<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): NOVEMBER 25, 1997
ASPECT DEVELOPMENT, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
DELAWARE 0-20749 25-1622857
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer)
incorporation or organization) Identification No.)
1300 CHARLESTON ROAD 94043
MOUNTAIN VIEW, CALIFORNIA
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number, including area code: (650) 428-2700
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of CADIS, Inc., required by Item 7(a) of Form 8-
K, prepared pursuant to Rule 3-05 of Regulation S-X and filed in
accordance with Item 7(a)(4) of Form 8-K:
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Board of Directors of
CADIS, Inc.:
We have audited the accompanying consolidated balance sheets of CADIS, Inc. (a
Delaware corporation) and subsidiary as of December 31, 1995 and 1996, and the
related consolidated statements of operations, mandatorily redeemable
convertible preferred stock, junior mandatorily redeemable preferred stock and
stockholders' deficit and cash flows for each of the three years in the period
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of CADIS, Inc. and
subsidiary as of December 31, 1995 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1996, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen LLP
Denver, Colorado,
January 15, 1997.
<PAGE>
CADIS, INC.
-----------
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
December 31,
--------------------------------- September 30,
ASSETS 1995 1996 1997
------ -------------- --------------- ------------------
(Unaudited)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $1,128,183 $ 7,051,397 $ 4,158,399
Short-term investments 1,807,867 2,962,238 -
Accounts receivable, net of allowance for
doubtful accounts of $0, $0 and
$258,705 (unaudited), respectively 309,700 2,923,395 2,384,016
Other receivables 51,633 50,559 105,090
Prepaid expenses and other 78,653 262,774 705,147
---------- ----------- -----------
Total current assets 3,376,036 13,250,363 7,352,652
---------- ----------- -----------
PROPERTY AND EQUIPMENT, at cost:
Office equipment 73,520 104,762 83,061
Furniture and fixtures 96,177 123,316 369,333
Computer software 218,235 354,119 402,855
Computer hardware 888,263 1,349,501 1,827,149
Leasehold improvements - - 69,627
Automobiles - - 66,853
---------- ----------- -----------
1,276,195 1,931,698 2,818,878
Less- Accumulated depreciation (556,155) (908,932) (1,346,221)
---------- ----------- -----------
Property and equipment, net 720,040 1,022,766 1,472,657
---------- ----------- -----------
OTHER ASSETS 84,146 - -
---------- ----------- -----------
$4,180,222 $14,273,129 $ 8,825,309
========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
<PAGE>
CADIS, INC.
-----------
CONSOLIDATED BALANCE SHEETS
---------------------------
<TABLE>
<CAPTION>
December 31,
LIABILITIES AND --------------------------- September 30,
--------------- 1995 1996 1997
STOCKHOLDERS' DEFICIT ------------- ------------ -------------
--------------------- (Unaudited)
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 128,621 $ 185,564 $ 481,616
Accrued compensation and other
accrued liabilities 132,111 502,509 482,244
Deferred revenue 211,583 1,071,497 1,098,341
Prepaid royalties - 536,000 458,101
------------ ------------ ------------
Total current liabilities 472,315 2,295,570 2,520,302
------------ ------------ ------------
LONG-TERM LIABILITIES:
Deferred revenue - - 330,000
Long-term capital lease obligation - - 49,405
------------ ------------ ------------
Total long-term liabilities - - 379,405
------------ ------------ ------------
COMMITMENTS AND CONTINGENCIES
(Notes 3 and 6)
MANDATORY REDEEMABLE CONVERTIBLE PREFERRED STOCK (Note 3), $.01 par value,
aggregate liquidation preference of $12,799,997 at December 31, 1995,
and $23,760,997 at December 31, 1996 and September 30, 1997
(unaudited); 11,356,579 shares authorized at each date; 7,143,874
shares issued and outstanding at December 31, 1995, and 9,370,874
shares issued and outstanding at December 31, 1996 and September 30, 1997
(unaudited); and none issued and outstanding on an unaudited pro forma
basis 12,799,997 23,098,864 23,098,864
JUNIOR MANDATORILY REDEEMABLE PREFERRED STOCK (Note 3), 1,985,705 shares
authorized, issued and outstanding, entitled to preference in
liquidation of $1,985,705 after payment to holders of mandatorily
redeemable convertible preferred stock 1,985,705 1,985,705 1,985,705
STOCKHOLDERS' DEFICIT:
Common stock, $.01 par value, 15,000,000 shares
authorized, 1,076,046, 1,960,314 and
2,025,100 (unaudited) shares issued and
outstanding, respectively 10,760 19,603 20,250
Additional paid-in capital 4,109,347 4,204,718 4,218,319
Accumulated deficit (15,194,511) (17,318,808) (23,378,100)
Cumulative currency translation adjustment (3,391) (12,523) (19,436)
------------ ------------ ------------
Total stockholders' deficit (11,077,795) (13,107,010) (19,158,967)
------------ ------------ ------------
$ 4,180,222 $ 14,273,129 $ 8,825,309
============ ============ ============
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated balance sheets.
<PAGE>
CADIS, INC.
-----------
CONSOLIDATED STATEMENTS OF OPERATIONS
-------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
For the Years Ended December 31, Ended September 30,
--------------------------------------- -------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
REVENUE:
License fees $ 520,000 $ 980,319 $ 3,779,622 $ 2,565,741 $ 2,082,540
Service fees 283,000 713,436 1,994,087 1,233,147 1,286,631
Maintenance fees 12,188 176,630 449,287 207,615 694,785
----------- ----------- ----------- ----------- -----------
Total revenue 815,188 1,870,385 6,222,996 4,006,503 4,063,956
----------- ----------- ----------- ----------- -----------
COST OF REVENUE:
Service fees 301,259 678,675 1,010,119 400,272 1,479,656
Maintenance fees - 204,743 89,491 68,926 118,345
----------- ----------- ----------- ----------- -----------
Total cost of revenue 301,259 883,418 1,099,610 469,198 1,598,001
----------- ----------- ----------- ----------- -----------
GROSS PROFIT 513,929 986,967 5,123,386 3,537,305 2,465,955
----------- ----------- ----------- ----------- -----------
OPERATING EXPENSES:
Research and development 916,168 1,172,352 1,709,755 1,229,937 1,860,866
General and administrative 544,793 593,299 1,055,278 666,435 756,048
Sales and marketing 934,767 2,637,846 4,721,401 3,184,073 6,193,578
----------- ----------- ----------- ----------- -----------
Total operating
expenses 2,395,728 4,403,497 7,486,434 5,080,445 8,810,492
----------- ----------- ----------- ----------- -----------
LOSS FROM OPERATIONS (1,881,799) (3,416,530) (2,363,048) (1,543,140) (6,344,537)
OTHER INCOME, net 33,944 189,918 238,751 141,035 285,245
----------- ----------- ----------- ----------- -----------
NET LOSS $(1,847,855) $(3,226,612) $(2,124,297) $(1,402,105) $(6,059,292)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
<PAGE>
CADIS, INC.
-----------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
<TABLE>
<CAPTION>
For the Nine Months
For the Years Ended December 31, Ended September 30,
--------------------------------------- -------------------------
1994 1995 1996 1996 1997
----------- ----------- ----------- ----------- -----------
(Unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(1,847,855) $(3,226,612) $(2,124,297) $(1,402,105) $(6,059,292)
Adjustments to reconcile net loss to net cash
used in operating activities-
Depreciation and amortization 143,805 263,138 435,182 237,804 495,700
(Gain) loss on disposal of assets (502) 526 (8,694) - 10,952
Change in-
Prepaid expenses and other assets (150,132) (5,781) (99,975) (101,542) (442,373)
Receivables (166,573) (194,760) (2,612,621) (953,605) 484,848
Accounts payable 34,610 85,180 56,943 (44,522) 296,052
Accrued compensation and other
accrued liabilities 28,824 51,846 370,398 165,265 (20,265)
Deferred revenue and prepaid royalties 189,763 21,820 1,395,914 277,358 278,945
----------- ----------- ----------- ----------- -----------
Net cash used in operating activities (1,768,060) (3,004,643) (2,587,150) (1,821,347) (4,955,433)
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (316,170) (614,466) (755,369) (279,009) (921,927)
Proceeds from sale of property and equipment 1,577 1,039 26,155 - 14,789
Purchases of short-term investments (986,431) (6,306,789) (9,874,125) (6,993,161) -
Sales and maturities of short-term investments 400,000 5,085,353 8,719,754 1,850,000 2,962,238
----------- ----------- ----------- ----------- -----------
Net cash (used in) provided by
investing activities (901,024) (1,834,863) (1,883,585) (5,422,170) 2,055,100
----------- ----------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock 2,299,999 4,999,998 10,961,000 10,961,000 -
Proceeds from issuance of common stock 58,000 15,000 105,455 104,530 14,248
Stock issuance costs (15,827) (20,280) (663,374) (626,562) -
----------- ----------- ----------- ----------- -----------
Net cash provided by
financing activities 2,342,172 4,994,718 10,403,081 10,438,968 14,248
----------- ----------- ----------- ----------- -----------
NET (DECREASE) INCREASE IN CASH AND
CASH EQUIVALENTS (326,912) 155,212 5,932,346 3,195,451 (2,886,085)
EFFECT OF EXCHANGE RATE CHANGES ON CASH - (3,391) (9,132) (9,015) (6,913)
CASH AND CASH EQUIVALENTS,
beginning of period 1,303,274 976,362 1,128,183 1,128,183 7,051,397
----------- ----------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 976,362 $ 1,128,183 $ 7,051,397 $ 4,314,619 $ 4,158,399
=========== =========== =========== =========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES:
Property purchased under capital leases $ - $ - $ - $ - $ 49,405
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes to consolidated financial statements
are an integral part of these consolidated statements.
<PAGE>
CADIS, INC.
-----------
CONSOLIDATED STATEMENTS OF MANDATORILY REDEEMABLE
-------------------------------------------------
CONVERTIBLE PREFERRED STOCK, JUNIOR MANDATORILY
-----------------------------------------------
REDEEMABLE PREFERRED STOCK AND STOCKHOLDERS' DEFICIT
----------------------------------------------------
<TABLE>
<CAPTION>
Mandatorily Stockholders' Deficit
Redeemable Junior Mandatorily -----------------------------------------------------
Convertible Redeemable Cumulative
Preferred Stock Preferred Stock Common Stock Additional Currency
---------------------- --------------------- ----------------- Paid-in Translation Accumulated
Shares Amount Shares Amount Shares Amount Capital Adjustment Deficit
--------- ----------- --------- ---------- -------- ------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCES, December 31, 1993 4,592,593 $ 5,500,000 1,985,705 $1,985,705 396,046 $ 3,960 $4,079,254 $ - $(10,120,044)
Issuance of common stock
upon exercise of stock
options at $.10 per
share, in April and
June 1994 - - - - 580,000 5,800 52,200 - -
Issuance of Series D
convertible preferred
stock for cash of $2.60
per share in June 1994,
including issuance
costs of $15,827 884,615 2,299,999 - - - - (15,827) - -
Net loss - - - - - - - - (1,847,855)
--------- ------------ --------- ---------- ------- ------- ---------- -------- ------------
BALANCES, December 31, 1994 5,477,208 7,799,999 1,985,705 1,985,705 976,046 9,760 4,115,627 - (11,967,899)
Issuance of Series E
convertible preferred
stock for cash of
$3.00 per share, in
May 1995, including
issuance costs of
$20,280 1,666,666 4,999,998 - - - - (20,280) - -
Issuance of common stock
upon exercise of stock
options at $.15 per
share, in June 1995 - - - - 100,000 1,000 14,000 - -
Net loss - - - - - - - - (3,226,612)
Net change in cumulative
currency translation
adjustments, net of tax - - - - - - - (3,391) -
--------- ------------ --------- ---------- ------- ------- ---------- -------- ------------
BALANCES, December 31, 1995 7,143,874 12,799,997 1,985,705 1,985,705 1,076,046 10,760 4,109,347 (3,391) (15,194,511)
Issuance of common stock
upon exercise of stock
options at $.10 per
share, in February,
April, May 1996 - - - - 611,395 6,114 55,026 - -
Issuance of common stock
upon exercise of stock
options at $.15 per
share, in April,
May and June 1996 - - - - 250,310 2,503 35,043 - -
Issuance of common stock
upon exercise of stock
options at $.30 per
share, in April and
December 1996 - - - - 22,563 226 6,543 - -
Issuance of Series E
convertible preferred
stock for cash of
$3.00 per share, in
February 1996,
including issuance
costs of $1,241 87,000 261,000 - - - - (1,241) - -
Issuance of Series F
convertible preferred
stock for cash of
$5.00 per share, in
August 1996, net
of issuance costs
of $662,133 2,140,000 10,037,867 - - - - - - -
Net loss - - - - - - - - (2,124,297)
Net change in cumulative
currency translation
adjustments, net of tax - - - - - - - (9,132) -
--------- ------------ --------- ---------- ------- ------- ---------- -------- ------------
BALANCES, December 31, 1996 9,370,874 23,098,864 1,985,705 1,985,705 1,960,314 19,603 4,204,718 (12,523) (17,318,808)
Issuance of common stock
upon exercise of stock
options at $.10, in
January 1997 (unaudited) - - - - 10,938 109 985 - -
Issuance of common stock
upon exercise of stock
options at $.15, in
June 1997 (unaudited) - - - - 20,000 200 2,800 - -
Issuance of common stock
upon exercise of stock
options at $.30, in
January and May 1997
(unaudited) - - - - 33,848 338 9,816 - -
Net loss (unaudited) - - - - - - - - (6,059,292)
Net change in cumulative
currency translation
adjustments, net of tax
(unaudited) - - - - - - - (6,913) -
--------- ------------ --------- ---------- ------- ------- ---------- -------- ------------
BALANCES, September 30,
1997 (unaudited) 9,370,874 $23,098,864 1,985,705 $1,985,705 2,025,100 $20,250 $4,218,319 $(19,436) $(23,378,100)
========= ============ ========= ========== ========= ======= ========== ======== ============
</TABLE>
The accompanying notes to consolidated financial statements are an
integral part of these consolidated statements.
<PAGE>
CADIS, INC.
-----------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(INFORMATION AS OF SEPTEMBER 30, 1996, AND FOR THE NINE
-------------------------------------------------------
MONTHS ENDED SEPTEMBER 30, 1996 AND 1997 IS UNAUDITED)
------------------------------------------------------
(1) ORGANIZATION AND BUSINESS
-------------------------
CAD Information Systems, Inc. was incorporated in the state of Delaware on May
5, 1987. In December 1991, the name was changed to CADIS, Inc. On August 15,
1995, CADIS, Inc. Formed a wholly owned subsidiary, Cadis International, Inc.
(collectively the "Company") which was incorporated in the state of Colorado.
The Company develops and markets computer software that allows retrieval of
information objects based on their parametric attributes and provides services
that transform a customer's existing data into an object-oriented database for
retrieval by the software. The Company currently has two applications for the
technology. The first application is the management and control of part number
and other related information at discrete manufacturing enterprises. The second
application is for use as a search engine on the World Wide Web. Subsequent to
license and installation of its software, the Company provides its customers
with data structuring services, implementation assistance, technical support,
and product enhancements. Prior to 1994, the Company was in the development
stage.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Principles of Consolidation
---------------------------
The accompanying consolidated financial statements include the accounts of
CADIS, Inc. and its wholly owned subsidiary. All significant intercompany
transactions have been eliminated in the accompanying consolidated financial
statements.
Cash and Cash Equivalents
-------------------------
For purposes of reporting cash flows, cash and cash equivalents include
investments in highly liquid investments with an original maturity of three
months or less.
<PAGE>
Short-Term Investments
----------------------
Effective December 31, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS No. 115"). Under SFAS No. 115, debt securities that
the Company has the positive intent and ability to hold to maturity are
classified as held-to-maturity securities and reported at amortized cost. Debt
and equity securities that are bought and held principally for the purpose of
selling them in the near term are classified as trading securities and reported
at fair value, with unrealized gains or losses included in earnings. Debt and
equity securities not classified as either held-to-maturity securities or
trading securities are classified as available-for-sale securities and reported
at fair value, with unrealized gains or losses excluded from earnings and
reported in a separate component of stockholders' equity.
The Company's short-term investments at December 31, 1995 and 1996, consist of
obligations of the U.S. government and are classified as held-to-maturity;
accordingly, the Company has stated its short-term investments at amortized
cost.
Property and Equipment
----------------------
Property and equipment are stated at cost and depreciation is provided using
straight-line and accelerated depreciation methods over the estimated useful
lives of the respective assets, generally three to five years. Maintenance and
repairs are expensed as incurred and improvements are capitalized. Leasehold
improvements are capitalized and amortized over the shorter of the lease term or
their estimated useful life.
Revenue Recognition
-------------------
The Company generates revenue from three sources: (i) fees for the license of
the Company's proprietary software products (ii) maintenance fees which give the
customer the right to updates of the Company's software when issued by the
Company and telephone support fees paid by the customer in advance on a periodic
basis, and (iii) data conversion, implementation and training services.
Revenue from license fees of the Company's software products is recognized upon
delivery of the software to the customer, provided that the Company has
satisfied all significant performance obligations, unless the terms of the sales
arrangement contains non-standard customer acceptance criteria. Until all such
significant performance obligations and all acceptance criteria are satisfied,
software revenue is deferred until such obligations are no longer significant
and/or until customer acceptance has occurred. Revenue from maintenance and
support agreements are deferred and recognized ratably over the term of the
agreements. Implementation, training, consulting and other service revenue is
generally recognized as the services are performed.
<PAGE>
Sales agreements with distributors of the Company's product typically do not
include any rights of return, commitments to provide updates to the distributor
or provisions for the future adjustment of the selling price. The Company
recognizes revenue from these transactions at the time the products are shipped
to the end-user site, unless the Company has other obligations with regard to
the sale to the end user. In such cases, revenue is not recognized until the
Company's obligations are substantially completed.
The Company currently derives substantially all of its revenue from the
licensing of its client/server and internet data management software and fees
from related services. These products and services are expected to continue to
account for substantially all of the Company's revenue for the foreseeable
future.
Software Development Costs
--------------------------
Research and development costs are expensed as incurred and consist of salaries
and other direct costs. Capitalization of software development costs commences
upon the establishment of technological feasibility of the product. The
Company's software products are deemed to be technologically feasible at the
point a working model of the software product is developed, which is generally
at or near the point the Company commences field testing of the software.
Through December 31, 1996 and September 30, 1997 (unaudited), for the products
developed by the Company, the period from field testing to the general customer
release of the software has been brief and, accordingly, the Company has not
capitalized any qualifying software development costs in the accompanying
financial statements.
Interim Results (Unaudited)
---------------------------
The accompanying consolidated balance sheets as of September 30, 1997, the
consolidated statements of operations and of cash flows for the nine months
ended September 30, 1996 and 1997, and the consolidated statement of mandatorily
redeemable convertible preferred stock, junior mandatorily redeemable preferred
stock and stockholders' deficit for the nine months ended September 30, 1997,
are unaudited. In the opinion of the Company's management, the consolidated
statements have been prepared on the same basis as the audited financial
statements and include all adjustments, consisting only of normal recurring
adjustments, necessary for the fair statement of the results of the interim
periods. Operating results for the nine months ended September 30, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates affect the reported amounts of assets and liabilities,
disclosure of contingent assets and liabilities at
<PAGE>
the date of the financial statements, and the reported amounts of revenue and
expenses during the reporting period. Actual results could differ from those
estimates.
Foreign Currency Translation
----------------------------
The functional currency of the foreign subsidiary is the local currency.
Translation of balance sheet amounts to U. S. Dollars is based on the exchange
rate as of the balance sheet date. Income statement and cash flow statement
amounts are translated at the average exchange rate for the period. Cumulative
currency translation adjustments are presented as a separate component of
stockholders' equity.
Transactions denominated in currencies other than the local currency are
recorded based on exchange rates at the time such transactions arise.
Subsequent changes in exchange rates result in transaction gains and losses
which are reflected in income as unrealized (based on period end translation) or
realized (upon settlement of the transactions). Unrealized transaction gains
and losses applicable to long-term intercompany investments by the U.S. parent
in its foreign subsidiary have been included in the cumulative currency
translation adjustments to stockholders' equity.
Concentration of Credit Risk
----------------------------
The Company has no significant off balance-sheet concentrations of credit risk,
such as foreign exchange contracts, options contracts or other hedging
arrangements. The Company maintains the majority of its cash and cash
equivalents with financial institutions in the form of demand deposits and U.S.
government securities.
The Company performs on-going evaluation of its customers' financial condition
and generally does not require collateral. Its accounts receivable balances are
primarily domestic and are concentrated among Fortune 500 Companies. Accounts
receivable also includes amounts due under contracts for services performed but
not yet been billed.
Income Taxes
------------
Income taxes are accounted for in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS No. 109").
SFAS No. 109 requires recognition of deferred income tax assets and liabilities
for the expected future income tax consequences, based on enacted tax laws, of
temporary differences between the financial reporting and tax bases of assets,
liabilities and carryforwards. Deferred tax liabilities are recognized for the
expected future tax consequences of taxable temporary differences. Deferred tax
assets are recognized for the expected future tax effects of all deductible
temporary differences, loss carryforwards and tax credit carryforwards.
Deferred tax assets are then reduced, if deemed necessary, by a valuation
allowance for the amount of any tax assets
<PAGE>
which more likely than not, based on current circumstances, are not expected to
be realized (see Note 8).
Reclassifications
-----------------
Certain prior year balances have been reclassified to conform to the current
year presentation.
(3) MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK AND
------------------------------------------------------
JUNIOR MANDATORILY REDEEMABLE PREFERRED STOCK
---------------------------------------------
The Company is authorized to issue 11,356,579 shares of mandatorily redeemable
convertible preferred stock and 1,985,705 of junior mandatorily redeemable
preferred stock. Under the articles of incorporation, shares of mandatorily
redeemable convertible preferred stock may be issued from time to time in one or
more series with designations, rights, preferences and limitations established
by the Company's board of directors (the "Board of Directors"). Mandatorily
redeemable convertible preferred stock and junior mandatorily redeemable
preferred stock ("Junior Preferred") issuances through December 31, 1995 and
1996 and
<PAGE>
September 30, 1997 (unaudited) are summarized as follows (liquidation
preferences may be adjusted under certain conditions, as discussed below):
<TABLE>
<CAPTION>
For the Years Ended December 31, For the Nine Months
-------------------------------------------- Ended
1995 1996 September 30, 1997
-------------------- -------------------- ----------------------
Shares Amount Shares Amount Shares Amount
-------- -------- -------- -------- ---------- --------
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Mandatorily redeemable convertible preferred stock,
$.01 par value, 11,356,579 shares authorized,
stated at redemption value:
Series B mandatorily redeemable convertible
preferred stock, 2,000,000 shares authorized,
entitled to a preference in liquidation
of $2,000,000 2,000,000 $ 2,000,000 2,000,000 $ 2,000,000 2,000,000 $ 2,000,000
Series C mandatorily redeemable convertible
preferred stock, 2,592,593 shares authorized,
entitled to a preference in liquidation
of $3,500,000 2,592,593 3,500,000 2,592,593 3,500,000 2,592,593 3,500,000
Series D mandatorily redeemable convertible
preferred stock, 884,615 shares authorized,
entitled to a preference in liquidation
of $2,299,999 884,615 2,299,999 884,615 2,299,999 884,615 2,299,999
Series E mandatorily redeemable convertible
preferred stock, 1,753,666 shares authorized,
entitled to preference in liquidation
of $4,999,998 and $5,260,998 1,666,666 4,999,998 1,753,666 5,260,998 1,753,666 5,260,998
Series F mandatorily redeemable convertible
preferred stock, 2,140,000 shares authorized,
entitled to preference in liquidation
of $10,700,000, presented net of $662,133
of offering costs - - 2,140,000 10,037,867 2,140,000 10,037,867
--------- ----------- --------- ----------- --------- -----------
7,143,874 $12,799,997 9,370,874 $23,098,864 9,370,874 $23,098,864
========= =========== ========= =========== ========= ===========
Junior mandatorily redeemable preferred stock,
1,985,705 shares authorized, entitled to
preference in liquidation of $1,985,705 after
payment to holders of Series B, C, D, E, and F
mandatorily redeemable convertible
preferred stock 1,985,705 $ 1,985,705 1,985,705 $ 1,985,705 1,985,705 $ 1,985,705
========= =========== ========= =========== ========= ===========
</TABLE>
Holders of Series B and C mandatorily redeemable convertible preferred stock are
entitled to annual dividends of $.08 per share, holders of Series D are entitled
to annual dividends of $.156 per share, holders of Series E are entitled to
annual dividends of $.18 per share, and holders of Series F are entitled to
annual dividends of $.30 per share only when and if declared by the Board of
Directors and only if declared and paid for all Series B, C, D, E and F
(collectively referred to as "Senior Preferred"). Holders of Junior Preferred
are not entitled to dividends. No distributions may be made to holders of
Junior Preferred or common stock until all dividends declared on Senior
Preferred have been paid. Dividends are not cumulative and
<PAGE>
accrue only to the extent they are declared but unpaid. No dividends have been
declared on any class of the Company's stock in any period presented.
Each holder of shares of Series F shares has preference over holders of Series
B, C, D and E, Junior Preferred and common stock in the event of liquidation of
the Company (including certain change of control events--Note 10) and is
entitled to $2.00 per share. After such payment to Series F, holders of Series
B, C, D, E and F have a preference over holders of the Junior Preferred and
common stock in the event of liquidation of the Company (including certain
change of control events--Note 10) and are entitled to $1.00, $1.35, $2.60,
$3.00 and an additional $3.00 per share, respectively, plus declared and unpaid
dividends, if any. After such payment is made to holders of Senior Preferred,
holders of Junior Preferred are entitled to $1.00 per share. After such payment
is made to holders of Junior Preferred, common stockholders are entitled to $.50
per share plus declared and unpaid dividends, if any. After all such payments
have been made, any remaining assets will be distributed to holders of Senior
Preferred and common stockholders on an as-if-converted to common stock basis.
In the event of certain changes in ownership of the Company (see Note 10), the
Series E and F conversion prices become subject to adjustment formulas. Where
consideration paid to the holders of Series E would be less than three times the
Series E liquidation preference amount per share but more than 1.6 times the
Series E liquidation preference amount per share, then the Series E conversion
price shall be decreased so that the sale price equals three times the Series E
liquidation preference amount, but the Series E conversion price will not be
decreased to less than $2.47 per share. In the event that the Series E
conversion price is adjusted, the Series F conversion price shall automatically
be adjusted based on a formula defined in the articles of incorporation.
Series F is mandatorily redeemable by the Company at $5.00 per share. After
such payment to Series F, Series B, C, D and E are mandatorily redeemable by the
Company at $1.00, $1.35, $2.60 and $3.00 per share, respectively. The
redemption value of Series F is presented net of offering costs of $662,133 at
December 31, 1996 and September 30, 1997. Such offering costs will be accreted
to the earliest date of redemption. Accretion of such amounts was not material
to the Company's results of operations for the year ended December 31, 1996 and
for the nine months ended September 30, 1997 (unaudited). The number of shares
mandatorily redeemable on each of July 31, 2000, 2001 and 2002 is equal to 33%,
50% and 100%, respectively, of the number of shares held by each holder on that
date, reduced by any shares for which the holder exercises the right to convert
shares of Senior Preferred to shares of common stock between the notice of
redemption and the date of redemption. At December 31, 1996 and September 30,
1997 (unaudited), shares of Senior Preferred currently are convertible at the
option of the holder into one share of common stock. The conversion rate is
subject to adjustment based on a formula to prevent dilution, as well as under
other specified conditions or events (see Note 10).
Each share of Senior Preferred is automatically convertible into common stock
immediately prior to the closing of a public offering which meets certain
conditions, or with respect to a
<PAGE>
particular Series upon the vote or written consent of a specific percentage of
the holders of such Series, or upon conversion of at least 75% of such Series.
The Junior Preferred is mandatorily redeemable at $1.00 per share in the event
of a public offering which meets certain conditions. It is also mandatorily
redeemable at $1.00 per share on each of July 31, 2000, 2001 and 2002, subject
to the senior redemption right of the Senior Preferred on those dates. The
number of shares redeemable on such dates is 33%, 50% and 100%, respectively,
times the number of shares of redeemable preferred stock held by each holder on
that date. If the Company does not have sufficient funds to redeem the stock as
described, the legally available funds will be used to redeem the stock on a
proportional basis. Any redeemable preferred stock remaining outstanding on
July 31, 2002, will be redeemed at a rate of 33%, 50% and 100% on July 31, 2003,
2004 and 2005, respectively. The Company may redeem the Junior Preferred Stock
at $1.00 per share at any time subject to the written consent of at least 50% of
the holders of Senior Preferred at the time.
(4) STOCK OPTION PLAN
-----------------
The Company has adopted a stock option plan (the "Plan") to provide directors,
officers and other employees options to purchase up to 3,100,000 shares (Note
10) of the Company's common stock. Under the terms of the Plan, the Board of
Directors may grant either "nonqualified" or "incentive" stock options as
defined by the Internal Revenue Code and related regulations. Under the terms
of the Plan, the purchase price of the shares subject to an incentive stock
option will be the fair market value of the Company's common stock on the date
the option is granted. The purchase price of a nonqualified option must comply
with applicable provisions of the Plan. If the grantee owns more than 10% of
the total combined voting power or value of all classes of stock on the date of
grant, the purchase price of an incentive stock option shall be at least 110% of
the fair market value at the date of grant and the exercise term will be up to
five years from the date of grant. All other options granted under the Plan are
exercisable up to 10 years from the date of grant.
The following summarizes stock option activity for 1994, 1995 and 1996. Options
issued to date vest over a four-year period, with 25% becoming exercisable after
one year from the date of grant and 2.08% becoming exercisable per month
thereafter. The Company accounts for the Plan in accordance with Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees", under which no compensation expense has been recognized.
Had compensation cost for these plans been determined consistent with the fair
value approach prescribed by Statement of Financial Accounting Standards No.
123, "Accounting for
<PAGE>
Stock-Based Compensation" ("SFAS No. 123"), the Company's net loss would have
increased to the following pro forma amounts:
<TABLE>
<CAPTION>
1995 1996
---------- ---------
<S> <C> <C>
Net loss:
As reported $3,226,612 $2,124,297
========== ==========
Pro forma $3,251,184 $2,177,914
========== ==========
</TABLE>
The fair value of each option grant is estimated on the date of grant using the
Black Scholes option pricing model with the following weighted-average
assumptions used for grants:
<TABLE>
<CAPTION>
1995 1996
-------- --------
<S> <C> <C>
Risk-free interest rates 6.13% 5.93%
Expected dividend yield rates 0% 0%
Expected lives 4 years 4 years
Expected volatility .001% .001%
</TABLE>
Because the SFAS No. 123 method of accounting has not been applied to options
granted prior to January 1, 1995, the resulting pro forma compensation cost may
not be representative of that to be expected in future years.
A summary of the status of the Company's stock option plan at December 31, 1994,
1995 and 1996 and changes during the years then ended is presented in the table
and narrative below:
<TABLE>
<CAPTION>
1994 1995 1996
--------------------- --------------------- ---------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Fixed Options Shares Price Shares Price Shares Price
- -------------------------------- --------- -------- ---------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Outstanding at beginning of year 1,856,000 $.12 1,314,000 $.13 1,579,500 $.17
Granted 61,000 .26 387,500 .30 338,000 .41
Exercised (580,000) .10 (100,000) .15 (884,268) .12
Forfeited (23,000) .17 (22,000) .17 (258,544) .24
--------- ---------- ---------
Outstanding at end of year 1,314,000 .13 1,579,500 .17 774,688 .31
========= ========== =========
Exercisable at end of year 568,677 .14 882,183 .12 255,577 .21
========= ========== =========
Weighted average fair value of
options granted $.06 $.09
========== =========
</TABLE>
<PAGE>
The following table summarizes information about the stock options outstanding
at December 31, 1996:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
----------------------- --------------------
Weighted-
Average Weighted- Weighted-
Remaining Average Average
Range of Number Contractual Exercise Number Exercise
Exercise Prices Outstanding Life Price Exercisable Price
------------------ ----------- ----------- --------- ----------- ----------
<S> <C> <C> <C> <C> <C>
$.10 to $.15 178,043 6.4 years $.15 149,854 $.15
$.30 409,645 8.6 years $.30 105,723 .30
$.50 187,000 9.7 years $.50 - -
------- ----------- ---- ------- ----
$.10 to $.50 774,688 8.7 years $.31 255,577 $.21
======= =========== ==== ======= ====
</TABLE>
(5) LICENSE AND DISTRIBUTION AGREEMENTS
-----------------------------------
License Agreements
------------------
During 1996 and 1997 (unaudited), the Company entered into various license and
distribution agreements. Under the terms of the agreements, the Company granted
third parties royalty- bearing, non-exclusive, worldwide rights to replicate and
license certain of the Company's products in certain defined territories, on a
standalone basis or as an integrated product in conjunction with the third
party's products. In consideration for the rights granted to it under the
agreements, the third parties made prepayments of royalties to the Company which
are generally non-refundable. The third parties will credit the prepayments
against the royalties due to the Company. The Company has included these
prepayments in prepaid royalties in the December 31, 1996 and September 30, 1997
(unaudited), consolidated balance sheets and will recognize the prepayments into
income as the related software is licensed to end users and royalties became due
to the Company or at the time the ability of the third parties to offset
prepayments against such royalties has lapsed.
(6) COMMITMENTS AND CONTINGENCIES
-----------------------------
Rent expense for the years ended December 31, 1994, 1995 and 1996 was $145,371,
$341,027 and $267,285, respectively. As discussed in Note 10, subsequent to
December 31, 1996 the Company signed a lease agreement for new space.
<PAGE>
The Company leases its office space under a noncancellable lease agreement,
which expires in June 1997. Aggregate future minimum annual rental commitments
under noncancellable operating leases are as follows:
Year ending December 31-
1997 $127,394
--------
$127,394
=======
(7) SIGNIFICANT CUSTOMERS
---------------------
Below is a listing of major customers, each of which comprised more than 10% of
revenue:
<TABLE>
<CAPTION>
For the Nine
For the Year Ended December 31, Months Ended
1994 1995 1996 September 30, 1997
-------- -------- -------- ------------------
(Unaudited)
<S> <C> <C> <C> <C>
Customer 1 - % - % 15% 2%
Customer 2 - % 14% 13% 4%
Customer 3 - % - % 13% 3%
Customer 4 23% 39% 3% 4%
Customer 5 - % - % 10% 7%
Customer 6 - % - % - % 17%
Customer 7 20% 3% - % 1%
Customer 8 15% 1% - % - %
Customer 9 33% 6% 2% 2%
</TABLE>
The Company's revenue is derived primarily from licenses, maintenance and
service fees related to its two software products from large manufacturers in
the United States. The Company has historically sold primarily to financially
stable institutions and has not obtained collateral. The Company has not
incurred significant credit losses during any of the periods presented.
(8) INCOME TAXES
------------
Due to a change in ownership in 1991, the utilization of the tax net operating
losses incurred prior to that date are limited. Accordingly, for income tax
return reporting purposes, the Company may utilize approximately $10,500,000 of
net operating loss carryforwards which
<PAGE>
expire, if not previously utilized, beginning in 2007 and approximately $390,000
of general business tax credit carryforwards which expire, if not previously
utilized, beginning in 2007. The Tax Reform Act of 1986 contains provisions
which may further limit the net operating loss carryforwards available to be
used in any given year if certain events occur, including significant changes in
ownership interests.
The Company has a deferred tax asset for the net operating loss carryforwards of
approximately $3,900,000 as of December 31, 1996. This asset has been
completely offset by a valuation allowance because the realization criteria set
forth in SFAS No. 109 are not currently satisfied.
(9) ACCRUED COMPENSATION AND OTHER ACCRUED LIABILITIES, AND PREPAID
----------------------------------------------------------------
EXPENSES AND OTHER
------------------
The components of accrued compensation and other accrued liabilities are as
follows:
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996 1997
-------- -------- -------------
(Unaudited)
<S> <C> <C> <C>
Accrued commissions and bonuses $ - $211,056 $163,421
Accrued vacation 54,562 81,424 136,366
Accrued sales taxes 35,798 141,214 49,998
Accrued professional fees 31,769 35,591 86,808
Other accrued liabilities 9,982 33,224 45,651
-------- -------- --------
$132,111 $502,509 $482,244
======== ======== ========
</TABLE>
The components of prepaid expenses and other are as follows:
<TABLE>
<CAPTION>
December 31, September 30,
1995 1996 1997
-------- -------- -------------
(Unaudited)
<S> <C> <C> <C>
Prepaid commissions $44,369 $ 83,934 $220,037
Prepaid deposits 16,652 141,048 361,225
Other 17,632 37,792 123,885
------- -------- --------
$78,653 $262,774 $705,147
======= ======== ========
</TABLE>
<PAGE>
(10) SUBSEQUENT EVENTS (UNAUDITED)
-----------------------------
On January 29, 1997, the Company approved an increase in the number of stock
options which may be granted under the Plan to 4,200,000 shares.
In February 1997, the Company signed a lease commencing March 3, 1997, for new
space. Future minimum lease payments under the lease are as follows:
During the year ended December 31,
1997 $ 219,431
1998 516,620
1999 532,119
2000 548,076
2001 564,521
2002 190,020
----------
$2,570,787
==========
On November 18, 1997, the Company entered into an Agreement and Plan of
Reorganization, and related agreements ("Merger Agreements") with Aspect
Development, Inc., a publicly held company. Subject to the terms of the Merger
Agreements, the Company will become a wholly-owned subsidiary of Aspect
Development, Inc. (the "Merger"). The Merger qualifies under the Company's
articles of incorporation as a liquidation event for purposes of determining
liquidation preferences for the Company's Senior and Junior Preferred Stock The
Merger Agreement provides, among other things, the mode of effecting the Merger
and the manner and basis of liquidating and/or converting each issued and
outstanding share of Senior Preferred, Junior Preferred and common stock of the
Company into shares of common stock of Aspect Development, Inc., and the
conversion of options for the Company's common stock then outstanding into
options for Aspect Development, Inc.'s common stock. The closing of the Merger
will take place after satisfaction or waiver of conditions required of the
parties involved as set forth in the Merger Agreements. The Merger is intended
to be a tax-free reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986 and to be accounted for as a pooling of interests
pursuant to Accounting Principles Board Opinion No. 16. The Company anticipates
closing of the Merger to occur before November 30, 1997.
<PAGE>
(b) Pro forma financial information required by Item 7(b) of Form 8-K,
prepared pursuant to Article 11 of Regulation S-X and filed in accordance with
Item 7(b)(2) of Form 8-K:
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma condensed combined financial information
assumes a business combination between Aspect Development, Inc. and CADIS, Inc.,
is accounted for as a pooling of interests and is based on the respective
historical consolidated financial statements and the notes thereto. The pro
forma condensed combined balance sheet combines Aspect's September 30, 1997
unaudited consolidated balance sheet with CADIS' September 30, 1997 unaudited
consolidated balance sheet. The pro forma statements of operations combine
Aspect's and CADIS' historical results for each of the periods indicated below.
The pro forma information is presented for illustrative purposes only and is not
necessarily indicative of the operating results or financial position that would
have occurred if the Merger had occurred during the periods presented, nor is it
necessarily indicative of future operating results or financial positions.
These pro forma financial statements are based on, and should be read in
conjunction with, the historical consolidated financial statements, and the
related notes thereto, of Aspect contained in the company's report on Form 10-
KSB for the year ended December 31, 1996 and on Form 10-QSB for the quarter
ended September 30, 1997. The historical consolidated financial statements of
CADIS are contained elsewhere in this Form 8-K.
<PAGE>
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
September 30, 1997
AFTER GIVING EFFECT TO THE MERGER
(IN THOUSANDS)
<TABLE>
<CAPTION>
PRO FORMA PRO FORMA
ASPECT CADIS ADJUSTMENTS COMBINED
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents 6,025 $ 4,158 $ 10,183
Short-term investments 44,209 - 44,209
Accounts receivable, net 9,004 2,384 11,388
Other receivables - 105 105
Prepaid expenses and other
current assets 2,062 705 2,767
------------ ------------ ------------- ------------
Total current assets 61,300 7,352 68,652
Property and equipment, net 6,034 1,473 7,507
Other assets, net 1,594 - 1,594
------------ ------------ ------------- ------------
$ 68,928 $ 8,825 $ 77,753
============ ============ ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,164 $ 482 $ 1,646
Other accrued liabilities 4,477 482 $ 4,312 (2) 9,271
Deferred revenue 6,818 1,556 8,374
Capital lease obligations - 381 - 381
current portion
Third-party royalties and fees 791 - 791
------------ ------------ ------------- ------------
Total current liabilities 13,631 2,520 4,312 20,463
Capital lease obligations 90 49 139
Other long term liabilities - 330 330
Redeemable convertible preferred - 23,761 (23,761) (1) -
stock
Redeemable preferred stock - 1,986 (1,986) -
Stockholders' equity:
Common stock 51,980 3,576 25,747 (1) 81,303
Retained earnings (Accumulated 4,138 (23,378) (4,312) (2) (23,552)
deficit)
Accumulated translation (172) (19) (191)
adjustment
Notes receivable from (320) - (320)
stockholders
Deferred stock compensation (419) - (419)
------------ ------------ ------------- ------------
Total stockholders' equity 55,207 (19,821) 54,835
------------ ------------ ------------- ------------
$ 68,928 $ 8,825 $ $ 77,753
============ ============ ============= ============
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
<PAGE>
ASPECT DEVELOPMENT, INC.
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
AFTER GIVING EFFECT TO THE MERGER
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Nine Months Ended
Year Ended December 31, September 30,
------------------------------------ ----------------------
1994 1995 1996 1996 1997
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Revenues:
Licenses $ 3,998 $ 8,123 $ 16,043 $ 10,980 $ 17,879
Subscription and maintenance 2,974 5,141 9,392 6,520 9,471
Service and other 2,327 2,299 5,023 3,316 5,736
-------- -------- -------- -------- --------
Total revenues 9,299 15,563 30,458 20,816 33,086
Cost of revenues
Cost of licenses 197 298 612 427 298
Cost of subscription and maintenance 735 1,142 1,206 920 1,831
Cost of service and other revenues 1,634 1,291 2,689 1,480 3,504
-------- -------- -------- -------- --------
Total cost of revenues 2,566 2,731 4,507 2,827 5,633
Gross profit 6,733 12,832 25,951 17,989 27,453
Operating expenses
Research and development 4,012 6,031 8,762 6,341 7,918
Sales and marketing 3,982 7,128 13,540 9,280 18,099
General and administrative 1,629 2,253 4,030 2,893 3,736
-------- -------- -------- -------- --------
Total operating expenses 9,623 15,412 26,332 18,514 29,753
Income (loss) from operations (2,890) (2,580) (381) (525) (2,300)
Interest Income and other income (expense),
net 66 185 1,596 876 1,837
-------- -------- -------- -------- --------
Income (loss) before income taxes (2,824) (2,395) 1,215 351 (463)
Provision for income taxes (4) 144 150 330 181 1,593
Net income (loss) $ (2,968) $ (2,545) $ 885 $ 170 $ (2,056)
======== ======== ======== ======== ========
Net income (loss) per share $ (0.54) $ (0.38) $ 0.06 $ 0.01 $ (0.15)
Number of shares used in computing per share
amounts (1) 5,498 6,754 13,870 13,408 13,946
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
<PAGE>
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
(1) The pro forma condensed combined financial statements reflect the issuance
of 0.081539 Aspect common shares for each outstanding share of CADIS common
stock, and a range of issuances from 0.021368 to 0.180179 of Aspect common
shares for outstanding shares of CADIS preferred and junior preferred
stock.
(2) The combined company expects to incur charges to operations totaling $4.3
million primarily in the quarter in which the Merger is consummated to
reflect direct transaction costs of approximatey $1.8 million and
additional anticipated costs of approximately $2.5 million associated with
integrating the two companies. Costs of integrating the companies are
expected to include employee severance and facilities consolidation.
Accordingly, an estimated charge of $4.3 million is reflected in the pro
forma condensed combined balance sheet as a reduction to retained earnings
and an increase to accrued liabilities. The estimated charge is not
reflected in the pro forma condensed combined statement of operations data.
(3) There were no material transactions between Aspect and CADIS during any
period presented. In addition, it is expected that the impact of any
conforming accounting policies will not be material.
(4) No benefit has been taken for the net operating loss carryforwards of
CADIS due to the cumulative losses incurred by the combined entities from
inception through September 30, 1997.
<PAGE>
(c) Exhibits
--------
Exhibit No. Description
----------- -----------
2.1(1) Agreement and Plan of Reorganization dated November 18, 1997
among Aspect Development, Inc., Hawaii Acquisition
Corporation and CADIS, Inc.
2.2(1) Amendment to Agreement and Plan of Reorganization dated
November 21, 1997 among Aspect Development, Inc., Hawaii
Acquisition Corporation and CADIS, Inc.
99.1(1) Press Release dated November 18, 1997 announcing the
execution of the Reorganization Agreement.
99.2(1) Press Release dated December 1, 1997 announcing the
effectiveness of the Merger.
(1) Filed with the Registrant's Report on Form 8-K on December 10, 1997.
<PAGE>
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.
Aspect Development, Inc.
February 9, 1998 By: /s/ David S. Dury
-----------------------------------
David S. Dury
Vice President and Chief Financial
Officer
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
- ----------- -----------
2.1(1) Agreement and Plan of Reorganization dated November 18, 1997 among
Aspect Development, Inc., Hawaii Acquisition Corporation and CADIS,
Inc.
2.2(1) Amendment to Agreement and Plan of Reorganization dated November
21, 1997 among Aspect Development, Inc., Hawaii Acquisition
Corporation and CADIS, Inc.
99.1(1) Press Release dated November 18, 1997 announcing the execution of
the Reorganization Agreement.
99.2(1) Press Release dated December 1, 1997 announcing the effectiveness
of the Merger.
(1) Filed with the Registrant's Report on Form 8-K on December 10, 1997.
