<PAGE>
UNITED STATES
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 30, 1999
------------------------
NEWGEN RESULTS CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 00024865 33-0604378
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation)
12680 HIGH BLUFF DRIVE, SUITE 300, SAN DIEGO, CALIFORNIA 92130
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (858) 481-7545
----------------------------
NOT APPLICABLE.
(Former name or former address, if changed since last report.)
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
Report of Independent Public Accountants
Balance Sheets as of June 30, 1998 and 1999 (audited)
Balance Sheet as of September 30, 1999 (unaudited)
Statements of Operations and Partners' Equity for fiscal
years ended June 30, 1998 and 1999 (audited)
Statements of Operations and Partners' Equity for the three
month periods ended September 30, 1998 and 1999
(unaudited)
Statements of Cash Flows for fiscal years ended June 30, 1998
and 1999 (audited) Statements of Cash Flows for the three
month periods ended September 30, 1998 and 1999
(unaudited)
Notes to Financial Statements
(b) PRO FORMA FINANCIAL INFORMATION
Condensed Pro Forma Balance Sheet as of September 30, 1999
(unaudited)
Condensed Pro Forma Statement of Operations for the nine
months ended September 30, 1999 (unaudited)
Condensed Pro Forma Statements of Operations for the year
ended December 31, 1998 (unaudited)
Notes to Condensed Pro Forma Financial Statements
<PAGE>
COMPUTER CARE
FINANCIAL STATEMENTS
AS OF JUNE 30, 1998 AND 1999 AND SEPTEMBER 30, 1999 (UNAUDITED)
TOGETHER WITH REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To Newgen Results Corporation:
We have audited the accompanying balance sheets of Computer Care (a New York
general partnership and a wholly owned operation of ADP, Inc.) as of June 30,
1998 and 1999 and the related statements of operations and partners' equity and
cash flows for the years then ended. 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 our audits 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 the 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 financial position of Computer Care as of June 30,
1998 and 1999 and the results of its operations and its cash flows for years
then ended, in conformity with generally accepted accounting principles.
San Diego, California
February 4, 2000
<PAGE>
COMPUTER CARE
BALANCE SHEETS
AS OF JUNE 30, 1998 AND 1999 AND SEPTEMBER 30, 1999 (UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
June 30, September 30,
1998 1999 1999
----------- ------------ ------------
<S> <C> <C> <C>
(unaudited)
CURRENT ASSETS:
Accounts receivable, net of allowance of
$105,000,
$242,000 and $584,000, respectively $3,501,481 $2,460,928 $2,387,253
Prepaid expenses 125,854 307,364 446,971
------------- ------------- -------------
Total current assets 3,627,335 2,768,292 2,834,224
------------- ------------- -------------
PROPERTY & EQUIPMENT 1,766,868 1,946,090 1,946,090
Less: accumulated depreciation and amortization (1,188,658) (1,521,890) (1,598,569)
------------- ------------- -------------
Property and equipment, net 578,210 424,200 347,521
OTHER ASSETS 106,169 106,169 -
------------- ------------ -------------
$4,311,714 $3,298,661 $3,181,745
============= ============ =============
LIABILITIES AND PARTNERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 788,616 $ 326,056 $ 127,945
Accrued expenses and deferred revenue 1,150,064 1,475,819 1,175,199
------------- ------------- --------------
Total current liabilities 1,938,680 1,801,875 1,303,144
COMMITMENTS AND CONTINGENCIES
PARTNERS' EQUITY 2,373,034 1,496,786 1,878,601
------------- ------------- -------------
$4,311,714 $3,298,661 $3,181,745
============= ============ =============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
COMPUTER CARE
STATEMENTS OF OPERATIONS AND PARTNERS' EQUITY
FOR THE FISCAL YEARS ENDED JUNE 30, 1998 AND 1999 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
Year Ended June 30, September 30,
---------------------------------- --------------------------------
1998 1999 1998 1999
--------------- --------------- -------------- --------------
(unaudited)
<S> <C> <C> <C> <C>
NET SERVICE REVENUE $25,048,758 $19,146,037 $5,819,958 $ 5,090,208
PRODUCTION COSTS 18,643,443 14,307,365 4,056,593 3,745,502
--------------- --------------- -------------- --------------
Gross profit 6,405,315 4,838,672 1,763,365 1,344,706
--------------- --------------- -------------- --------------
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 7,444,762 7,713,348 1,731,541 1,262,921
--------------- --------------- -------------- --------------
NET (LOSS) INCOME (1,039,447) (2,874,676) 31,824 81,785
PARTNERS' EQUITY, beginning of year 2,209,148 2,373,034 2,373,034 1,496,786
INTERCOMPANY ACTIVITY, net 1,203,333 1,998,428 57,462 300,030
-------------- -------------- -------------- --------------
PARTNERS' EQUITY, end of year $ 2,373,034 $ 1,496,786 $2,462,320 $1,878,601
============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
COMPUTER CARE
STATEMENTS OF CASH FLOWS
FOR THE FISCAL YEARS ENDED JUNE 30, 1998 AND 1999 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
Year Ended June 30, September 30,
---------------------------------- --------------------------------
1998 1999 1998 1999
--------------- -------------- -------------- --------------
(unaudited)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) income $ (1,039,447) $ (2,874,676) $ 31,824 $ 81,785
Adjustments to reconcile net (loss) income
to net cash provided by (used
in) operating activities:
Depreciation and amortization 266,728 333,232 86,043 76,679
Changes in assets and liabilities:
Accounts receivable, net (67,157) 1,040,553 416,836 73,675
Prepaid expenses 249,046 (181,510) (55,069) (139,607)
Other assets - - - 106,169
Accounts payable 550,938 (462,560) (531,898) (198,111)
Accrued expenses and deferred
revenue (696,254) 325,755 93,497 (300,620)
--------------- -------------- -------------- --------------
Net cash provided by (used in) operating
activities (736,146) (1,819,206) 41,233 (300,030)
--------------- -------------- -------------- --------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (467,187) (179,222) (98,695) -
--------------- -------------- -------------- --------------
Net cash used in investing
activities (467,187) (179,222) (98,695) -
--------------- -------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activity and capital
contributions, net 1,203,333 1,998,428 57,462 300,030
--------------- -------------- -------------- --------------
Net cash provided by financing
activities 1,203,333 1,998,428 57,462 300,030
--------------- -------------- -------------- --------------
Net change in cash - - - -
CASH, beginning of period - - - -
--------------- -------------- -------------- --------------
CASH, end of period $ - $ - $ - $ -
=============== ============== ============== ==============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
<PAGE>
COMPUTER CARE
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1998 AND 1999
(ALL INFORMATION AS OF SEPTEMBER 30, 1999 AND
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999 IS UNAUDITED)
1. ORGANIZATION AND NATURE OF BUSINESS
The financial statements presented herein include the accounts of
Computer Care, (the "Company") a New York general partnership and a
wholly owned operation of ADP, Inc. The Company's two general
partners, ADP, Inc. and ADP Financial Information Services, Inc.,
represent 99 and 1 percent of the ownership interests, respectively.
The Company operates in one business segment and is a provider of
customer retention and support services to manufacturers and dealers
of automobiles through communication to their customers that relate
to the servicing, repair and maintenance of such customers'
automobiles.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
UNAUDITED INTERIM FINANCIAL DATA
The accompanying interim balance sheet at September 30, 1999, and the
statements of operations and partners' equity and cash flows for the
three month periods ended September 30, 1998 and 1999, together with
the related notes as of and for the periods then ended, are unaudited,
but have been prepared on the same basis as the audited financial
statements, and reflect all adjustments, consisting only of normal
recurring adjustments which are, in the opinion of management,
necessary for a fair presentation of the financial position and results
of the interim periods presented in accordance with generally accepted
accounting principles. Operating results for the unaudited three months
ended September 30, 1999 are not necessarily indicative of results
expected for the entire year.
UNBILLED ACCOUNTS RECEIVABLE
For customers that services have been performed, but not yet billed
for, the Company records an accrual for the amount of unbilled accounts
receivable in the period that the services were rendered and are
included within accounts receivable in the accompanying balance sheets.
Such amounts were approximately $944,000, $295,000 and $444,000 as of
June 30, 1998 and 1999 and September 30, 1999, respectively.
PREPAID EXPENSES
Prepaid expenses primarily consist of prepaid postage and other related
costs for customer mailings. These items are recognized as expense in
the period the service is provided and the related cost is incurred.
<PAGE>
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Repairs and maintenance
are expensed as incurred.
Depreciation of property and equipment is provided using the
straight-line method over the estimated useful lives of the respective
assets ranging from five to seven years. Leasehold improvements are
amortized over the shorter of the lease term or the estimated useful
lives of the assets. Depreciation and amortization expense for the
years ended June 30, 1998 and 1999, and for the three months ended
September 30, 1998 and 1999 was $266,728, $333,232, $86,043 and
$76,679, respectively.
LONG-LIVED ASSETS
The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of," which requires impairment
losses to be recorded on long-lived assets used in operations when
indicators of impairment are present and the undiscounted cash flows
estimated to be generated by those assets are less than the assets
carrying amount.
The Company periodically re-evaluates the original assumptions and
rationale utilized in the establishment of the carrying value and
estimated useful lives of these assets. The criteria used for these
evaluations include management's estimate of the assets' continuing
ability to generate income from operations and positive cash flows in
future periods as well as the strategic significance of the assets to
the Company's business activity.
PARTNERS' EQUITY
Partners' equity reflects retained earnings for the Company and all
amounts receivable or payable to the Company from its general partner,
ADP, Inc. During the three months ended September 30, 1999, the Company
received approximately $1,600,000 from ADP, Inc. as settlement of an
outstanding intercompany receivable.
REVENUE RECOGNITION
The Company has standard agreements with its customer retention and
support services customers. Although the terms of each individual
agreement may vary, most agreements call for the Company to provide
customized letters and telephone contacts for its dealership customers,
in exchange for the payment of a monthly fee per active name in the
automobile dealership's customer list.
The Company recognizes revenue from its customer retention and support
services in the month that the services are provided. In certain
instances, the Company's customers may pay an amount in advance for
services to be provided over a period of time. In other cases,
customers may pay the Company a fixed amount per month with the Company
providing more services in certain months than in others. Advance
payments are reflected as deferred revenue.
<PAGE>
INCOME TAXES
The Company is a partnership for income tax reporting purposes.
Accordingly, no provision or benefit for income taxes has been included
in the accompanying statements of operations. Such taxes are the
responsibility of the partners based on their respective shares of the
partnership's income or loss. The tax returns of the partnership are
subject to examination by the federal and state taxing authorities. If
such examination results in a change in the Company's income tax status
the related taxes of the partnership or the partners could be changed
accordingly.
SIGNIFICANT CUSTOMERS
Two customers accounted for 35 percent of revenue for the year ended
June 30, 1998. Three customers accounted for 48 percent of revenue for
the year ended June 30, 1999. Two customers accounted for 49 and 33
percent of revenue for the three months ended September 30, 1998 and
1999, respectively.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ
from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amounts of all financial instruments such as accounts
receivable, accounts payable and accrued expenses are reasonable
estimates of their fair value because of the short maturity of these
items.
RECENT ACCOUNTING PRONOUNCEMENTS
In March 1998, the Accounting Standards Executive Committee issued
AICPA Statement of Position 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use" ("SOP 98-1"). This
statement provides guidance on accounting for the costs of computer
software developed or obtained for internal use and identifies
characteristics of internal use software as well as assists in
determining when computer software is for internal use. SOP 98-1 is
effective for fiscal years beginning after December 15, 1998, with
earlier application permitted. The Company adopted SOP 98-1 on July 1,
1999, the effect of which was immaterial to the financial statements.
<PAGE>
3. COMMITMENTS AND CONTINGENCIES
LEASES
The Company currently leases office space and under an operating lease
agreement that extends to September 30, 2000. Rent expense for this
lease for the years ended June 30, 1998 and 1999, and for the three
months ended September 30, 1998 and 1999 was approximately $152,000,
$196,000, $36,000 and $55,000, respectively.
Future minimum payments for operating leases at June 30, 1999 are as
follows:
<TABLE>
<CAPTION>
Year Ending June 30,
-------------------
<S> <C>
2000 $199,240
2001 $ 49,810
</TABLE>
LEGAL PROCEEDINGS
The Company is subject to various claims and legal actions as a result
of its ongoing business activities. Management believes that the
outcome of any such claims or legal actions will not have a material
adverse effect on the Company's financial position or results of
operations.
4. RELATED PARTY TRANSACTIONS
The Company utilizes several divisions of one of its general partners,
ADP, Inc., to provide services to facilitate the processing and
delivery of its customer support and retention services. The Company
receives a monthly allocation from ADP, Inc. for the sales and
marketing expenses of its program services. Amounts charged to the
Company for the years ended June 30, 1998 and 1999 and for the three
months ended September 30, 1998 were approximately $4,350,000,
$3,184,000 and $838,000, respectively, and are included within
selling, general and administrative expenses in the accompanying
statements of operations. The Company began utilizing in-house sales
and marketing subsequent to June 30, 1999 and, therefore, no longer
receives an allocation of these expenses.
The Company utilizes a division of ADP, Inc., Proxy Services, for the
letter fulfillment stage of their services. This service includes the
stuffing, sealing and mailing of the service reminder letters printed
by the Company. The Company is charged a service fee for this process
and is included within production costs in the accompanying statements
of operations. Amounts charged to the Company for these services for
the years ended June 30, 1998 and 1999 and for the three months ended
September 30, 1998 and 1999 was approximately $622,000, $464,000,
$139,000 and $104,000, respectively.
Data polling information generated for the specific identification of
customer information that is utilized to ascertain the type and timing
of the respective service reminder letters is supplied by another
division of ADP, Inc. This data extraction fee is charged to the
Company and was approximately $2,254,000, $1,147,000, $397,000 and
$191,000 for the years ended June 30, 1998 and 1999 and for the three
months ended September 30, 1998 and 1999, respectively. These amounts
are included within production costs in the accompanying statements of
operations.
Management believes that the related party charges incurred by Computer
Care are reasonable.
<PAGE>
5. SUBSEQUENT EVENT TO JUNE 30, 1999
Effective November 30, 1999, the Company was acquired by Newgen Results
Corporation ("Newgen"). In connection therewith, Newgen acquired 100%
of the partnership interests and certain net assets of the partnership
for $11,025,000 in cash. Newgen may also pay up to an additional
$9,000,000 based on certain earn-out criteria, as defined in the
partnership purchase agreement.
<PAGE>
NEWGEN RESULTS CORPORATION
CONDENSED PROFORMA FINANCIAL STATEMENTS (UNAUDITED)
AS OF SEPTEMBER 30, 1999, FOR THE YEAR ENDED
DECEMBER 31, 1998 AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
<PAGE>
NEWGEN RESULTS CORPORATION
CONDENSED PROFORMA BALANCE SHEET
SEPTEMBER 30, 1999
(UNAUDITED)
ASSETS
<TABLE>
<CAPTION>
Computer Proforma Adjusted
Newgen Care Adjustments Balance
------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 23,249,517 $ - $ (651,545) a $22,597,972
Short-term investments 12,299,941 - (10,942,821) b 1,357,120
Accounts receivable, net 7,965,243 2,387,253 (2,387,253) c 7,965,243
Prepaid expenses and other 722,649 446,971 (446,971) c 722,649
------------- -------------- ------------- ------------
Total current assets 44,237,350 2,834,224 (14,428,590) 32,642,984
------------- -------------- ------------- ------------
PROPERTY, PLANT AND EQUIPMENT, NET 5,418,855 347,521 (147,195) D 5,619,181
OTHER ASSETS 583,478 - 11,551,235 E 12,134,713
------------- -------------- ------------- ------------
Total Assets $50,239,683 $3,181,745 $ (3,024,550) $50,396,878
============= ============== ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,181,837 $ 127,945 $ (77,945) f $ 3,231,837
Accrued liabilities 3,644,184 1,175,199 (1,068,004) f 3,751,379
Capital lease obligations, current 1,020,323 - - 1,020,323
------------- ---------- ------------- ------------
Total current liabilities 7,846,344 1,303,144 (1,145,949) 8,003,539
------------- ---------- ------------- ------------
LONG-TERM LIABILITIES 1,443,686 - - 1,443,686
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock 10,021 - - 10,021
APIC 52,257,867 - - 52,257,867
Other (1,261,749) - - (1,261,749)
Retained deficit (10,056,486) - - (10,056,486)
Partners' equity - 1,878,601 (1,878,601) g -
------------- -------------- -------------- ------------
Total stockholders' equity 40,949,653 1,878,601 (1,878,601) 40,949,653
------------- -------------- -------------- ------------
Total liabilities and
Stockholders' equity $50,239,683 $3,181,745 $ (3,024,550) $50,396,878
============= ============== ============== ============
</TABLE>
The accompanying notes are an integral part of these
proforma financial statements.
<PAGE>
NEWGEN RESULTS CORPORATION
CONDENSED PROFORMA STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(UNAUDITED)
<TABLE>
<CAPTION>
Computer Proforma Adjusted
Newgen Care Adjustments Balance
------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
REVENUE
Database marketing services $31,512,768 $ - $ - $ 31,512,768
Consulting services 8,593,061 - - 8,593,061
Service reminders - 24,637,494 - 24,637,494
------------ ------------- -------------- ------------
Total revenues 40,105,829 24,637,494 - 64,743,323
------------ ------------- -------------- ------------
COST OF SERVICES
Cost of database marketing services 21,156,695 - - 21,156,695
Cost of consulting services 6,694,764 - - 6,694,764
Installation costs 1,410,997 - - 1,410,997
Processing costs - 17,891,784 - 17,891,784
------------ ------------- -------------- ------------
Total cost of services 29,262,456 17,891,784 - 47,154,240
------------ ------------- -------------- ------------
Gross profit 10,843,373 6,745,710 - 17,589,083
------------ ------------- -------------- ------------
EXPENSES
Selling, general and administrative 8,876,608 8,080,171 1,350,246 h 18,307,025
Technology and product development 2,258,892 - - 2,258,892
Software rewrite costs 2,842,083 - - 2,842,083
------------ ------------- -------------- ------------
Total operating costs 13,977,583 8,080,171 1,350,246 23,408,000
------------ ------------- -------------- ------------
Loss from operations (3,134,210) (1,334,461) (1,350,246) (5,818,917)
------------ ------------- -------------- ------------
INTEREST INCOME (EXPENSE)
Interest income 143,381 - - 143,381
Interest expense (212,300) - (772,000) j (984,300)
------------ ------------- -------------- ------------
Interest expense, net (68,919) - (772,000) (840,919)
------------ ------------- -------------- ------------
Net loss (3,203,129) (1,334,461) (2,122,246) (6,659,836)
Adjustment for accretion of redeemable
preferred stock (1,370,909) - - (1,370,909)
------------ ------------- -------------- ------------
Loss applicable to common shareholders $(4,574,038) $(1,334,461) $(2,122,246) $(8,030,745)
============ ============= ============== ============
Basic loss per share $(1.21) $(2.13)
============ ============
Diluted loss per share $(1.21) $(2.13)
============ ============
Shares used in basic and diluted
per share calculation 3,767,415 3,767,415
============ ============
</TABLE>
The accompanying notes are an integral part of these
proforma financial statements.
<PAGE>
NEWGEN RESULTS CORPORATION
CONDENSED PROFORMA STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
<TABLE>
<CAPTION>
Computer Proforma Adjusted
Newgen Care Adjustments Balance
------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
REVENUE
Database marketing services $35,190,837 $ - $ - $35,190,837
Consulting services 4,675,914 - - 4,675,914
Service reminders - 12,702,094 - 12,702,094
------------ ------------- -------------- ------------
Total revenues 39,866,751 12,702,094 - 52,568,845
------------ ------------- -------------- ------------
COST OF SERVICES
Cost of database marketing services 19,380,567 - - 19,380,567
Cost of consulting services 3,999,208 - - 3,999,208
Installation costs 1,088,233 - - 1,088,233
Processing costs - 10,379,941 - 10,379,941
------------ ------------- -------------- ------------
Total cost of services 24,468,008 10,379,941 - 34,847,949
------------ ------------- -------------- ------------
Gross profit 15,398,743 2,322,153 - 17,720,896
------------ ------------- -------------- ------------
EXPENSES
Selling, general and administrative 9,365,916 5,005,937 1,012,684 h 15,384,537
Technology and product development 2,807,006 - - 2,807,006
------------ ------------- -------------- ------------
Total operating costs 12,172,922 5,005,937 1,012,684 18,191,543
------------ ------------- -------------- ------------
Income (loss) from operations 3,225,821 (2,683,784) (1,012,684) (470,647)
INTEREST INCOME (EXPENSE)
Interest income 629,375 - (200,000) i (200,000)
Interest expense (277,151) - (321,500) j (321,500)
------------ ------------- -------------- ------------
Interest income (expense), net 352,224 - (521,500) (521,500)
------------ ------------- -------------- ------------
Income (loss) before tax 3,578,045 (2,683,784) (1,534,184) (639,923)
Income taxes 10,250 - - 10,250
------------ ------------- -------------- ------------
Net income (loss) 3,567,795 (2,683,784) (1,534,184) (650,173)
Adjustment for accretion of
redeemable preferred stock (486,807) - - (486,807)
------------ ------------- -------------- ------------
Income (loss) applicable
to common shareholders $ 3,080,988 $(2,683,784) $ (1,534,184) $(1,136,980)
============ ============= ============== ============
Basic income (loss) per share $ 0.45 $ (0.17)
============ ============
Diluted income (loss) per share $ 0.38 $ (0.17)
============ ============
Shares used in basic per
share calculation 6,817,070 6,817,070
============ ============
Shares used in diluted
per share Calculation 9,386,220 6,817,070
============ ============
</TABLE>
The accompanying notes are an integral part of these
proforma financial statements.
<PAGE>
NEWGEN RESULTS CORPORATION
AND SUBSIDIARY
NOTES TO CONDENSED PROFORMA FINANCIAL STATEMENTS
(Unaudited)
1. GENERAL
On November 30, 1999, Newgen Results Corporation ("Newgen"), a Delaware
corporation, together with its subsidiary NGR Acquisition Corp. ("NGR"),
acquired the partnership interest, including certain net assets and
liabilities of Computer Care, a New York general partnership and wholly
owned operation of ADP, Inc. Pursuant to the terms and conditions of the
partnership purchase agreement dated October 22, 1999, subsequently
amended on November 30, 1999 (the "Agreement"), Newgen acquired the 100
percent interest in Computer Care for an aggregate purchase price of
$11,025,000 and up to an additional $9,000,000 earn-out which may be
paid based upon certain earn-out criteria, as defined in the partnership
purchase agreement. The acquisition will be accounted for as a purchase.
Acquisition goodwill of approximately $11,500,000 will be amortized on a
straight-line basis over 9 years.
2. BASIS OF PRESENTATION
The accompanying unaudited condensed proforma financial statements are
based on adjustments to Newgen's historical consolidated financial
statements to give effect to the acquisition described in Note 3 below.
Computer Care had a fiscal year end of June 30. Accordingly, the interim
periods of July 1 through December 31 have been used to adjust the June
30 balances to Newgen's calendar year end. The unaudited condensed
proforma balance sheet assumes the acquisition had occurred at the end
of the period presented. The unaudited condensed proforma statements of
operations assume the acquisition was consummated as of the beginning of
the periods presented. The unaudited condensed proforma statements of
operations are not necessarily indicative of results that would have
occurred had the acquisition been consummated as of the beginning of the
periods presented or the results that may be attained in the future.
Certain information normally included in financial statements prepared
in accordance with generally accepted accounting principles has been
condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. The condensed proforma financial
statements should be read in conjunction with the historical audited
consolidated financial statements of Newgen and the historical audited
financial statements of Computer Care.
The information in the unaudited condensed proforma statements of
operations for the year ended December 31, 1998, and for the nine months
ended September 30, 1999, have been derived from (i) the audited
statements of operations of Newgen for the year ended December 31, 1998;
(ii) the audited fiscal year ended June 30, 1998 and 1999, statements of
operations of Computer Care; (iii) unaudited interim period (July 1
through December 31) statement of operations information of Computer
Care; (iv) unaudited statements of operations for the nine months ended
September 30, 1999, of Computer Care; and (v) Newgen unaudited
statements of operations for the nine months ended September 30, 1999.
<PAGE>
The Company obtained the following assets and assumed certain liabilities, as a
result of the acquisition, which will be accounted for as a purchase.
<TABLE>
<S> <C>
Cash paid $ 11,594,366
Liabilities assumed 157,195
--------------
Total consideration given 11,751,561
==============
Assets acquired $ 200,326
Goodwill 11,551,235
--------------
Total consideration received $ 11,751,561
==============
</TABLE>
The allocation of the purchase price to the assets acquired was based on
preliminary estimates of fair value.
3. ADJUSTMENTS TO THE HISTORICAL FINANCIAL STATEMENTS
The following pro forma adjustments have been made to the historical
condensed balance sheet as of September 30, 1999 and statements of operations
for the year ended December 31, 1998 and for the nine months ended September
30, 1999 as if the acquisition described in Note 1 was consummated at
September 30, 1999 and as of the beginning of the periods presented,
respectively. Earnings per share has been adjusted to reflect the addition of
Computer Care's net loss for the periods presented, as well as the pro forma
adjustments.
BALANCE SHEET
(a) To reflect the cash paid for acquisition expenses in conjunction with the
purchase transaction.
(b) To reflect Newgen's cash payment to ADP for the acquisition of Computer
Care.
(c) Pursuant to the terms of the Agreement, these assets and liabilities were
not assumed by Newgen.
(d) Computer Care's fixed assets have been adjusted to estimated net realizable
value, as determined by third-party appraisal.
(e) To record goodwill related to the acquisition of Computer Care.
(f) Pursuant to the terms of the Agreement, the assumption of specific accounts
payable and deferred revenue.
(g) To reflect the elimination of Computer Care's net equity.
STATEMENTS OF OPERATIONS
(h) To reflect incremental depreciation and amortization of the acquired fixed
assets and purchase price paid in excess of fair value of the assets
acquired, respectively. Depreciation is being recorded on a straight-line
basis over 3 years and goodwill is being recorded on a straight-line basis
over 9 years.
(i) To reflect the reduction of interest income due to the reduction of cash
and short-term investments related to the acquisition of Computer Care.
(j) To reflect the increase of interest expense assuming that Newgen would
have been required to obtain additional debt to complete the acquisition
discussed in Note 1, utilizing an incremental borrowing rate of
approximately 7 percent, through May of 1999.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
NEWGEN RESULTS CORPORATION
By: /s/ Samuel Simkin
----------------------------------
Samuel Simkin
Senior Vice President and
Chief Financial Officer
Date: February 11, 2000
