-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A3HCKGzYIvTlvkLz/i9GtMyAwq0K87m0rmZM4B5aJK3uHirFy9Ux07YLMpwy/ms1 BVUhG1AOAtPRfmX4DudkMQ== 0000950135-95-002135.txt : 19951013 0000950135-95-002135.hdr.sgml : 19951013 ACCESSION NUMBER: 0000950135-95-002135 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19951011 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19951012 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOFTKEY INTERNATIONAL INC CENTRAL INDEX KEY: 0000719612 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 942562108 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-13069 FILM NUMBER: 95580260 BUSINESS ADDRESS: STREET 1: ONE ATHENAEUM ST CITY: CAMBRIDGE STATE: MA ZIP: 02142 BUSINESS PHONE: 6174941200 MAIL ADDRESS: STREET 1: ONE ATHENAEUM ST CITY: CAMBRIDGE STATE: MA ZIP: 02142 FORMER COMPANY: FORMER CONFORMED NAME: WORDSTAR INTERNATIONAL INC DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: MICROPRO INTERNATIONAL CORP DATE OF NAME CHANGE: 19890618 8-K 1 SOFTKEY INTERNATIONAL INC. 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): October 11, 1995 SOFTKEY INTERNATIONAL INC. _____________________________________________________________________ (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) Delaware 0-13069 94-2562108 _____________________________________________________________________ (STATE OR OTHER (COMMISSION (IRS EMPLOYER JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.) INCORPORATION) One Athenaeum Street, Cambridge, Massachusetts 02142 _____________________________________________________________________ (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (617) 494-1200 N/A (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT Total Number of Pages: Exhibit Index Appears on Page 2 Item 5. Other Events. ------------ PRIVATE OFFERING OF NOTES. On October 11, 1995, SoftKey International Inc. ("SoftKey") announced that it is making a private offering of $300,000,000 principal amount Senior Convertible Notes due 2000 (the "Notes"). The Notes will be convertible into SoftKey common stock at a fixed conversion price per share to be determined. The Notes will be redeemable by SoftKey on or after November 2, 1998 at declining redemption prices. SoftKey intends to use all or a substantial portion of the net proceeds of the offering for acquisitions and strategic alliances. There are currently no understandings, agreements or commitments with respect to any such transactions. The Notes to be offered by SoftKey in the private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent such registration or an applicable exemption from the registration requirements thereof. In connection with the offering, SoftKey disclosed the following to prospective investors. The Company has historically expanded its business through, among other strategies, acquisitions, business combinations and strategic alliances. Moreover, the consumer software industry as a whole has recently experienced consolidation. The Company believes that its customers will in the future demand that the Company offer increasing numbers of titles throughout the Company's existing product categories and, in particular, the education and entertainment categories. The Company believes that in many cases the most efficient means to acquire such titles or the ability to develop or license such titles is to enter into acquisitions, business combinations or strategic alliances with consumer software companies. The Company continuously evaluates and considers other businesses of varying sizes as potential strategic partners and candidates for acquisition and has engaged in discussions with certain businesses in pursuit of possible transactions. Certain of these businesses may be substantially larger than businesses acquired in 2 3 the past by the Company. The Company is currently evaluating and considering a number of potential transactions (both negotiated and non-negotiated) and transaction prospects, but there are currently no understandings, agreements or commitments with respect to any acquisition, business combination or strategic alliance. Moreover, there can be no assurance that the Company will enter into any such transaction or, if the Company does identify and consummate such a transaction, that the transaction will enable the Company to achieve its goals. PRELIMINARY EARNINGS. On October 11, 1995, SoftKey also announced that it expects its revenues for the third quarter ended September 30, 1995 will be $40 million and that its approximate earnings per share will be between $.33 and $.35 per share on a fully diluted basis. A copy of the press release announcing the offering and these preliminary earnings is filed as Exhibit 99.1 hereto. RESTATED AND REVISED FINANCIAL INFORMATION. In connection with the offering, SoftKey restated its unaudited financial results for the six months ended June 30, 1995 to reflect the acquisition of Future Vision Holding, Inc. on August 31, 1995, accounted for as a pooling of interests. The restated results for the six months ended June 30, 1995 restate the historical financial information for June 30, 1995 and the six month period then ended presented in SoftKey's Form 10-Q as filed with the Securities and Exchange Commission (the "Commission") on August 15, 1995. SoftKey also prepared revised unaudited pro forma financial information for the year ended December 31, 1994 and the six months ended June 30, 1995 (based on the above-referenced restated financial results) to give effect to the acquisition of tewi Verlag GmbH, which occurred on July 21, 1995. SoftKey originally prepared unaudited pro forma financial information with respect to the tewi Verlag GmbH acquisition for SoftKey's Form 8- K/A filed with the Commission on October 4, 1995. A copy of the restated financial results, which includes the revised unaudited pro forma financial information, is filed as Exhibit 99.2 hereto. 3 4 Item 7. (c) Exhibits. --------- 99.1 Press release dated October 11, 1995 99.2 Restated financial results for the six months ended June 30, 1995 (including revised unaudited pro forma financial information for the year ended December 31, 1994 and the six months ended June 30, 1995) 5 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 thereunto duly authorized. SOFTKEY INTERNATIONAL INC. -------------------------- (Registrant) By: /s/ R. Scott Murray -------------------- R. Scott Murray Chief Financial Officer October 12, 1995 - ---------------- (Date) 6 Exhibit Index -------------
Exhibit Exhibit Description Sequential No. Page No. 99.1 Press release dated October 11, 1995 99.2 Restated financial results for the six months ended June 30, 1995 (including revised unaudited pro forma financial information for the year ended December 31, 1994 and the six months ended June 30, 1995)
EX-99.1 2 PRESS RELEASE 1 EXHIBIT 99.1 Contact: R. Scott Murray Chief Financial Officer SoftKey International Inc. (617) 494-5861 For Immediate Release - --------------------- SoftKey International Inc. Announces Private Offering of $300,000,000 Principal Amount of Senior Convertible Notes and Preliminary Earnings -------------------------------------------- CAMBRIDGE, MASS., October 11, 1995 -- SoftKey International Inc. (Nasdaq: SKEY; TSE: SSK) today announced that it is making a private offering of $300,000,000 principal amount Senior Convertible Notes due 2000. The Notes will be convertible into SoftKey common stock at a fixed conversion price per share to be determined. The Notes will be redeemable by SoftKey on or after November 1, 1998 at declining redemption prices. SoftKey intends to use a substantial portion of the net proceeds of the offering for acquisitions and strategic alliances. There are currently no understandings, agreements or commitments with respect to any such transactions. The Senior Convertible Notes to be offered by SoftKey in the private placement have not been registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent such registration or an applicable exemption from the registration requirements. SoftKey also announced today that it expects its revenues for the third quarter ended September 30, 1995 will be $40 million and that its approximate earnings per share will be between $.33 - $.35 per share on a fully diluted basis. SoftKey will announce its third quarter financial results on October 24, 1995 as previously expected. EX-99.2 3 RESTATED FINANCIALS 1 EXHIBIT 99.2 SOFTKEY INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
JUNE 30, DECEMBER 31, 1995 1994 ----------- ------------ (UNAUDITED) ASSETS CURRENT ASSETS: Cash and cash equivalents....................................... $ 93,447 $ 12,205 Accounts receivable, less allowances for returns and doubtful accounts of $7,535 and $6,744, respectively.................. 20,607 16,745 Inventories..................................................... 11,725 9,795 Other current assets............................................ 8,096 8,247 --------- -------- 133,875 46,992 Property and equipment, net....................................... 11,956 9,325 Goodwill, net..................................................... 31,337 32,051 Other assets...................................................... 6,171 2,447 --------- -------- $ 183,339 $ 90,815 ========= ======== LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable and accrued liabilities........................ $ 23,064 $ 29,455 Current portion of long-term obligations........................ 7,024 2,016 --------- -------- 30,088 31,471 LONG-TERM OBLIGATIONS............................................. 7,704 17,536 DEFERRED INCOME TAXES............................................. 4,339 4,323 --------- -------- 42,131 53,330 --------- -------- STOCKHOLDERS' EQUITY.............................................. 141,208 37,485 --------- -------- $ 183,339 $ 90,815 ========= ========
The accompanying notes are an integral part of these condensed consolidated financial statements. 2 SOFTKEY INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, --------------------------- 1995 1994 ----------- ----------- REVENUES........................................................... $ 77,829 $ 62,090 COST OF REVENUES................................................... 25,907 21,743 ----------- ----------- GROSS MARGIN..................................................... 51,922 40,347 ----------- ----------- OPERATING EXPENSES: Sales, marketing and support..................................... 18,145 12,941 General and administrative....................................... 12,355 11,117 Research and development......................................... 5,667 3,308 ----------- ----------- 36,167 27,366 ----------- ----------- OPERATING INCOME................................................... 15,755 12,981 INTEREST EXPENSE, NET.............................................. (757) 315 ----------- ----------- INCOME BEFORE TAXES................................................ 14,998 13,296 PROVISION FOR INCOME TAXES......................................... 2,203 3,051 ----------- ----------- NET INCOME......................................................... $ 12,795 $ 10,245 =========== =========== NET INCOME PER SHARE-FULLY DILUTED................................. $ 0.54 $ 0.53 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING...................... 23,801,000 20,079,000
The accompanying notes are an integral part of these condensed consolidated financial statements. 3 SOFTKEY INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
SIX MONTHS ENDED JUNE 30, ------------------- 1995 1994 ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income............................................................. $12,795 $10,245 Adjustments to reconcile net income to net cash used for operating activities: Depreciation and amortization....................................... 4,334 1,640 Changes in operating assets and liabilities: Accounts receivable............................................... (3,862) (662) Accounts payable and accruals..................................... (6,391) (5,332) Other............................................................. (5,586) (9,570) ------- ------- 1,290 (3,679) ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of fixed assets, net.......................................... (6,251) (1,409) Other.................................................................. (3,724) 518 ------- ------- (9,975) (891) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Borrowing under capital leases and long-term debt, net................. 2,661 (5) Issuance of common stock, net.......................................... 91,686 5,606 Repayment of line-of-credit............................................ (4,699) -- Redemption of Series B preferred stock................................. -- (4,660) ------- ------- 89,648 941 ------- ------- EFFECT OF EXCHANGE RATE CHANGES ON CASH.................................. 279 684 NET CHANGE IN CASH AND CASH EQUIVALENTS.................................. 81,242 (2,945) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD........................... 12,205 22,797 ------- ------- CASH AND CASH EQUIVALENTS, END OF PERIOD................................. $93,447 $19,852 ======= =======
The accompanying notes are an integral part of these condensed consolidated financial statements. 4 SOFTKEY INTERNATIONAL INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (IN THOUSANDS, EXCEPT SHARE AMOUNTS) (UNAUDITED) 1. BASIS OF PRESENTATION The condensed consolidated financial statements for the six months ended June 30, 1995 and 1994 are unaudited and reflect all adjustments, consisting of normal recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the results for the interim periods. These condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 1994. The results of operations for the six months ended June 30, 1995 are not necessarily indicative of the results for the entire year ending December 31, 1995. For clarity of presentation and comparison, the periods from January 1, 1995 to July 1, 1995 and from January 1, 1994 to July 2, 1994 are referred to as the "Six Months Ended June 30, 1995" and "Six Months Ended June 30, 1994", respectively, throughout these financial statements. On August 31, 1995, the Company acquired all of the issued and outstanding capital stock of Future Vision in exchange for the issuance of 1,088,149 shares of common stock of the Company. The results for the Six Months Ended June 30, 1995 have been restated to reflect the pooling-of-interest accounting treatment of the transaction. The financial statements for periods prior to the Six Months Ended June 30, 1995 do not include amounts for this acquisition as they were deemed to be immaterial. Summarized results of operations for the Six Months Ended June 30, 1995 on a separate company and combined basis are as follows (in thousands):
SOFTKEY FUTURE VISION COMBINED ------- ------------- -------- Revenues......................................... $74,721 $ 3,108 $77,829 Operating income (loss).......................... 21,779 (6,024) 15,755 Net income (loss)................................ 17,973 (5,178) 12,795
2. GOODWILL Goodwill represents the excess of purchase price over fair market value of identifiable assets acquired. The Company evaluates the carrying value of goodwill for possible impairment on a quarterly basis. Based upon its most recent analysis, the Company believes that no impairment of goodwill exists at June 30, 1995. 3. LONG-TERM OBLIGATIONS
JUNE 30, 1995 DECEMBER 31, 1994 -------------- ----------------- Revolving line-of-credit...................................... $ 3,001 $ 7,700 Related party debt............................................ 4,954 2,123 Capital leases................................................ 2,241 2,411 Accrued minimum royalties..................................... 2,210 2,415 Other......................................................... 2,322 4,903 -------------- ----------------- 14,728 19,552 Less: current portion......................................... (7,024) (2,016) -------------- ----------------- $ 7,704 $17,536 =========== =============
The long-term related party debt includes $2,000 of debt that converted into equity in August, 1995. 4. INVENTORIES Inventories consist primarily of finished goods at June 30, 1995 and December 31, 1994. 5 5. COMPUTATION OF EARNINGS PER SHARE Net income per share is computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. Dilutive common stock equivalent shares consist of convertible debentures and notes, convertible Series A and Series B preferred stock and stock options and warrants using the treasury stock method. The computations do not include common stock equivalents where the effect would not be dilutive. Primary earnings per share computations do not materially differ from fully diluted earnings per share. 6. COMMITMENTS AND CONTINGENCIES COMPETITION ACT INQUIRY (CANADA) On June 10, 1994, the Director of Investigation and Research under the Competition Act (Canada) (the "Act") commenced an inquiry in Canada under the non-criminal, reviewable practices provisions of the Act respecting the activities of SoftKey Software Products Inc. ("SoftKey Software") in the tax preparation software business in Canada. On June 28, 1994, an order requiring SoftKey Software, along with other companies in the Canadian tax preparation software business, to produce certain documents and information respecting the Canadian tax preparation software industry was issued by the Federal Court of Canada, Trial Division. SoftKey Software has provided the Canadian Bureau of Competition Policy (the "Bureau") with the documents and information sought by the Bureau and is continuing to cooperate with the Bureau in its inquiry into the relevant activities. At this time, no formal application has been made seeking remedy under the Act. Management does not currently expect that the outcome of this inquiry will have a material adverse effect on the Company. OTHER LITIGATION The Company is a defendant in various legal actions involving copyright, breach of contract and various other claims incident to the conduct of its business. Management does not expect the Company to suffer any material liability by reason of such actions. 7. SUBSEQUENT EVENTS ACQUISITION OF TEWI VERLAG GMBH On July 21, 1995, the Company acquired tewi Verlag GmbH ("tewi"), a publisher and distributor of CD-ROM software and computer related books, located in Munich, Germany. The purchase price was settled by a combination of cash and issuance of common stock. The Company issued 99,045 shares of common stock for $3,640 and may issue additional shares of Common Stock to a former shareholder of tewi pursuant to an earn-out agreement. The Company also paid cash consideration of $12,688 for all of the share capital of tewi. The transaction will be accounted for as a purchase. The purchase price will be allocated as follows: Goodwill........................................................ $19,265 Less: net liabilities assumed................................... (2,101) ------- Stock issued and cash paid, including transaction costs......... $17,164 =======
6 The amortization of goodwill resulting from the purchase will be amortized over its estimated useful life of 20 years on a straight-line basis. Pro-forma consolidated financial information adjusted to give effect to the acquisition of tewi, is as follows:
YEAR ENDED DECEMBER 31, 1994(C) ------------------------------------------- SIX MONTHS ENDED JUNE 30, 1995 PRO ------------------------------------------- SOFTKEY TEWI ADJUSTMENTS FORMA SOFTKEY TEWI ADJUSTMENTS PRO FORMA -------- ------- ----------- -------- ------- ------- ----------- --------- (IN THOUSANDS, EXCEPT PER SHARE DATA) OPERATING INFORMATION(A): Revenues....................... $121,287 $12,320 $ -- $133,607 $77,829 $ 3,720 $ -- $81,549 Cost of revenues............... 39,085 8,913 -- 47,998 25,907 5,161 -- 31,068 -------- ------- ------ -------- ------- ------- ----- ------- Gross margin................... 82,202 3,407 -- 85,609 51,922 (1,441) -- 50,481 -------- ------- ------ -------- ------- ------- ----- ------- Sales, marketing and support................... 27,274 2,775 -- 30,049 18,145 1,439 -- 19,584 General and administrative... 22,444 1,298 963 24,705 12,355 709 482 13,546 Research and development..... 6,696 -- -- 6,696 5,667 -- -- 5,667 Purchased research and development............... -- -- -- -- -- -- -- -- Merger and reorganization costs..................... 1,079 -- -- 1,079 -- -- -- -- Provision for (gain on) product lines sold or discontinued.............. (778) -- -- (778) -- -- -- -- Provisions (reversals) for litigation................ (254) -- -- (254) -- -- -- -- -------- ------- ------ -------- ------- ------- ----- ------- Total operating expenses..... 56,461 4,073 963 61,497 36,167 2,148 482 38,797 -------- ------- ------ -------- ------- ------- ----- ------- Operating income (loss)........ 25,741 (666) (963) 24,112 15,755 (3,589) (482) 11,684 Operating income (expense)..... (535) (91) -- (626) (757) (54) -- (811) -------- ------- ------ -------- ------- ------- ----- ------- Income (loss) before taxes..... 25,206 (757) (963) 23,486 14,998 (3,643) (482) 10,873 Provision for income taxes..... 4,061 -- -- 4,061 2,203 -- -- 2,203 -------- ------- ------ -------- ------- ------- ----- ------- Net income (loss).............. $ 21,145 $ (757) $ (963) $ 19,425 $12,795 $(3,643) $(482) $ 8,670 ======== ======= ====== ======== ======= ======= ===== ======= Fully diluted net income per share........................ $1.04 $0.95 $0.54 $0.36 Shares used in computing fully diluted net income per share........................ 21,115 99 21,214 23,801 99 23,900
SIX MONTHS ENDED JUNE 30, 1995 -------------------------------------------- SOFTKEY TEWI ADJUSTMENTS PRO FORMA -------- ------- ----------- --------- BALANCE SHEET INFORMATION(B): Working Capital................................................ $103,787 $(3,412) $ -- $ 100,375 Total Assets................................................... 183,339 4,563 6,577 194,479 Total long-term obligations, less current portion.............................................. 7,704 2,224 (2,224) 7,704 Total stockholders' equity (deficit)........................... 141,208 (4,486) 8,330 145,052
- --------------- (a) The pro forma operating information has been prepared assuming the acquisition of tewi, a German publisher and distributor of CD-ROM software and computer related books, by the Company occurred at the beginning of each of the fiscal year ended December 31, 1994 and the six-month interim period ended June 30, 1995. Pro forma adjustments have been recorded to reflect the amortization of goodwill resulting from the purchase over its estimated useful life of 20 years on a straight-line basis. There were no intercorporate transactions that required elimination. (b) The pro forma balance sheet information has been prepared assuming the acquisition of tewi by the Company occurred on June 30, 1995. (c) The financial information for periods prior to the Six Months Ended June 30, 1995 do not include amounts for the acquisition of Future Vision as they were deemed to be immaterial. 7 REDEMPTION OF WARRANTS On July 31, 1995, the Company announced that it would redeem all of its 2,925,000 publicly traded warrants for $.10 per warrant on August 31, 1995 in accordance with the terms and conditions of the warrants. As of September 30, 1995, holders of such warrants received in exchange for warrants an aggregate of 289,959 shares of Common Stock. The remaining approximately 25,410 warrants were redeemed by the Company. -----END PRIVACY-ENHANCED MESSAGE-----