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
____________
JANUARY 27, 2000 (JANUARY 26, 2000)
Date of Report (Date of Earliest Event Reported)
STERLING COMMERCE, INC.
(Exact Name of Registrant as Specified in Charter)
DELAWARE 1-14196 75-2623341
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation or Number) Identification No.)
300 CRESCENT COURT,
SUITE 1200, DALLAS, TEXAS 75201
Address of Principal Executive Office) (Zip Code)
(214) 981-1100
(Registrant's Telephone Number, Including Area Code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
ITEM 5. OTHER EVENTS.
On January 26, 2000, Sterling Commerce, Inc. ("Sterling Commerce"),
together with certain of its subsidiaries, entered into a definitive Asset
Purchase Agreement (the "Asset Purchase Agreement") to sell to Brave
Acquisition Corp., an affiliate of Francisco Partners, L.P., the assets
related to the operation of Sterling Commerce's Managed Systems Division,
formerly known as XcelleNet. The purchase price for the assets of MSD is
approximately $50 million, subject to adjustment, consisting of
approximately $40 million in cash and a $10 million promissory note payable
to Sterling Commence and the assumption of certain liabilities. The
transaction is also subject to customary closing conditions.
On January 27, 2000, Sterling Commerce issued a press release
announcing the execution of the Asset Purchase Agreement. The press
release is filed herewith as Exhibit 99.1 and is hereby incorporated by
reference in its entirety.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS.
(c) Exhibits.
EXHIBIT
NO. DESCRIPTION
--------- -----------
99.1 Press Release, dated January 27, 2000, issued by
Sterling Commerce, Inc.
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.
STERLING COMMERCE, INC.
By: /s/ Dennis Byrnes
------------------------
Name: Dennis Byrnes
Title: Vice President
and Assistant General Counsel
Date: January 27, 2000
STERLING COMMERCE, INC.
CURRENT REPORT ON FORM 8-K
REPORT DATED JANUARY 27, 2000
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
--------- -----------
99.1 Press Release dated January 27, 2000 issued by Sterling
Commerce, Inc.
[STERLING COMMERCE LOGO] EXHIBIT 99.1
NEWS RELEASE
STERLING COMMERCE ANNOUNCES
PRELIMINARY FIRST QUARTER RESULTS
RESULTS EXCEED EXPECTATIONS AND INCLUDE STRONG PERFORMANCE FROM NEW
OFFERINGS; COMPANY ALSO ANNOUNCES AGREEMENT FOR SALE OF XCELLENET
COLUMBUS, Ohio (January 27, 2000) -- Sterling Commerce, Inc. (SE-NYSE), a
worldwide leader in providing E-business integration solutions, today
announced preliminary financial results for its first fiscal quarter ended
December 31, 1999.
For the first quarter, the Company expects revenues to be in the range of
$137 million to $138 million and earnings per share to be $.33 to $.34.
This excludes the expected results from the XcelleNet business and the
expected charge related to its sale. The analysts' consensus estimate for
revenues and the First Call consensus estimate for earnings per share for
the first quarter were approximately $135 million and $.31, respectively.
The estimates also exclude the expected results from the XcelleNet business
and the expected charge related to its sale. The Company expects to have
approximately 81 million weighted shares outstanding.
The Company also announced it has entered into an agreement for the sale of
the XcelleNet business with Francisco Partners, a leading private equity
firm focused exclusively on the information technology industry. As
previously announced, the XcelleNet business is not closely related to the
Company's core E-business strategies. The sale is part of the Company's
fiscal 1999 realignment plan aimed at realigning the Company's resources to
its core strategies. The sale price will be approximately $50 million,
subject to adjustment, and will consist of cash and a $10 million buyer
note issued to the Company. The closing is subject to customary
conditions. In connection with the sale, the Company expects to take a $50
million charge in the first quarter. The Company expects first quarter
revenues and earnings per share, including the XcelleNet business and
excluding the charge from its sale, to be in the range of $150 million to
$151 million and $.30 to $.31, respectively. Including the charge from
this sale, the Company expects first quarter earnings per share to be in
the range of $(.28) to $(.27).
"We are pleased with the progress we have made implementing our realignment
plan, which included rapidly moving resources to focus exclusively on
targeted growth markets and the divestiture of XcelleNet," said Warner C.
Blow, CEO of Sterling Commerce. "Our new offerings are gaining traction in
the market place and contributed to the strong first quarter results. We
continued to meet or exceed the goals we set for building the business
around these target markets."
-more-
For the E-community management market, the Company introduced E-Business
Centre, a comprehensive, integrated Web marketplace that allows companies
to exchange information, transact business, and streamline relationships
with customers, suppliers and other communities globally. "What sets us
apart in this emerging market is our ability to build e-marketplaces at an
enterprise-level, an industry-level, and perhaps, most importantly, on a
global basis," said J. Brad Sharp, President and COO of Sterling Commerce.
Overall, the Company enjoyed strong growth in building, managing and
servicing E-communities with the addition of over 1400 new customers such
as Ourhouse.com, Pella Corporation, and Uniden America to an installed base
of more than 27,000 E-community management customers.
The Company continued to extend its focus in the E-business communications
infrastructure market with the delivery of CONNECT:Enterprise. This is a
solution to move and manage any data within and between enterprises using
the Internet, at any time, anywhere, and fully secured. The Company
secured ten new users including UMB Bank, Bank of New York, Qwest,
MCI/Worldcom and ENEL, a top European electricity provider.
Sterling Commerce further expanded its capabilities in the E-business
process integration market by introducing GENTRAN:Catalyst, a new message
broker offering aimed at the rapidly growing enterprise application and Web
integration markets. Fundamentally, it provides companies a way to
integrate applications inside the enterprise. New customers for this
solution included Standard Register and Leica. Additionally, the Company
closed sixteen new GENTRAN:WebSuite deals with companies like Harley
Davidson, The Limited and Alcan Aluminum.
The Company also announced considerable progress in the E-Sourcing market
where it provides resources and expertise to solve customer business
problems through managed E-business integration services and outsourcing.
The Company completed eight Web consulting engagements with large companies
like The Limited, Costco, and Johnson Controls. Finally, six new
outsourcing deals were signed with leading companies such as Baltimore Gas
and Electric, Owens Corning, Arch Communications and Medcenter.com
"Entering 2000, Sterling Commerce is a focused, Internet-driven
organization," commented Mr. Blow. "We are excited about the opportunities
available to us to help our customers benefit from E-business. Our
offerings are at the heart of this rapidly growing industry. With our
industry experience, deep customer relationships, and leading edge
solutions capabilities, we are looking forward to continuing to expand our
position as the leading E-business integration solution provider."
The Company has not finalized its results for the first quarter. Except
for this announcement, the Company does not intend to provide further
detail on its first quarter results until it announces final results and
files its Form 10-Q in mid-February.
-more-
About Francisco Partners
Francisco Partners is a leading private equity firm focused on buyout and
recapitalization investments in technology companies. Headquartered in
Si`licon Valley, Francisco Partners targets public companies, divisions of
public companies and private companies with transaction values ranging from
$50 million to in excess of $2 billion. The firm's principals have made
substantial investments in over 20 technology companies, including the
largest technology buyout in history, the $1.8 billion purchase of On
Semiconductor from Motorola.
About Sterling Commerce
Sterling Commerce is a worldwide leader in providing E-business integration
solutions for the Global 5000 and their commerce communities. The Company
is one of 40 companies included in the Dow Jones Internet Services Index
and one of 100 companies included in the USA Today Internet 100 Stock
Index. The Company provides solutions to address E-business process
integration, E-community management, E-business communication
infrastructure and E-sourcing.
For more information, visit the Sterling Commerce Web site at
www.sterlingcommerce.com.
FORWARD-LOOKING
This news release contains certain forward-looking statements and
information that are based on the beliefs of, and information currently
available to, the Company's management, as well as estimates and
assumptions made by the Company's management. Words such as "anticipate,"
"believe," "estimate," "expect," "future," "intend," "plan" and similar
expressions, as they relate to the Company or the Company's management,
identify forward-looking statements. Such statements reflect the current
views of the Company with respect to future events and are subject to
certain risks, uncertainties and assumptions relating to the Company's
operation and results of operations, competitive factors and pricing
pressures, shifts in market demand, the performance and needs of the
industries served by the Company, the costs of product development and
other risks and uncertainties, including, in addition to any risks
discussed in the Sterling Commerce, Inc. 1999 Annual Report on Form 10K
under the section titled "Risk Factors," uncertainties with respect to
changes or developments in social, economic, business, industry, market,
legal and regulatory circumstances and conditions and actions taken or
omitted to be taken by third parties, including the Company's stockholders,
customers, suppliers, business partners, competitors and legislative,
regulatory, judicial and other governmental authorities and officials.
Should one or more of these risks or uncertainties materialize, or should
the underlying estimates or assumptions prove incorrect, actual results or
outcomes may vary significantly from those anticipated, believed,
estimated, expected, intended or planned.
Contact: Sterling Commerce, Inc.
(614) 793-7000
Lon Baugh
Vice President, Investor Relations
