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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
Cotelligent, Inc.
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(Exact name of registrant as specified in its charter)
June 30, 2000
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Date of Report (Date of earliest event reported)
Delaware 0-27412 94-3173918
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(State or other juris- (Commission File Number) (I.R.S. Employer
diction of incorporation) Identification No.)
101 California Street - Suite 2050 San Francisco, CA 94111
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(Address of principal executive offices) (Zip Code)
(415)439-6400
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(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
In March 2000, Cotelligent, Inc. ("the Company") committed to a formal plan to
divest its IT staff augmentation business. Pursuant to this decision, on June
14, 2000, the Company entered into a definitive agreement with COMSYS
Information Technology Services, Inc., (COMSYS") to sell the majority of this
business. This included operations in Atlanta, Boston, Cedar Rapids, Cleveland,
Dallas, Denver, Ft. Lauderdale, Minneapolis, Orlando, Pittsburgh, Portland,
Sacramento, St. Louis, San Diego, San Francisco, San Jose, San Mateo, San Ramon
and Seattle. The sale transaction was closed on June 30, 2000. The consideration
for the sale included $116.0 million in cash paid at closing (less a $5 million
holdback for liabilities that may arise within the next year), a contingent
payment of up to $5.0 million relating to operating results for the quarter
ending June 30, 2000 and the assumption of certain liabilities totaling
approximately $10.0 million. The sale agreement excluded certain aged
receivables and lease commitments negotiated between the two parties and
required the Company to service certain back-office operations of the purchased
locations potentially to June 30, 2001.
A copy of the Asset Purchase Agreement by and among the Company, Cotelligent
USA, Inc. and COMSYS dated as of June 14, 2000 (the "Asset Purchase Agreement")
was filed with the Securities and Exchange Commission on June 20, 2000 as an
Exhibit to the Company's Registration Statement of Form S-3/A (File No.
333-37586) and is incorporated hereto by reference.
In addition, the Company closed the sale of its Orlando operations for $0.6
million on July 14, 2000. A copy of the Purchase and Sale of Assets Agreement
between the Company, Cotelligent USA, Inc. and Hurst Technologies, Inc. will be
filed with an amendment to this current report once available.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
Financial Statements Page
-------------------- ----
Unaudited Pro Forma Consolidated Balance Sheet as of March 31, 2000..... 3
Unaudited Pro Forma Consolidated Statement of Operations for the fiscal
year ended March 31, 2000............................................... 4
Unaudited Notes to Pro Forma Consolidated Financial Statements.......... 5
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COTELLIGENT, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
MARCH 31, 2000
(In thousands, except share data)
<TABLE>
<CAPTION>
PRO FORMA
AS REPORTED ADJUSTMENTS PRO FORMA
(AUDITED) (UNAUDITED) (UNAUDITED)
------------ ----------- -----------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 4,794 $ 54,255 (a) $ 59,049
Accounts receivable, including unbilled accounts of $5,716
and net of allowance for doubtful accounts of $1,880..... 19,735 19,735
Deferred tax assets....................................... 564 564
Current portion of notes receivable from officers......... 505 505
Prepaid expenses and other................................ 2,289 10,000 (b) 12,289
Net assets of discontinued operations..................... 88,421 (54,151)(c) 34,270
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Total current assets.................................... 116,308 126,412
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Property and equipment, net................................. 5,697 5,697
Goodwill, net of accumulated amortization of $1,913......... 35,236 35,236
Notes receivable from officers.............................. 1,119 1,119
Other assets................................................ 1,050 1,050
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Total assets............................................ $159,410 $169,514
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt and current maturities of long-term debt.. $ 48,958 (48,958)(a) $ -
Accounts payable.......................................... 2,055 2,055
Accrued compensation and related payroll liabilities...... 6,312 6,312
Income taxes payable...................................... 1,957 14,000 (d) 15,957
Amounts due sellers of acquired business.................. 8,386 (8,386)(a) -
Deferred income tax liabilities........................... - 4,000 (d) 4,000
Other accrued liabilities................................. 5,710 11,000 (e) 16,710
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Total current liabilities............................... 73,378 45,034
Long-term debt.............................................. 52 52
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Total liabilities....................................... 73,430 45,086
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Total stockholders' equity.................................. 85,980 38,448 (a,b,c,d,e) 124,428
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Total liabilities and stockholders' equity.............. $159,410 $169,514
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</TABLE>
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COTELLIGENT, INC.
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 2000
(In thousands, except share data)
<TABLE>
<CAPTION>
PRO FORMA
AS REPORTED ADJUSTMENTS PRO FORMA
(AUDITED) (UNAUDITED) (UNAUDITED)
----------- ----------- -----------
<S> <C> <C> <C>
Revenues......................................... $ 105,564 $ 105,564
Cost of services................................. 69,995 69,995
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Gross profit................................... 35,569 35,569
Selling, general and administrative expenses..... 41,860 41,860
Depreciation and amortization of goodwill........ 3,266 3,266
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Operating income (loss).......................... (9,557) (9,557)
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Operating income (expense)
Interest expense............................... (3,915) (3,915)
Interest income................................ 278 278
Other.......................................... (119) (119)
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Total other income (expense).................... (3,756) (3,756)
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Income (loss) from continuing operations before
provision for income taxes...................... (13,313) (13,313)
Provision (benefit) for income taxes............. (4,660) (798)(d) (5,458)
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Income (loss) from continuing operations......... (8,653) (7,855)
Income (loss) from discontinued operations
(less provision (benefit) for income taxes)..... (9,990) 8,758 (g) (1,232)
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Net income (loss)................................ $ (18,643) $ (9,087)
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Earnings per share
Basic--
Income (loss) from continuing operations......... $ (0.60) $ (0.55)
Income (loss) from discontinued operations....... (0.70) (0.09)
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Net income (loss)................................ $ (1.30) $ (0.64)
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Diluted--
Income (loss) from continuing operations......... $ (0.60) (0.55)
Income (loss) from discontinued operations....... (0.70) (0.09)
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Net income (loss)................................ $ (1.30) $ (0.64)
========== ==========
Weighted average number of shares outstanding:
Basic.......................................... 14,298,693 14,298,693
Diluted........................................ 14,298,693 14,298,693
</TABLE>
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COTELLIGENT, INC.
UNAUDITED NOTES TO PRO FORMA CONSOLIDATED STATEMENTS
MARCH 31, 2000
(IN THOUSANDS)
1. Unaudited Pro Forma Consolidated Balance Sheet Adjustments:
(a) Adjustment to reflect the cash proceeds on the sale of assets to COMSYS of
$116,000, less a $5,000 escrow holdback for future contingencies, plus the
cash proceeds from the sale of the Orlando location of $600, less the payoff
of the credit line of $48,958 and the amounts due sellers of acquired
business of $8,386.
(b) Adjustments to reflect the $5,000 holdback for future contingencies and
$5,000 for the contingent proceeds related to the operating results for the
quarter ending June 30, 2000 in connection with the sale of assets to
COMSYS.
(c) Adjustment to reflect the sale of the net assets of discontinued operations
to COMSYS and the Orlando location.
(d) Adjustment to reflect federal and state income taxes on the sale of assets
to COMSYS and the Ordando location.
(e) Adjustment to reflect expense of sale and potential contingencies of $11,000
from the sale of assets to COMSYS and the Orlando location.
2. Unaudited Pro Forma Consolidated Statement of Operations Adjustments:
(f) Tax rate adjusted to reflect pro forma effective tax rate of 41%.
(g) Net income associated with the discontinued operations sold to COMSYS and
the Orlando location.
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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 hereunto duly authorized.
Cotelligent, Inc.
By: /s/ Curtis J. Parker
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Curtis J. Parker
Chief Accounting Officer
Date: July 17, 2000
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