<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 6, 2000
---------------
InfoCure Corporation
--------------------
(Exact name of registrant as specified in its charter)
Delaware
--------
(State or other jurisdiction of incorporation)
011-12799
---------
(Commission File Number)
58-2271614
----------
(IRS Employer Identification Number)
1765 The Exchange Building, Suite 200, Atlanta, Georgia 30339
-------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (770) 221-9990
--------------
Not applicable
--------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
Item 5. Other Events.
On August 22, 2000, InfoCure Corporation ("InfoCure") announced its
intention to transfer the assets and liabilities of its dental division to
PracticeWorks, Inc., a wholly owned, indirect subsidiary of InfoCure, and to
effect a distribution of 100% of PracticeWorks common stock to its stockholders
in a tax-free transaction. This transaction is referred to in this report as the
distribution. On August 22, 2000, InfoCure also announced that it had filed a
Registration Statement on Form 10 with the Securities and Exchange Commission in
connection with the proposed distribution. InfoCure's dental division provides
information management technology and services to its approximately 38,000
dentists, orthodontists, and oral and maxillofacial surgeons. PracticeWorks will
be an independent public company following the distribution and will apply to
list its common stock on the Nasdaq Stock Market's National Market.
InfoCure intends to change its name to VitalWorks, Inc. following the
distribution, and will concentrate its operations on management information
technology and services exclusively for medical practices, including the
delivery of its previously announced ASP products.
The distribution is anticipated to be completed in the fourth quarter
of this year. InfoCure will receive an opinion from counsel that the
distribution should be tax-free for U.S. federal income tax purposes to InfoCure
and its stockholders. Each InfoCure stockholder of record at the time of
distribution will receive a pro rata dividend of PracticeWorks common stock
based on the number of shares of InfoCure common stock held on the record date
for the distribution in a ratio to be determined by InfoCure.
At the time of the distribution, each company will have a separate and
unrelated board of directors and independent management teams. James K. Price
will become chief executive officer and Richard E. Perlman will become chairman
of PracticeWorks. Frederick L. Fine will become chairman of VitalWorks.
This report contains certain forward-looking statements and information
relating to InfoCure that are based on the beliefs of management as well as
assumptions made by and information currently available to management. When used
in this report, the words "anticipate," "believe," "estimate," "expect,"
"intend," "plan," or any similar expressions, as they relate to InfoCure or its
management or the management of any of its businesses, are intended to identify
forward-looking statements. Such statements reflect the current view of the
Company with respect to future events and are subject to certain risks,
uncertainties and assumptions. Should one or more of these risks or
uncertainties materialize, or should underlying assumptions prove incorrect,
actual results may vary materially from those described herein as anticipated,
believed, estimated, expected, intended or planned. Reference is made in
particular to the discussion set forth below in this report and set forth in
InfoCure's Annual Report on Form 10-K for the year ended December 31, 1999, as
amended, for a discussion of some of the risks, uncertainties and assumptions
that could cause actual results to differ materially from those described in our
forward-looking statements. The risks, uncertainties and assumptions that could
cause actual results to differ from our forward-looking statements if InfoCure
completes the distribution include the factors discussed below. If InfoCure
completes the distribution, it will provide its stockholders with
an information statement that will include a discussion of PracticeWorks'
business and the risks relating to ownership of the PracticeWorks common stock
InfoCure's stockholders will receive in the distribution. InfoCure can make no
assurance that it will complete the distribution on the terms described in this
report or at all.
INFOCURE AND PRACTICEWORKS MIGHT EXPERIENCE DIFFICULTIES IN OPERATING AS
INDEPENDENT PUBLIC COMPANIES FOLLOWING THE DISTRIBUTION.
At the time of the distribution, InfoCure would divide its management,
financial, administrative and other personnel and its other resources between
InfoCure and PracticeWorks. Following the distribution, InfoCure and
PracticeWorks would be independent public companies and each company would be
responsible for its own management and operations, credit and banking
relationships, financial reporting, investor relations and other
responsibilities as a public company. If InfoCure did not appropriately
allocate its resources between InfoCure and PracticeWorks, or if either company
did not successfully put in place the management, financial and administrative
structure necessary to operate as an independent company, either InfoCure or
PracticeWorks, or both companies, might be unsuccessful or fail to become
profitable. In addition, InfoCure and PracticeWorks each have experienced recent
net losses and expect future losses. Following the distribution, InfoCure and
2
<PAGE> 3
PracticeWorks might have greater difficulty in financing their losses and other
capital needs, including activities related to each company's growth plans.
THE DISTRIBUTION MIGHT CAUSE FLUCTUATIONS IN TRADING PRICES OF INFOCURE COMMON
STOCK.
Following the distribution, InfoCure common stock would continue to be
listed and traded on the Nasdaq National Market. As a result of the
distribution, the trading price of InfoCure common stock immediately following
the distribution might be lower than the trading price of InfoCure common stock
immediately prior to the distribution. The combined trading prices of InfoCure
common stock and PracticeWorks common stock after the distribution might be less
than, equal to or greater than the trading prices of InfoCure common stock
immediately prior to the distribution. Until the market had fully analyzed the
operations of InfoCure common stock without the operations of PracticeWorks, the
prices at which InfoCure common stock trades might fluctuate significantly. In
addition, the stock market often experiences significant price fluctuations that
are unrelated to the operating performance of the specific companies whose stock
is traded. Market fluctuations could have a material adverse effect on the
trading price of InfoCure common stock.
IF THE DISTRIBUTION IS TAXABLE, INFOCURE STOCKHOLDERS COULD BE REQUIRED TO PAY
TAX ON THEIR SHARES OF PRACTICEWORKS COMMON STOCK, AND INFOCURE COULD INCUR A
CORPORATE TAX LIABILITY.
InfoCure and PracticeWorks intend for the distribution generally to
qualify for non-recognition treatment for federal income tax purposes under
Section 355 of the Internal Revenue Code. In connection with the distribution,
InfoCure anticipates that King & Spalding, counsel to InfoCure, would render an
opinion that the distribution should qualify for non-recognition treatment under
Section 355 of the Internal Revenue Code. Whether a transaction qualifies for
nonrecognition treatment under Section 355 of the Internal Revenue Code depends
in part on the business reasons for the transaction and satisfaction of numerous
other fact-based requirements. The opinion of King & Spalding, therefore, would
be subject to certain assumptions and based on various factual representations
made by officers of InfoCure and PracticeWorks. If any of the assumptions or
representations upon which the opinion of King & Spalding would be based are
inaccurate or incomplete in any material respect, the distribution could become
taxable to InfoCure, InfoCure's stockholders, or both. Moreover, the opinion of
King & Spalding would not be binding on the Internal Revenue Service and, as a
result, InfoCure cannot assure you that the distribution would qualify as a
tax-free transaction. Additionally, even if the distribution was tax-free to
InfoCure's stockholders, it is possible that the distribution could be rendered
taxable to InfoCure as a result of a subsequent acquisition of PracticeWorks or
InfoCure.
If the distribution failed to qualify for nonrecognition treatment
under Section 355 of the Internal Revenue Code, InfoCure stockholders who would
receive shares of PracticeWorks common stock in the distribution would be
treated as if they had received a taxable distribution in an amount equal to the
fair market value of the PracticeWorks common stock received. The amount of the
taxable distribution would be treated as (1) a dividend to the extent paid out
of InfoCure's current or accumulated earnings and profits, if any, including
earnings and profits recognized by InfoCure as a result of the distribution of
the PracticeWorks common stock, then (2) a reduction in such stockholder's basis
in his or her InfoCure common stock to the extent that the amount received
exceeds the amount treated as a dividend, and then (3) gain from the sale or
exchange of InfoCure common stock to the extent the amount received exceeds the
amounts described in clauses (1) and (2) above.
If the distribution failed to qualify for tax-free treatment as to
InfoCure stockholders, then, in general, a corporate income tax also could be
payable by the consolidated group of which InfoCure is the common parent based
upon the difference between (1) the aggregate fair market value of the shares of
InfoCure common stock distributed in the distribution and (2) InfoCure's
adjusted basis in the shares of InfoCure common stock. Although the corporate
level tax would be payable by InfoCure, PracticeWorks would enter into an
agreement to indemnify InfoCure under certain circumstances for all or a portion
of this tax liability. In addition, under the consolidated return regulations,
each member of InfoCure's
3
<PAGE> 4
consolidated group, including PracticeWorks, would be jointly and severally
liable for any tax liability incurred by InfoCure.
Even if the distribution qualified as a tax-free distribution for
United States federal income tax purposes as to InfoCure stockholders, a
corporate income tax could be payable by InfoCure as described above pursuant to
Section 355(e) of the Internal Revenue Code if, during the four-year period
beginning two years before the distribution, one or more persons were to acquire
a 50% or greater interest in PracticeWorks or InfoCure as part of a plan or
series of related transactions that included the distribution. For example, a
transaction or series of transactions resulting in an acquisition of a 50% or
greater interest in either PracticeWorks or InfoCure, in the aggregate, by one
or more persons within the two-year period following the distribution would
trigger a corporate level tax liability to InfoCure under Section 355(e) unless
InfoCure affirmatively established that the acquisition or acquisitions were not
part of a plan or series of related transactions that included the distribution.
In addition, Section 355(e) would apply to acquisitions of "predecessors" of
either PracticeWorks or InfoCure that occurred pursuant to a plan or series of
related transactions that include the distribution. A number of corporations
that InfoCure previously acquired might be treated as predecessors of
PracticeWorks or of InfoCure, although the statute is not clear and no
administrative guidance or court decisions to date have addressed the matter. If
corporations acquired by InfoCure within the two-year period preceding the
distribution were treated as predecessors of InfoCure or PracticeWorks, the
distribution would be presumed to occur pursuant to a plan or series of related
transactions that included InfoCure's acquisition of the predecessor
corporations. Nevertheless, InfoCure believes that, if it completes the
distribution and the Internal Revenue Service asserts that the distribution is
taxable to InfoCure under Section 355(e) of the Internal Revenue Code because of
InfoCure's acquisition of the predecessor corporations, it would be able to
prove that none of its pre-distribution acquisitions occurred pursuant to a plan
or series of related transactions that included the distribution. It is
possible, however, that InfoCure would not be successful in rebutting the
presumption under Section 355(e) and the distribution would be taxable to
InfoCure.
THERE WILL NOT HAVE BEEN ANY PRIOR TRADING MARKET FOR PRACTICEWORKS COMMON STOCK
PRIOR TO THE DISTRIBUTION.
There will be no trading market for PracticeWorks common stock prior to
the distribution, although a when-issued trading market might develop
prior to completion of the distribution. PracticeWorks would apply to list its
common stock on the Nasdaq National Market under the symbol "PWKS" following the
distribution. There can be no assurance that PracticeWorks' common stock would
be actively traded and InfoCure cannot predict the prices at which PracticeWorks
common stock would trade. Some of InfoCure's stockholders who would receive
shares of PracticeWorks common stock might decide that they do not want shares
in an information management technology company focused exclusively on the
dental, orthodontic and oral and maxillofacial surgery markets, and they might
sell their shares of PracticeWorks common stock following the distribution.
These sales might delay the development of an orderly trading market in
PracticeWorks common stock for a period of time following the distribution.
Until the shares of PracticeWorks common stock were fully distributed and an
orderly market developed, the prices at which PracticeWorks common stock would
trade might fluctuate significantly and might be lower or higher than the price
that would be expected for a fully distributed issue. Prices for PracticeWorks
common stock would be determined in the marketplace and might be influenced by
many factors, including the depth and liquidity of the market for the shares,
the results of operations of PracticeWorks, investors' impressions of
PracticeWorks, changes in economic conditions in the healthcare information
technology industry and general economic and market conditions. In addition, the
stock market often experiences significant price fluctuations that are unrelated
to the operation performance of the specific companies whose stock is traded.
Market fluctuations could have a material adverse impact on the trading price of
PracticeWorks commons stock following the potential distribution.
THE POSSIBILITY OF SUBSTANTIAL SALES COULD HAVE AN ADVERSE IMPACT ON THE TRADING
PRICE OF PRACTICEWORKS COMMON STOCK FOLLOWING THE DISTRIBUTION.
Under the United States federal securities laws, almost all of the
shares of PracticeWorks common stock could be resold immediately in the public
market following the distribution, except for shares of PracticeWorks common
stock held by affiliates. InfoCure cannot predict whether its stockholders would
resell large amounts of PracticeWorks' common stock in the public market
following the distribution or how quickly they might
4
<PAGE> 5
resell those shares. The resale of large amounts of PracticeWorks common stock
could have a material adverse effect on the trading price of the PracticeWorks
common stock InfoCure stockholders would receive in the distribution.
Item 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired
None.
(b) Pro Forma Financial Information
The unaudited pro forma condensed consolidated financial
information of InfoCure, included in Item 7(b) of this Report, is
based on and should be read in conjunction with the audited
consolidated financial statements and notes thereto appearing in
InfoCure's Annual Report on Form 10-K for the year ended December 31,
1999, and the unaudited consolidated financial statements and notes
thereto appearing in InfoCure's Form 10-Q for the period ended June 30,
2000. The accompanying unaudited pro forma condensed consolidated
statements of operations for the six months ended June 30, 2000 and for
the year ended December 31, 1999 have been presented as if the
distribution had been completed as of January 1, 2000 and 1999,
respectively. The unaudited pro forma balance sheet has been presented
as if the distribution had been completed as of June 30, 2000.
In the opinion of management, the statements include all
material adjustments necessary to reflect, on a pro forma basis, the
impact of the distribution on the historical financial information of
InfoCure. The adjustments are described in the unaudited notes to pro
forma financial information and are set forth in the "Pro Forma
Adjustments" column.
The unaudited pro forma financial information has been
presented for informational purposes only and does not reflect the
results of operations or financial position of InfoCure that would have
occurred had InfoCure operated without the operations to be transferred
to PracticeWorks for the periods presented. The unaudited pro forma
financial information should not be relied upon as being indicative of
InfoCure's results had the distribution been completed as of the dates
presented or of future results after the distribution.
5
<PAGE> 6
INFOCURE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
JUNE 30, PRO FORMA JUNE 30,
2000 ADJUSTMENTS 2000
---------- ----------- ----------
<S> <C> <C> <C>
ASSETS
Current:
Cash and cash equivalents $ 15,339 $ (4,915)(A) $ 10,424
Accounts receivable-trade, net of allowance 23,364 (5,819)(A) 17,545
Other receivables 1,263 (439)(A) 824
Inventory 4,376 (2,216)(A) 2,160
Refundable income taxes 256 -- 256
Deferred tax assets 4,053 (704)(A) 3,349
Net assets of discontinued operations -- 41,170 (A)
(41,170)(B) --
Prepaid expenses and other current assets 1,800 (100)(A) 1,700
---------- ---------- ----------
Total current assets 50,451 (14,193) 36,258
Property and equipment, net of accumulated depreciation 27,298 (2,512)(A) 24,786
Intangible assets, net of accumulated amortization 109,756 (50,969)(A) 58,787
Deferred tax assets 24,603 (5,354)(A) 19,249
Other assets 3,806 (1,452)(A) 2,354
---------- ---------- ----------
$ 215,914 $ (74,480) $ 141,434
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 1,222 $ -- $ 1,222
Accounts payable 4,388 (984)(A) 3,404
Accrued expenses 12,228 (4,466)(A) 7,762
Accrued restructuring costs 1,970 (203)(A) 1,767
Deferred revenue and customer deposits 14,501 (7,971)(A) 6,530
Current portion of long-term debt 406 (5)(A) 401
---------- ---------- ----------
Total current liabilities 34,715 (13,629) 21,086
Long-term debt, less current portion 59,901 (19,681)(A) 40,220
Other liabilities 963 -- 963
---------- ---------- ----------
Total liabilities 95,579 (33,310) 62,269
---------- ---------- ----------
Commitments and contingencies
Convertible, redeemable subsidiary preferred stock issuable 10,000 -- 10,000
---------- ---------- ----------
Stockholders' equity:
Common stock $0.001 par value, 200,000,000 authorized, 34 -- 34
33,959,814 outstanding
Additional paid-in capital 202,603 (41,170)(B) 161,433
Notes receivable - officers (12,175) -- (12,175)
Accumulated deficit (80,127) -- (80,127)
---------- ---------- ----------
Total stockholders' equity 110,335 (41,170) 69,165
---------- ---------- ----------
$ 215,914 $ (74,480) $ 141,434
========== ========== ==========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated
financial information.
6
<PAGE> 7
INFOCURE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
SIX MONTHS SIX MONTHS
ENDED ENDED
JUNE 30, PRO FORMA JUNE 30,
2000 ADJUSTMENTS(C) 2000
---------- -------------- ----------
<S> <C> <C> <C>
Revenue:
Systems and software $ 17,484 $ (6,562) $ 10,922
Maintenance, support and services 52,439 (13,454) 38,985
---------- ---------- ----------
Total revenue 69,923 (20,016) 49,907
---------- ---------- ----------
Operating expense:
Hardware and other items purchased for resale 16,896 (2,851) 14,045
Selling, general and administrative 56,819 (18,980) 37,839
Research and development 9,309 (1,541) 7,768
Depreciation and amortization 21,742 (7,898) 13,844
Restructuring and other charges 1,616 (816) 800
(Gain) loss on disposal of fixed assets (530) 632 102
---------- ---------- ----------
Total operating expense 105,852 (31,454) 74,398
---------- ---------- ----------
Operating loss (35,929) 11,438 (24,491)
Interest expense and other, net 2,524 (959) 1,565
---------- ---------- ----------
Loss from continuing operations before income taxes (38,453) 12,397 (26,056)
Income tax benefit (12,856) 3,731 (9,125)
---------- ---------- ----------
Net loss from continuing operations (25,597) 8,666 (16,931)
Discontinued operations:
Net loss from discontinued operations,
net of tax benefit of $3,731 -- (8,666) (8,666)
---------- ---------- ----------
Net loss $ (25,597) $ -- $ (25,597)
========== ========== ==========
Basic and diluted net loss per share:
Loss from continuing operations $ (0.78) $ 0.26 $ (0.52)
Loss from discontinued operations -- (0.26) (0.26)
---------- ---------- ----------
Basic and diluted net loss per share $ (0.78) $ -- $ (0.78)
========== ========== ==========
Weighted average shares outstanding:
Basic and diluted 32,889 32,889
========== ==========
</TABLE>
See accompanying notes to unaudited pro forma condensed
consolidated financial information.
7
<PAGE> 8
INFOCURE CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands)
<TABLE>
<CAPTION>
PRO FORMA
YEAR ENDED PRO FORMA YEAR ENDED
DECEMBER 31, 1999 ADJUSTMENTS(C) DECEMBER 31, 1999
----------------- -------------- -----------------
<S> <C> <C> <C>
Revenue:
Systems and software $ 96,241 $ (34,325) $ 61,916
Maintenance, support and services 107,393 (20,266) 87,127
---------- ---------- ----------
Total revenue 203,634 (54,591) 149,043
---------- ---------- ----------
Operating expense:
Hardware and other items purchased for resale 49,613 (9,654) 39,959
Selling, general and administrative (excluding
compensatory stock awards) 104,770 (28,666) 76,104
Research and development 15,655 (4,185) 11,470
Depreciation and amortization 14,490 (3,284) 11,206
Restructuring and other charges 10,681 (1,814) 8,867
Merger costs 3,764 (659) 3,105
Compensatory stock awards 1,431 (428) 1,003
---------- ---------- ----------
Total operating expense 200,404 (48,690) 151,714
---------- ---------- ----------
Operating income (loss) 3,230 (5,901) (2,671)
Interest expense and other, net 3,513 (1,335) 2,178
---------- ---------- ----------
Loss from continuing operations before income taxes (283) (4,566) (4,849)
and extraordinary item
Provision (benefit) provision for income taxes 576 (2,186) (1,610)
---------- ---------- ----------
Net loss from continuing operations before
extraordinary item (859) (2,380) (3,239)
Discontinued operations:
Income from discontinued operations,
net of income tax provision of $2,186 -- 2,692 2,692
---------- ---------- ----------
Loss before extraordinary item (859) 312 (547)
Extraordinary item - debt extinguishment cost,
net of income taxes 2,935 (72) 2,863
---------- ---------- ----------
Net loss (3,794) 384 (3,410)
Pro forma tax adjustments (137) (384) 247
---------- ---------- ----------
Pro forma net loss available to common stockholders $ (3,657) $ -- $ (3,657)
========== ========== ==========
Basic and diluted net loss per share $ (0.14) $ 0.01 $ (0.13)
========== ========== ==========
Basic and diluted pro forma net loss per share:
Loss from continuing operations $ (0.03) $ (0.09) $ (0.12)
Income from discontinued operations -- 0.09 0.09
Extraordinary item - net of income taxes (0.10) -- (0.10)
---------- ---------- ----------
Basic and diluted pro forma net loss per share $ (0.13) $ -- $ (0.13)
========== ========== ==========
Weighted average shares outstanding:
Basic and diluted 27,994 27,994
========== ==========
</TABLE>
See accompanying notes to unaudited pro forma condensed consolidated
financial information
8
<PAGE> 9
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL
INFORMATION
See introduction to pro forma financial information on page 5. The pro
forma unaudited condensed consolidated balance sheet was prepared assuming the
distribution occurred as of June 30, 2000 and included "Pro Forma Adjustments"
as follows:
(A) To reclassify the assets and liabilities to be transferred to
PracticeWorks in connection with the distribution as net
assets of discontinued operations.
(B) To record the distribution of the shares of PracticeWorks
common stock to InfoCure stockholders.
The pro forma unaudited condensed consolidated statement of operations
for the six months ended June 30, 2000 and the year ended December 31, 199 have
been presented as if the distribution was completed as of January 1, 2000 and
1999, respectively. These statements include "Pro Forma Adjustments" as follows:
(C) To reclassify the operations to be transferred to
PracticeWorks in connection with the distribution as
discontinued operations.
9
<PAGE> 10
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.
Date: September 6, 2000
INFOCURE CORPORATION
By: /s/ James A. Cochran
----------------------------------
Name: James A. Cochran
Title: Senior Vice President and
Chief Financial Officer
10
