<PAGE> 1
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): DECEMBER 31, 1999
SALESLOGIX CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C> <C>
Delaware 0-26161 86-0808340
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
</TABLE>
8800 N. Gainey Center Drive, Suite 200
Scottsdale, Arizona 85258
(Address of principal executive offices) (Zip Code)
(480) 368-3700
(Registrant's telephone number, including area code)
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This Amendment No. 1 to our Current Report on Form 8-K dated December
31, 1999 relates to our acquisition of the ACT! Product Line and related
business from Symantec Corporation pursuant to a Software License Agreement
dated December 6, 1999, as amended and closed on December 31, 1999. The purpose
of this amendment is to provide the financial information required by Items 7(a)
and 7(b) of Form 8-K, which information was excluded from the original filing in
reliance upon Item 7(a)(4) of Form 8-K.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements of Business Acquired
Audited Financial Statements
(i) Report of Independent Auditors.
(ii) Statements of Assets Acquired and Liabilities Assumed
as of December 31, 1999 and March 31, 1999.
(iii) Statements of Net Revenues and Direct Expenses for
the nine months ended December 31, 1999 and the years ended March 31, 1999 and
1998.
(iv) Notes to Financial Statements for the nine months
ended December 31, 1999 and the years ended March 31, 1999 and 1998.
(b) Pro Forma Financial Information
Pro Forma Financial Statements (unaudited).
(i) Pro Forma Statement of Operations for the year ended
December 31, 1998.
(ii) Pro Forma Statement of Operations for the nine month
period ended September 30, 1999.
(iii) Pro Forma Balance Sheet as of September 30, 1999.
(iv) Notes to Pro Forma Financial Statements.
2
<PAGE> 3
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Exhibit No. Description
- --------------------------------------------------------------------------------
<S> <C>
2.1* Software License Agreement between the Company and Symantec
Corporation dated December 6, 1999.
- --------------------------------------------------------------------------------
2.2* Amendment to Software License Agreement between the Company and
Symantec Corporation dated December 31, 1999.
- --------------------------------------------------------------------------------
2.3* Exhibit A to Software License Agreement - Licensed Products
- --------------------------------------------------------------------------------
2.4* Exhibit C to Software License Agreement - Other Transferred Assets
- --------------------------------------------------------------------------------
2.5* Exhibit E to Software License Agreement - Transferred Liabilities
- --------------------------------------------------------------------------------
2.6* Exhibit F to Software License Agreement - Transition Agreement
- --------------------------------------------------------------------------------
2.7* Exhibit M to Software License Agreement - Registration Rights
Agreement
- --------------------------------------------------------------------------------
2.8* Exhibit N to Software License Agreement - Stockholder Agreement
- --------------------------------------------------------------------------------
23.1 Consent of Ernst & Young LLP
- --------------------------------------------------------------------------------
</TABLE>
* Previously filed with Form 8-K filed on December 31, 1999.
3
<PAGE> 4
Report of Independent Auditors
The Board of Directors and Stockholders
Symantec Corporation
We have audited the accompanying statements of assets acquired and liabilities
assumed of the ACT! Product Line (the ACT! Business) of Symantec Corporation as
of December 31, 1999 and March 31, 1999, and the related statements of net
revenues and direct expenses for the years ended March 31, 1999 and 1998 and the
nine-month period ended December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion of these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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.
As described in Note 1, the accompanying financial statements were prepared
solely to present the assets of the ACT! Business acquired by SalesLogix
Corporation pursuant to the purchase agreement, dated December 6, 1999, and the
related net revenues and direct expenses of the ACT! Business, and are not
intended to be a complete presentation of the assets and liabilities or the
results of operations of the ACT! Business of Symantec Corporation.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the assets acquired and liabilities assumed of the ACT!
Business of Symantec Corporation as of December 31, 1999 and March 31, 1999, and
the related statements of net revenues and direct expenses for the years ended
March 31, 1999 and 1998 and for the nine months ended December 31, 1999, in
conformity with accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
San Jose, California
February 25, 2000
4
<PAGE> 5
ACT! Product Line of Symantec Corporation
Statements of Assets Acquired and Liabilities Assumed
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1999 1999
--------------------------
(in thousands)
<S> <C> <C>
Inventories - finished goods $ 610 $ 178
Furniture and equipment 215 323
Less accumulated depreciation (117) (202)
-----------------------
Net furniture and equipment 98 121
-----------------------
Assets acquired $ 708 $ 299
=======================
Deferred product revenue $ 5,731 $ 2,356
Deferred upgrade insurance and maintenance 226 367
-----------------------
Liabilities assumed $ 5,957 $ 2,723
=======================
</TABLE>
5
<PAGE> 6
ACT! Product Line of Symantec Corporation
Statements of Net Revenues and Direct Expenses
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEARS ENDED MARCH 31, DECEMBER 31,
1999 1998 1999
----------------------------------------
(in thousands)
<S> <C> <C> <C>
Net revenues $38,450 $42,923 $28,732
Direct expenses:
Cost of revenues 4,007 5,276 2,994
Operating expenses:
Research and development 5,797 7,930 3,627
Marketing 7,006 9,858 3,256
-------------------------------------
Total operating expenses 12,803 17,788 6,883
-------------------------------------
Total direct expenses 16,810 23,064 9,877
-------------------------------------
Net revenues less direct expenses $21,640 $19,859 $18,855
=====================================
</TABLE>
6
<PAGE> 7
ACT! Product Line of Symantec Corporation
Notes to Financial Statements
December 31, 1999
1. BASIS OF PRESENTATION
The ACT! Product Line (the ACT! Business) has operated as a product line within
the Remote Productivity Solutions business unit of Symantec Corporation
(Symantec). The ACT! Business sells its products, contact management software
solutions, primarily to distributors and resellers. The ACT! Business markets
its products in North America and in international countries. North American net
revenues were approximately 85% of total net revenues in the nine months ended
December 31, 1999 and the years ended March 31, 1999 and 1998. The accompanying
financial statements were prepared to present the assets acquired and
liabilities assumed of the ACT! Business, which was sold to SalesLogix
Corporation (SalesLogix), pursuant to a software license agreement, dated
December 6, 1999, and the related net revenues and direct expenses of the ACT!
Business and are not intended to be a complete presentation of the results of
operations of the ACT! Business. The related net revenues and direct expenses
include net revenues, cost of revenues, and direct expenses for the ACT!
Business.
The ACT! Business had no separate legal status as it was an integral part of
Symantec's overall operations. As a result, separate financial statements have
not been maintained for the operations sold to SalesLogix.
The accompanying financial statements have been prepared from the historical
accounting records of Symantec and do not purport to reflect the assets,
liabilities, deferred revenue, net revenues, and direct expenses that would have
resulted if the ACT! Business had operated as an unaffiliated independent
company. Since only certain assets are being sold, statements of cash flows are
not applicable.
Symantec has a 52/53-week fiscal accounting year. Accordingly, all references as
of and for the periods ended December 31, 1999, March 31, 1999, and March 31,
1998 reflect amounts as of and for the periods ended December 31, 1999, April 2,
1999, and April 3, 1998, respectively. The nine months ended December 31, 1999
comprised 39 weeks of activity. The years ended March 31, 1999 and 1998
comprised 52 weeks of activity.
7
<PAGE> 8
ACT! Product Line of Symantec Corporation
Notes to Financial Statements (continued)
1. BASIS OF PRESENTATION (CONTINUED)
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 amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.
CUSTOMER CONCENTRATIONS
The customers, which account for more than 10% of revenues in each period, are
as follows:
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
MARCH 31, DECEMBER 31,
1999 1999
---------------------------
<S> <C> <C>
Ingram 41% 58%
Merisel 17% 17%
Tech Data -- 12%
</TABLE>
INVENTORIES
Inventories are valued at the lower of cost or market. Cost is determined using
currently adjusted standards, which approximates actual cost on a first-in,
first-out basis.
FURNITURE AND EQUIPMENT
Furniture and equipment are stated at cost, net of accumulated depreciation.
Depreciation is provided on a straight-line basis over the estimated useful
lives of the respective assets, generally three years. Direct operating expenses
include depreciation expense related to the assets sold of $178,000 and $346,000
for the years ended March 31, 1999 and 1998, respectively, and $62,000 for the
nine months ended December 31, 1999.
8
<PAGE> 9
ACT! Product Line of Symantec Corporation
Notes to Financial Statements (continued)
1. BASIS OF PRESENTATION (CONTINUED)
LIABILITIES ASSUMED
Deferred product revenue relates to all distribution and reseller channel
inventory in excess of defined inventory levels in these channels. Deferred
upgrade insurance and maintenance relates to significant post-contract support
agreements that are deferred and recognized over the period of the agreements.
REVENUE RECOGNITION
Under Statement of Position (SOP) 97-2, as modified by SOP 98-4 and SOP 98-9,
revenue is recognized upon persuasive evidence of an arrangement, delivery of
software to the customer, determination that there are no significant
post-delivery obligations, and a probable collection of a fixed or determinable
license fee.
Product revenue relating to all distribution and reseller channel inventory in
excess of defined inventory levels in these channels has been deferred. The
related net revenues and cost of revenues are not included in the statements of
net revenues and direct expenses until recognized. The right of return of
products of the ACT! Business exists under various policies. Reserves for
product returns are maintained and estimated in accordance with Statement of
Financial Accounting Standards No. 48, "Revenue Recognition When Right of Return
Exists." Symantec believes that these estimates are reasonable.
Revenues related to significant post-contract support agreements (generally
product maintenance and upgrade insurance) are deferred and recognized over the
period of the agreements.
Net revenues in the accompanying financial statements represent sales by
Symantec for the ACT! Business.
9
<PAGE> 10
ACT! Product Line of Symantec Corporation
Notes to Financial Statements (continued)
1. BASIS OF PRESENTATION (CONTINUED)
DIRECT EXPENSES
The caption "Direct Expenses" on the accompanying financial statements
represents that portion of the total Direct Expenses of Symantec incurred by the
ACT! Business. Symantec maintains separate accounts to capture research and
development and sales and marketing expenses directly attributable to the ACT!
Business, which have been included in the caption "Direct Expenses." Direct
Expenses do not include corporate services, information services, advertising,
other selling, and general and administrative services incurred at the corporate
level and allocated to Symantec's various business units. Additionally, there is
no allocation of interest income, interest expense, or income taxes. Cost of
revenues includes direct manufacturing costs (CDs, product packaging),
royalties, and the ACT! Business' allocation of various manufacturing overhead
costs. These costs are not necessarily indicative of the costs that would have
been incurred by an independent third-party purchaser. These direct expenses are
not necessarily indicative of the expenses that would have been incurred had the
ACT! Business operated as a standalone business.
2. SALES TO SALESLOGIX CORPORATION
On December 31, 1999, the assets and liabilities reflected in the accompanying
Statements of Assets Acquired and Liabilities Assumed were acquired by
SalesLogix Corporation. In consideration for the license and the assets,
SalesLogix transferred 623,247 shares of unregistered common stock to Symantec,
valued at approximately $20 million. In addition, to the shares, SalesLogix will
pay royalties up to a maximum $57 million. At the end of the four-year royalty
period, SalesLogix has the exclusive option to purchase the licensed technology
for $60 million less all the royalties paid to Symantec to date.
10
<PAGE> 11
UNAUDITED PRO FORMA FINANCIAL STATEMENTS
On December 31, 1999, SalesLogix Corporation ("SalesLogix" or the
"Company") completed its acquisition of the ACT! product line and related
business from Symantec Corporation ("Symantec") pursuant to a Software License
Agreement dated December 6, 1999. Under the terms of the agreement, SalesLogix
acquired an exclusive license of ACT! and an option to purchase the product line
at the end of the four year license term for an aggregate purchase price,
including royalties, of $60.0 million in cash plus 623,247 shares of SalesLogix
common stock valued at $20.0 million and issued at closing. The $60.0 million
cash is to be paid over four years and has been discounted at 22.4% to reflect
SalesLogix's borrowing rate in a simultaneous third party transaction.
The following unaudited pro forma financial statements of SalesLogix
present the unaudited pro forma combined consolidated statements of operations
for the year ended December 31, 1998, and for the nine months ended September
30, 1999, and the unaudited pro forma combined consolidated balance sheet as of
September 30, 1999.
The unaudited pro forma statement of operations for the year ended
December 31, 1998 and the nine months ended September 30, 1999, have been
adjusted to give effect to the acquisition of the ACT! product line from
Symantec as if this transaction had occurred January 1, 1998 and January 1,
1999, respectively.
The unaudited pro forma balance sheet at September 30, 1999 gives
effect to the acquisition of the ACT! product line from Symantec as if this
transaction had occurred on September 30, 1999.
The pro forma adjustments represent, in the opinion of management, all
adjustments necessary to present the Company's pro forma results of operations
and financial position in accordance with Article 11 of SEC Regulation S-X and
are based upon available information and certain assumptions considered
reasonable under the circumstances.
SalesLogix has no experience in selling a shrink-wrapped software
product through a retail distribution channel and has limited historical data
from which to estimate the expected costs to be incurred by the ACT! line of
business. Because of its larger size and related economies of scale, management
believes that the costs incurred by SalesLogix to run the ACT! line of business
will be higher than costs incurred by Symantec for comparable goods and
services. Actual results may differ materially from these estimated amounts.
The ACT! line of business was not a subsidiary or a reportable segment
of Symantec. Symantec maintained separate accounts to capture research and
development and certain product specific marketing activities of the ACT! line
of business. Symantec did not maintain separate accounts to capture corporate
services, information services, selling, other marketing, or general and
administrative expenses incurred at the corporate level and allocated to the
ACT! line of business by Symantec. Symantec's cost of revenue includes the
direct manufacturing costs of the ACT! product, royalties, and the allocation of
various manufacturing overhead costs to the ACT! line of business. These costs
are not necessarily indicative of the costs that would have
11
<PAGE> 12
been incurred if SalesLogix Corporation had operated the business for the
periods presented. The expenses charged to the ACT! line of business by Symantec
are not necessarily indicative of the expenses that would have been incurred had
the ACT! line of business operated as a stand-alone business.
The unaudited pro forma financial statements presented herein does not
purport to present what the Company's financial position or results of
operations would actually have been had the events leading to the pro forma
adjustments in fact occurred on the date or at the beginning of the periods
indicated or to project the Company's financial position or results of
operations for any future date or period.
The unaudited pro forma financial statements should be read in
conjunction with the audited consolidated financial statements of SalesLogix
Corporation and the notes thereto and management's discussion and analysis
thereof, included in the Company's registration statement on Form S-1 and the
unaudited financial statements of SalesLogix Corporation and the notes thereto
and management's discussion and analysis thereof, included in Company's
quarterly reports on Form 10-Q.
12
<PAGE> 13
SALESLOGIX
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED DECEMBER 31, 1998
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACT!
SALESLOGIX STATEMENT OF NET
STATEMENT OF REVENUES AND
OPERATIONS DIRECT EXPENSES PRO FORMA PRO
12/31/98 3/31/99 COMBINED ADJUSTMENTS FORMA
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total revenues $15,643 $38,450 $54,093 $ 54,093
Cost of revenues $ 4,903 $ 4,007 $ 8,910 (2) $ 3,153 $ 12,063
--------------------------------------------- -------------------------
Gross profit $10,740 $34,443 $45,183 $ (3,153) $ 42,030
Sales & marketing $10,077 $ 7,006 $17,083 (2) $ 6,393 $ 23,476
Research & development $ 3,845 $ 5,797 $ 9,642 (2) $ 9,642
General & administrative $ 2,151 $ 2,151 (2) $ 916 $ 3,067
Amortization of acquisition related intangibles $ 1,436 $ 1,436 (1) $ 15,470 $ 16,906
--------------------------------------------- -------------------------
Total operating expenses $17,509 $12,803 $30,312 $ 22,779 $ 53,091
--------------------------------------------- -------------------------
Income (loss) from operations $(6,769) $21,640 $14,871 $(25,932) $(11,061)
Interest expense $ (255) $ (255) (3) $ (8,224) $ (8,479)
Other income $ 385 $ 385 $ 385
--------------------------------------------- -------------------------
Net income (loss) $(6,639) $21,640 $15,001 $(34,156) $(19,155)
============================================= =========================
Loss per share $ (0.54) (4) $ (1.48)
======= =======
Pro forma weighted average shares outstanding 12,311 (3) 623 12,934
======= =======
</TABLE>
13
<PAGE> 14
SALESLOGIX
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED SEPTEMBER 30, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
ACT!
SALESLOGIX STATEMENT OF NET
STATEMENT OF REVENUES AND
OPERATIONS DIRECT EXPENSES PRO FORMA PRO
9/30/99 12/31/99 COMBINED ADJUSTMENTS FORMA
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Total revenues $24,621 $28,732 $53,353 $ 53,353
Cost of revenues $ 6,625 $ 2,994 $ 9,619 (2) $ 2,279 $ 11,898
---------------------------------------------- --------------------------
Gross profit $17,996 $25,738 $43,734 $ (2,279) $ 41,455
Sales & marketing $13,653 $ 3,256 $16,909 (2) $ 6,246 $ 23,155
Research & development $ 4,572 $ 3,627 $ 8,199 (2) $ 498 $ 8,697
General & administrative $ 2,306 $ 2,306 (2) $ 719 $ 3,025
Amortization of acquisition related intangibles $ 3,207 $ 3,207 (1) $ 11,603 $ 14,810
---------------------------------------------- --------------------------
Total operating expenses $23,738 $ 6,883 $30,621 $ 19,066 $ 49,687
---------------------------------------------- --------------------------
Income (loss) from operations $(5,742) $18,855 $13,113 $(21,345) $ (8,232)
Interest expense $ (135) $ -- $ (135) (3) $ (6,413) $ (6,548)
Other income $ 694 $ -- $ 694 $ 694
---------------------------------------------- --------------------------
Net income (loss) $(5,183) $18,855 $13,672 $(27,758) $(14,086)
============================================== ==========================
Loss per share $ (0.33) (4) $ (0.85)
========== =========
Weighted average shares outstanding 15,912 (3) 623 16,535
========== ==========================
</TABLE>
14
<PAGE> 15
SALESLOGIX
UNAUDITED PRO FORMA BALANCE SHEET
SEPTEMBER 30, 1999
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACT! ASSETS
ACQUIRED AND
LIABILITIES PRO FORMA PRO
SALESLOGIX ASSUMED COMBINED ADJUSTMENTS FORMA
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and equivalents $ 29,385 $ 29,385 $ 29,385
Short-term investments $ 4,773 $ 4,773 $ 4,773
Accounts receivable, net $ 9,593 $ 9,593 $ 9,593
Due from Symantec $ 5,957 $ 5,957
Prepaid expenses and other $ 1,251 $ 610 $ 1,861 $ (250) $ 1,611
----------------------------------------------------------------
Total current assets $ 45,002 $ 610 $ 45,612 $ 5,707 $ 51,319
Property and equipment $ 4,199 $ 98 $ 4,297 $ 4,297
Intangible assets $ 11,179 $ 11,179 $61,880 $ 73,059
Other $ 105 $ 105 $ 105
----------------------------------------------------------------
Total assets $ 60,485 $ 708 $ 61,193 $67,587 $128,780
================================================================
Accounts payable $ 2,235 $ 2,235 $ 2,235
Accrued expenses $ 3,425 $ 3,425 $ 1,399 $ 4,824
Current portion of debt and leases $ 429 $ 429 $11,775 $ 12,204
Deferred revenues $ 3,818 $ 5,957 $ 9,775 $ 9,775
----------------------------------------------------------------
Total current liabilities $ 9,907 $ 5,957 $ 15,864 $13,174 $ 29,038
Long-term debt $ -- $ -- $29,164 $ 29,164
Capital lease obligations $ 175 $ 175 $ 175
Deferred rental obligation $ 106 $ 106 $ 106
$ -- $ --
Common stock $ 19 $ 19 $ 19
Additional paid-in capital $ 75,740 $ 75,740 $20,000 $ 95,740
Accumulated deficit $(22,560) $(22,560) $(22,560)
Unearned compensation $ (2,901) $ (2,901) $ (2,901)
Treasury stock $ (1) $ (1) $ (1)
Excess of liabilities assumed over assets acquired $(5,249) $ (5,249) 5,249 $ --
----------------------------------------------------------------
Total stockholders' equity $ 50,297 $(5,249) $ 45,048 $25,249 $ 70,297
Total liabilities and stockholders' equity $ 60,485 $ 708 $ 61,193 $67,587 $128,780
================================================================
</TABLE>
15
<PAGE> 16
NOTES TO UNAUDITED PRO FORMA
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(1) Represents the amortization of goodwill and other acquired
intangibles from the ACT! acquisition using a four year life.
(2) Represents the additional expenses the Company estimates would
have been incurred had it run the ACT! line of business since January 1, 1998.
The ACT! line of business was not a subsidiary or a reportable segment
of Symantec Corporation. Symantec maintained separate accounts to capture
research and development and certain product specific marketing activities of
the ACT! line of business. Symantec did not maintain separate accounts to
capture corporate services, information services, selling, other marketing, or
general and administrative expenses incurred at the corporate level and
allocated to the ACT! line of business by Symantec. Symantec's cost of revenue
includes the direct manufacturing costs of the ACT! product, royalties, and the
allocation of various manufacturing overhead costs to the ACT! line of business.
These costs are not necessarily indicative of the costs that would have been
incurred if SalesLogix Corporation had operated the business for the periods
presented. The expenses charged to the ACT! line of business by Symantec are not
necessarily indicative of the expenses that would have been incurred had the
ACT! line of business operated as a stand-alone business.
SalesLogix has no experience in selling a shrink-wrapped software
product through a retail distribution channel and has limited historical data
from which to estimate the expected costs to be incurred by the ACT! line of
business. Because of it larger size and related economies of scale, management
believes that the costs incurred by SalesLogix to run the ACT! line of business
will be higher than costs incurred by Symantec for comparable goods and
services. Actual results may differ materially from these estimated amounts.
(3) Represents imputed interest expense on the cash portion of the
purchase price for ACT! Cash payments of $60.0 million are to be paid over four
years. The cash portion of the purchase price has been discounted at 22.4% to
reflect the Company's borrowing rate in a simultaneous third party borrowing
transaction.
(4) Loss per share has been determined in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
Common share equivalents have been excluded from the calculation of loss per
share for all columns presented, as their effect is anti-dilutive.
16
<PAGE> 17
NOTES TO UNAUDITED PRO FORMA
STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(1) Represents the amortization of goodwill and other acquired
intangibles from the ACT! acquisition using a four year life.
(2) Represents the additional expenses the Company estimates would
have been incurred had it run the ACT! line of business since January 1, 1999.
The ACT! line of business was not a subsidiary or a reportable segment
of Symantec Corporation. Symantec maintained separate accounts to capture
research and development and certain product specific marketing activities of
the ACT! line of business. Symantec did not maintain separate accounts to
capture corporate services, information services, selling, other marketing, or
general and administrative expenses incurred at the corporate level and
allocated to the ACT! line of business by Symantec. Symantec's cost of revenue
includes the direct manufacturing costs of the ACT! product, royalties, and the
allocation of various manufacturing overhead costs to the ACT! line of business.
These costs are not necessarily indicative of the costs that would have been
incurred if SalesLogix Corporation had operated the business for the periods
presented. The expenses charged to the ACT! line of business by Symantec are not
necessarily indicative of the expenses that would have been incurred had the
ACT! line of business operated as a stand-alone business.
SalesLogix has no experience in selling a shrink-wrapped software
product through a retail distribution channel and has limited historical data
from which to estimate the expected costs to be incurred by the ACT! line of
business. Because of it larger size and related economies of scale, management
believes that the costs incurred by SalesLogix to run the ACT! line of business
will be higher than costs incurred by Symantec for comparable goods and
services. Actual results may differ materially from these estimated amounts.
(3) Represents imputed interest expense on the cash portion of the
purchase price for ACT! Cash payments of $60.0 million are to be paid over four
years. The cash portion of the purchase price has been discounted at 22.4% to
reflect the Company's borrowing rate in a simultaneous third party borrowing
transaction.
(4) Loss per share has been determined in accordance with
Statement of Financial Accounting Standards No. 128, "Earnings Per Share."
Common share equivalents have been excluded from the calculation of loss per
share for all columns presented, as their effect is anti-dilutive.
17
<PAGE> 18
NOTES TO UNAUDITED PRO FORMA
BALANCE SHEET
AS OF SEPTEMBER 30, 1999
The pro forma adjustment represents the purchase price paid for the
ACT! line of business and the recording of the Company's preliminary estimates
of the tangible and intangible assets acquired at fair value.
The Company paid $80.0 million for the ACT! line of business, including
623,247 shares of the Company's common stock valued at $20.0 million and issued
at closing. Cash payments of $60.0 million are to be paid over four years. The
cash portion of the purchase price has been discounted at 22.4% to reflect the
Company's borrowing rate in a simultaneous third party borrowing transaction.
18
<PAGE> 19
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.
SALESLOGIX CORPORATION
By: /s/ Gary R. Acord
--------------------------------
Gary R. Acord
Chief Financial Officer
Dated: March 15, 2000
19
<PAGE> 20
EXHIBIT LIST
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Exhibit No. Description
- --------------------------------------------------------------------------------
<S> <C>
2.1* Software License Agreement between the Company and Symantec
Corporation dated December 6, 1999.
- --------------------------------------------------------------------------------
2.2* Amendment to Software License Agreement between the Company and
Symantec Corporation dated December 31, 1999.
- --------------------------------------------------------------------------------
2.3* Exhibit A to Software License Agreement - Licensed Products
- --------------------------------------------------------------------------------
2.4* Exhibit C to Software License Agreement - Other Transferred Assets
- --------------------------------------------------------------------------------
2.5* Exhibit E to Software License Agreement - Transferred Liabilities
- --------------------------------------------------------------------------------
2.6* Exhibit F to Software License Agreement - Transition Agreement
- --------------------------------------------------------------------------------
2.7* Exhibit M to Software License Agreement - Registration Rights
Agreement
- --------------------------------------------------------------------------------
2.8* Exhibit N to Software License Agreement - Stockholder Agreement
- --------------------------------------------------------------------------------
23.1 Consent of Ernst & Young LLP
- --------------------------------------------------------------------------------
</TABLE>
* Previously filed with Form 8-K filed on December 31, 1999.
20
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-81247) pertaining to the SalesLogix Corporation 1996 Equity Incentive
Plan, SalesLogix Corporation 1999 Non-Employee Director Stock Option Plan and
SalesLogix Corporation 1999 Employee Stock Purchase Plan of our report dated
February 25, 2000, with respect to the statements of assets acquired and
liabilities assumed of the ACT! Product Line of Symantec Corporation as of
December 31, 1999 and March 31, 1999, and the related statements of net revenues
and direct expenses for years ended March 31, 1999 and 1998 and the nine month
period ended December 31, 1999, included in the Current Report on Form 8-K/A of
SalesLogix Corporation dated March 13, 2000.
/s/ ERNST & YOUNG LLP
San Jose, California
March 10, 2000
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