,017     1,555     (225 ) (D)     2,347  
   
 
 
     
 
Total operating expenses     8,459     27,253     (1,590 )       34,122  
   
 
 
     
 
Income (loss) from continuing operations before income taxes and interest expense     (1,387 )   6,726     1,811         7,150  
Interest (income) expense     (47 )   (222 )           (269 )
Interest on mandatory redeemable shares         3,396             3,396  
   
 
 
     
 
Income (loss) from continuing operations before income tax     (1,340 )   3,552     1,811         4,023  
Income tax (benefit) expense on continuing operations     (1 )   477             476  
   
 
 
     
 
Net Income (loss)     (1,339 )   3,075     1,811         3,547  
Accretion of redeemable class B common shares and class C common shares         41,488             41,488  
   
 
 
     
 
Net loss available to common shareholders   $ (1,339 ) $ (38,413 ) $ 1,811       $ (37,941 )
   
 
 
     
 
Weighted average shares used to compute net loss available to common shareholders per common share—basic and diluted           9,558,486               9,558,486  
Basic and diluted loss per share:           (4.02 )             (3.97 )

P-4



Kenexa Corporation and Subsidiaries

Pro forma Consolidated Statements of Operations (unaudited)
For the Twelve Months Ended December 31, 2004
(in thousands, except share and par share data)

 
  Webhire, Inc.
(A)

  Kenexa
(B)

  Pro forma
Adjustments

  F/N
  Pro forma
as Adjusted

 
Revenue                              
Subscription revenue   $ 8,320   $ 36,348   $       $ 44,668  
Other revenue     3,565     9,952             13,517  
   
 
 
     
 
Total revenue     11,885     46,300             58,185  
Cost of revenue (exclusive of depreciation, shown separately below)     2,234     12,230     (295 ) (C)     14,169  
   
 
 
     
 
Gross profit     9,651     34,070     295         44,016  
Operating expenses:                              
Sales and marketing     3,339     13,351     (537 ) (C)     16,153  
General and administrative     5,093     10,243     (1,042 ) (C)     14,294  
Research and development     1,901     4,271     (224 ) (C)     5,948  
Depreciation and amortization     1,140     2,476     (300 ) (D)     3,316  
   
 
 
     
 
Total operating expenses     11,473     30,341     (2,103 )       39,711  
   
 
 
     
 
Income (loss) from continuing operations before income taxes and interest expense     (1,822 )   3,729     2,398         4,305  
Interest (income) expense     (54 )   160             106  
Interest on mandatory redeemable shares         8,386             8,386  
   
 
 
     
 
Income (loss) from continuing operations before income tax     (1,768 )   (4,817 )   2,398         (4,187 )
Income tax (benefit) expense on continuing operations     (3 )   (723 )           (726 )
   
 
 
     
 
Net loss     (1,765 )   (4,094 )   2,398         (3,461 )
Accretion of redeemable class B common shares and class C common shares         1,020             1,020  
   
 
 
     
 
Net loss available to common shareholders   $ (1,765 ) $ (5,114 ) $ 2,398       $ (4,481 )
   
 
 
     
 
Weighted average shares used to compute net loss available to common shareholders per common share—basic and diluted           5,995,389               5,995,389  
Basic and diluted loss per share:           (0.85 )             (0.75 )

P-5



Kenexa Corporation

Notes to Pro Forma Consolidated Financial Statements
(Unaudited)

Notes to Pro Forma Consolidated Balance Sheet as of September 30, 2005


(A)

 

To reflect the unaudited balance sheet of Webhire, Inc. as of September 30, 2005.

(B)

 

To reflect the unaudited balance sheet of the Company as of September 30, 2005, as reported on the Company's Form 10-Q.

(C)

 

To record the consideration of $34.4 million for the purchase of Webhire, Inc., financed entirely through existing cash. These amounts represent adjustments related to the acquisition under the purchase method of accounting. The total purchase price has been allocated on a preliminary basis to assets acquired and liabilities assumed based upon management's best estimate of their fair value with excess cost over the net tangible and intangible assets acquired allocated to goodwill: $0.9 million of the purchase price is allocated to software. Based on the finalization of a purchase price allocation study, a portion of the purchase may be allocated to other intangible assets such as customer lists or trademarks which will be amortized over their useful lives.

(D)

 

To reflect accrued severance expense for employees terminated in connection with the acquisition and in accordance with employment agreements in place with Webhire. The Company notified employees of their termination on the acquisition date and entered into severance agreements with such employees that state the termination benefit.

(E)

 

To eliminate Webhire, Inc.'s shareholders' equity as of September 30, 2005.

P-6



Kenexa Corporation

Notes to Pro Forma Consolidated Financial Statements (Continued)
(Unaudited)

Notes to Pro Forma Consolidated Statements of Operations for the nine months ended September 30, 2005 and for the year ended December 31, 2004


(A)

 

 

 

To reflect the historical unaudited statement of operations of Webhire, Inc. as of September 30, 2005 and December 30, 2004.

(B)

 

 

 

To reflect the consolidated historical statement of operations of the Company as of September 30, 2005, as reported on the Company's Form 10-Q, and December 31, 2004 as reported on the Company's form S-1 registration statement.

(C)

 

 

 

To reflect reduced staff expense including salaries, taxes and fringe benefits. The Company notified employees of their termination on the acquisition date and entered into severence agreements with such employees that state the termination benefit.

(D)

 

 

 

To reflect the amortization of intangible assets and depreciation of revaluing of property and equipment (per the allocation of the estimated purchase price) that would have been recorded in the period, using a useful life of three years. The amortization is subject to revision based upon the completion of the purchase price allocation study.

 

 

 

 

 

P-7




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SIGNATURE
Index to Unaudited Pro Forma Consolidated Financial Statements
Kenexa Corporation and Subsidiaries Pro Forma Consolidated Financial Statements (Unaudited)
Kenexa Corporation and Subsidiaries Pro forma Consolidated Balance Sheets (unaudited) as of September 30, 2005 (in thousands)
Kenexa Corporation and Subsidiaries Pro forma Consolidated Statements of Operations (unaudited) For the Nine Months Ended September 30, 2005 (in thousands, except share and par share data)
Kenexa Corporation and Subsidiaries Pro forma Consolidated Statements of Operations (unaudited) For the Twelve Months Ended December 31, 2004 (in thousands, except share and par share data)
Kenexa Corporation Notes to Pro Forma Consolidated Financial Statements (Unaudited)
Kenexa Corporation Notes to Pro Forma Consolidated Financial Statements (Continued) (Unaudited)