<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
June 14, 2000
Date of Report (Date of earliest event reported)
MCK COMMUNICATIONS, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 0-27703 06-15555163
(State of incorporation) (Commission file number (I.R.S. Employer)
Identification No.)
117 KENDRICK STREET
NEEDHAM, MA 02494
(Address of principal executive offices, including zip code)
(617) 454-6100
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
<PAGE> 2
ITEM 2.
On June 28, 2000, MCK Communications, Inc. ("MCK" or the "Company") filed a
Form 8-K to report its acquisition of DTI Holdings, Inc. ("DTIH") through a
merger of a wholly-owned subsidiary of MCK with and into DTIH. Pursuant to Item
7 of Form 8-K, MCK indicated that it would file certain financial information no
later than the date required by Item 7 of Form 8-K. This Amendment is being
filed to provide such financial information.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED
See exhibit 20.1 for the audited consolidated financial statements of DTI
Holdings, Inc., as of and for the year and three months ended December 31, 1999
and 1998, respectively.
See exhibit 20.2 for the audited financial statements of Digital
Techniques, Inc., as of and for the nine months ended September 30, 1998.
See exhibit 20.3 for the unaudited consolidated financial statements of DTI
Holdings, Inc., as of and for the three months ended March 31, 2000.
(b) UNAUDITED PRO-FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro-forma condensed combined financial statements
give effect to the acquisition of DTIH by MCK which occurred on June 14, 2000.
The acquisition of DTIH was accounted as a purchase in accordance with APB
Opinion No. 16 and related interpretations.
The unaudited pro-forma condensed combined balance sheet has been prepared
to reflect the acquisition of DTIH as if it occurred on April 30, 2000. The
unaudited pro-forma condensed combined statement of operations reflect the
results of operations of MCK for the year ended April 30, 2000 and the results
of operations of DTIH for the year ended March 31, 2000.
The unaudited pro-forma condensed combined financial statements are
presented for illustrative purposes only and are not necessarily indicative of
the combined financial position or results of operations in future periods or
the results that actually would have been realized had MCK and DTIH been a
combined company during the specified period. In the opinion of management, all
adjustments necessary to present fairly such pro-forma financial information
have been made to the condensed combined financial statements and are reflected
in the accompanying notes. The unaudited pro-forma condensed combined financial
statements, including the notes thereto, are qualified in their entirety by
reference to, and should be read in conjunction with the historical consolidated
financial statements and the related notes thereto of MCK included in its annual
report on Form 10-K for the year ended April 30, 2000 as filed with the SEC and
the audited consolidated financial statements of DTI Holdings, Inc. and Digital
Techniques, Inc. included in this filing.
<PAGE> 3
MCK COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
APRIL 30, 2000
(In thousands)
<TABLE>
<CAPTION>
PRO FORMA
MCK DTIH ADJUSTMENTS COMBINED
--- ---- ----------- --------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 55,844 $ 553 $(11,500)a $ 44,897
Short-term investments 19,879 -- -- 19,879
Accounts receivable, net 5,018 1,061 -- 6,079
Inventory, net 2,498 900 -- 3,398
Prepaid expenses and other current assets 1,297 26 -- 1,323
-------- ------ -------- --------
Total current assets 84,536 2,540 (11,500) 75,576
Property and equipment, net 2,306 260 -- 2,566
Goodwill, intangibles and other assets 352 2,620 21,610 b 24,582
-------- ------ -------- --------
Total assets $ 87,194 $5,420 $ 10,110 $102,724
======== ====== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 4,782 729 -- 5,511
Accrued liabilities 328 318 -- 646
Accrued compensation 621 213 -- 834
Taxes payable 413 222 -- 635
Short -term debt -- 380 -- 380
Deferred revenue 71 -- -- 71
Accrued merger expenses -- -- 400 c 400
-------- ------ -------- --------
Total current liabilities 6,215 1,862 400 8,477
-------- ------ -------- --------
Deferred taxes 33 -- -- 33
Long-term debt, net of current portion -- 768 -- 768
Shareholders' equity:
Common stock 19 1,000 (1,000)d 19
Additional paid-in capital 115,802 6,417 6,083 e 128,302
Accumulated deficit (29,213) (4,627) 4,627 f (29,213)
Deferred stock-based compensation (4,624) -- -- (4,624)
Accumulated other comprehensive loss (345) -- -- (345)
Notes receivable from officer (693) -- -- (693)
-------- ------ -------- --------
Total shareholders' equity 80,946 2,790 9,710 93,446
-------- ------ -------- --------
Total liabilities and shareholders'
equity $ 87,194 $5,420 $ 10,110 $102,724
======== ====== ======== ========
</TABLE>
See accompanying notes to unaudited pro forma condensed
combined financial statements.
<PAGE> 4
MCK COMMUNICATIONS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED APRIL 30, 2000
(In thousands, except per share data)
<TABLE>
<CAPTION>
PRO FORMA
MCK DTIH ADJUSTMENTS COMBINED
--- ---- ----------- --------
<S> <C> <C> <C> <C>
Revenues $ 25,082 $12,367 $ -- $ 37,449
Cost of goods sold 9,455 5,351 -- 14,806
----------- ------- ------ ----------
Gross profit 15,627 7,016 -- 22,643
Operating expenses:
Research and development 4,876 1,242 -- 6,118
Sales and marketing 7,817 1,576 -- 9,393
General and administrative 2,475 1,275 -- 3,750
Stock based compensation 4,645 4,412 -- 9,057
Amortization of goodwill -- -- 5,110 g 5,110
----------- ------- ------ ----------
Total operating expenses 19,813 8,505 5,110 33,428
----------- ------- ------ ----------
Loss from operations 4,186 1,489 5,110 10,785
Other (income) expense, net (758) 86 690 h 18
----------- ------- ------ ----------
Loss before provision for income taxes
and dividends on redeemable preferred
stock of subsidiary 3,428 1,575 5,800 10,803
Income tax provision 100 109 -- 209
Dividends on redeemable preferred stock
of subsidiary 97 -- -- 97
----------- ------- ------ ----------
Net loss 3,625 1,684 5,800 11,109
Dividends on redeemable preferred stock 1,285 -- -- 1,285
----------- ------- ------ ----------
Loss available to common shareholders $ 4,910 $ 1,684 $5,800 $ 12,394
=========== ======= ====== ==========
Basic and diluted net loss per common
share $ (0.44) $ (1.08)
=========== ==========
Shares used in computing basic and
diluted net loss per common share 11,144,565 11,509,166
=========== ==========
</TABLE>
See accompanying notes to unaudited pro forma condensed
combined financial statements.
<PAGE> 5
MCK COMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONDENSED
COMBINED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Pursuant to an Agreement and Plan of Merger, MCK Communications, Inc.
("MCK" or the "Company") on June 14, 2000 paid $11.5 million in cash and issued
364,601 shares of its common stock in exchange for all of the issued and
outstanding shares of DTI Holdings, Inc. ("DTIH"). MCK also exchanged all issued
and outstanding stock options of DTIH for fully vested options to purchase
101,916 shares of MCK's common stock. The acquisition has been accounted for as
a purchase in accordance with APB No. 16 and related interpretations. The
pro-forma condensed combined statement of operations presents the effect of this
acquisition as though it had occurred on May 1, 1999, the beginning of MCK's
most recently completed fiscal year. For purposes of preparing the pro-forma
condensed combined statement of operations, the results of DTIH's operations for
the twelve months ended March 31, 2000 were combined with the results of MCK's
operations for the fiscal year ended April 30, 2000. The pro-forma condensed
combined balance sheet reflects the acquisition as though it had occurred on
April 30, 2000.
2. PRO FORMA ADJUSTMENTS
Pro forma adjustments to the April 30, 2000 unaudited pro-forma condensed
combined balance sheet have been prepared to reflect the purchase of DTIH and
includes the following adjustments necessary for fair presentation:
a) Reflects cash used in purchase of DTIH.
b) Reflects goodwill and related intangibles from the transaction. Goodwill
and intangibles are amortized on a straight-line basis over the useful life
of the asset which ranges between four and five years.
c) Reflects accrued deal costs including financial advisory fees, attorney
fees, accountant fees, and other related charges.
d) Reflects the elimination of DTIH's common stock.
e) Reflects the issuance of 364,601 shares of common stock for $12.5 million
and the elimination of DTIH's paid in capital of $6.4 million.
f) Reflects the elimination of DTIH's accumulated deficit.
Pro forma adjustments to the unaudited pro-forma condensed combined
statement of operations for the year ended April 30, 2000 have been prepared to
reflect the purchase of DTIH as though it had occurred on May 1, 1999 and
include the following adjustments necessary for the fair presentation:
g) Reflects the amortization of goodwill and related intangibles on a straight
line basis.
h) Reflects interest income on $11.5 million paid to DTIH shareholders in the
acquisition at an annual rate of 6 percent. MCK would not have earned this
income had the deal been completed on May 1, 1999.
While not reflected in the pro-forma condensed combined statement of
operations for the year ended April 30, 2000, the Company wrote off $694,000 of
in-process research and development expenses related to DTIH during the quarter
ended July 31, 2000.
3. PRO-FORMA LOSS PER COMMON SHARE
The unaudited pro-forma condensed combined basic net loss per share, was
calculated using a denominator equal to the sum of the historical weighted
average outstanding shares of MCK for the fiscal year ended April 30, 2000 and
the number of shares issued in connection with the acquisition of DTIH
(364,601).
4. CONFORMING AND RECLASSIFICATION ADJUSTMENTS
There were no adjustments required to conform the accounting policies of
DTIH. There were no intercompany transactions in the periods presented.
<PAGE> 6
(c) EXHIBITS
The following exhibits are filed herewith:
20.1 DTI Holdings, Inc. audited consolidated financial statements for the year
ended December 31, 1999 and the three months ended December 31, 1998.
20.2 Digital Techniques, Inc. audited financial statements for the nine months
ended September 30, 1998.
20.3 DTI Holdings,Inc. unaudited consolidated financial statements for the three
months ended March 31, 2000.
23.1 Consent of KPMG LLP, Independent Auditors.
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.
MCK COMMUNICATIONS, INC.
/s/ Paul K. Zurlo
Date: August 28, 2000 By: Paul K. Zurlo
Chief Financial Officer
