<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------------
FORM 8-K/A
AMENDMENT TO APPLICATION OR REPORT
FILED PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
TRIDEX CORPORATION
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
AMENDMENT NO. 1
The undersigned registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report, dated April 30,
1998, on Form 8-K as set forth in the pages attached hereto:
(List all such items, financial statements, exhibits or other portions amended)
Item 7. Financial Statements and Exhibits
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this amendment to be signed on its behalf by the
undersigned, thereunto duly authorized.
TRIDEX CORPORATION
(Registrant)
By: /s/ Seth M. Lukash
---------------------------
Seth M. Lukash
Chairman of the Board and
Chief Executive Officer
June 30, 1998
Page 1 of 21
<PAGE>
<TABLE>
<CAPTION>
Item 7. Financial Statements and Exhibits. Page No.
<S> <C>
(a) Financial statements of businesses acquired
Progressive Software, Inc., Financial Statements 3
(b) Pro forma financial information
Tridex Corporation and Subsidiaries pro forma consolidated condensed
financial statements:
Unaudited Pro Forma Consolidated
Condensed Financial Information 14
Pro Forma Consolidated Condensed Statement of Income
for the year ended December 31, 1997 15
Pro Forma Consolidated Condensed Statement of Income
For the quarter ended March 31, 1998 16
Pro Forma Consolidated Condensed Balance Sheet
at March 31, 1998 17
Notes to Unaudited Pro Forma Consolidated
Condensed Financial Information 18
(c) Exhibits
Exhibit 24.1 Consent of Independent Accountants
(RE: Registration Statements on Form S-8) 20
Exhibit 24.2 Consent of Independent Accountants
(RE: Registration Statements on Form S-8) 21
</TABLE>
2
<PAGE>
PROGRESSIVE SOFTWARE, INC.
FINANCIAL REPORT
DECEMBER 31, 1997
3
<PAGE>
CONTENTS
<TABLE>
<CAPTION>
<S> <C>
- -------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT - McGladrey & Pullen, LLP 5
- -------------------------------------------------------------------------------
INDEPENDENT AUDITOR'S REPORT - Arthur Andersen LLP 6
- -------------------------------------------------------------------------------
FINANCIAL STATEMENTS
Balance sheets 7
Statements of income 8
Statements of stockholder's equity (deficit) 9
Statements of cash flows 10
Notes to financial statements 11 - 13
- -------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholder of
Progressive Software, Inc.
We have audited the accompanying balance sheets of Progressive Software, Inc. as
of December 31, 1997 and 1996, and the related statements of income,
stockholder's equity (deficit), 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 the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Progressive Software, Inc. as
of December 31, 1997 and 1996, and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
/s/ McGLADREY & PULLEN, LLP
Charlotte, North Carolina
February 4, 1998, except for the last sentence of
Note 2 and Note 7 as to which the date is April 17, 1998
5
<PAGE>
Report of Independent Public Accountants
To the Stockholder of Progressive Software, Inc.:
We have audited the accompanying statements of income, changes in stockholder's
equity and cash flows of Progressive Software, Inc. for the year ended December
31, 1995. 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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Progressive
Software, Inc. for the year ended December 31, 1995, in conformity with
generally accepted accounting principles.
/s/ Arthur Andersen, LLP
Charlotte, North Carolina,
November 21, 1996 (except with respect to the matter
discussed in Note 7, as to which the date is
April 17, 1998).
6
<PAGE>
PROGRESSIVE SOFTWARE, INC.
BALANCE SHEETS
December 31, 1997 and 1996
<TABLE>
<CAPTION>
ASSETS 1997 1996
- ----------------------------------------------------------------- --------------------- --------------------
<S> <C> <C>
Current Assets
Cash and cash equivalents $ 93,220 $ 317,501
Accounts receivable, net of allowance for doubtful
accounts of $95,000 in 1997 and $22,000 in 1996
(Notes 2 and 4) 4,223,773 3,043,217
Advances to employees 39,891 40,685
Inventory, net of allowance for obsolete inventory of
$50,000 for 1997 and 1996 (Note 2) 4,567,492 5,433,001
Loan to related parties (Note 6) 585,901 556,833
--------------------- --------------------
Total current assets 9,510,277 9,391,237
--------------------- --------------------
Equipment and leasehold improvements (Note 3)
Office furniture 626,660 483,747
Computer equipment 558,080 269,688
Leasehold improvements 147,816 120,442
Vehicles 34,409 -
--------------------- --------------------
--------------------- --------------------
1,366,965 873,877
Accumulated depreciation (305,255) (122,511)
--------------------- --------------------
--------------------- --------------------
1,061,710 751,366
--------------------- --------------------
--------------------- --------------------
Other assets
Capitalized software development costs, net of
accumulated amortization of $97,320 in 1997 and
$0 in 1996 1,308,476 269,537
--------------------- --------------------
Total assets $ 11,880,463 $ 10,412,140
--------------------- --------------------
--------------------- --------------------
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDER'S EQUITY
- ----------------------------------------------------------------- --------------------- --------------------
Current liabilities
<S> <C> <C>
Line of credit (Note 2) $ 8,763,938 $ 6,317,650
Current maturity of capital lease obligation (Note 3) 8,413 -
Accounts payable 1,949,098 2,583,828
Accrued expenses (Note 3) 450,896 175,194
Deferred revenue 703,187 4,420
--------------------- --------------------
--------------------- --------------------
Total current liabilities 11,875,532 9,081,092
--------------------- --------------------
--------------------- --------------------
Long-term portion of capital lease obligation (Note 3) 8,731 -
--------------------- --------------------
--------------------- --------------------
Commitments (Note 3)
Stockholder's equity (deficit):
Common stock, par value $181.50 per share, 100,000
shares authorized, 10,000 shares issued and outstanding 1,815,000 1,815,000
Retained deficit (Note 2) (1,818,800) (483,952)
--------------------- --------------------
--------------------- --------------------
Total stockholder's equity (deficit) (3,800) 1,331,048
--------------------- --------------------
--------------------- --------------------
Total liabilities and stockholder's equity (deficit) $ 11,880,463 $ 10,412,140
--------------------- --------------------
--------------------- --------------------
</TABLE>
See Notes to Financial Statements
7
<PAGE>
PROGRESSIVE SOFTWARE, INC.
STATEMENTS OF INCOME
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
- ------------------------------------------------------- ----------------- ----------------- ----------------
<S> <C> <C> <C>
Sales (Note 4) $ 33,817,965 $ 28,347,931 $ 16,648,526
Cost of sales 23,772,489 20,796,484 11,132,307
Amortization of capitalized software 97,320 - -
----------------- ----------------- ----------------
----------------- ----------------- ----------------
Gross profit 9,948,156 7,551,447 5,516,219
----------------- ----------------- ----------------
----------------- ----------------- ----------------
Selling expenses 885,646 588,013 91,870
General and administrative expenses 5,492,775 4,048,009 2,132,523
Product development expenses 1,367,665 1,245,794 1,283,565
Depreciation expenses 182,745 99,303 21,662
----------------- ----------------- ----------------
----------------- ----------------- ----------------
7,928,831 5,981,119 3,529,620
----------------- ----------------- ----------------
----------------- ----------------- ----------------
Operating income 2,019,325 1,570,328 1,986,599
----------------- ----------------- ----------------
Financial income (expenses):
Interest income 10,198 40,456 26,222
Interest expense (691,724) (448,627) (242,789)
----------------- ----------------- ----------------
----------------- ----------------- ----------------
(681,526) (408,171) (216,567)
----------------- ----------------- ----------------
----------------- ----------------- ----------------
Net income $ 1,337,799 $ 1,162,157 $ 1,770,032
----------------- ----------------- ----------------
----------------- ----------------- ----------------
</TABLE>
See Notes to Financial Statements.
8
<PAGE>
PROGRESSIVE SOFTWARE, INC.
STATEMENTS OF STOCKHOLDER'S EQUITY (DEFICIT)
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
Retained Total
Earnings Stockholder's
Common Stock (Deficit) Equity (Deficit)
- ------------------------------------------------- ------------------ ------------------- -------------------
<S> <C> <C> <C>
Balance, December 31, 1994 $ 1,815,000 $ 1,798,852 $ 3,613,852
Net income - 1,770,032 1,770,032
Distributions - (3,441,153) (3,441,153)
------------------ ------------------- -------------------
Balance, December 31, 1995 $ 1,815,000 $ 127,731 $ 1,942,731
Net income - 1,162,157 1,162,157
Distributions - (1,773,840) (1,773,840)
------------------ ------------------- -------------------
Balance, December 31, 1996 $ 1,815,000 $ (483,952) $ 1,331,048
Net income - 1,337,799 1,337,799
Distributions - (2,672,647) (2,672,647)
------------------ ------------------- -------------------
------------------ ------------------- -------------------
Balance, December 31, 1997 $ 1,815,000 $ (1,818,800) $ (3,800)
------------------ ------------------- -------------------
------------------ ------------------- -------------------
</TABLE>
See Notes to Financial Statements.
9
<PAGE>
PROGRESSIVE SOFTWARE, INC.
STATEMENTS OF CASH FLOWS
Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
1997 1996 1995
- ------------------------------------------------------- ----------------- ---------------- -----------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 1,337,799 $ 1,162,157 $ 1,770,032
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 280,065 99,303 21,662
Gain on disposition of equipment - - (500)
Decrease (increase) in:
Accounts receivable, net (1,180,556) (1,113,709) 169,130
Advances to employees 794 (18,866) (8,119)
Inventory, net 15,061,650 11,128,301 13,913,628
Other current assets - 33,616 (33,616)
Increase (decrease) in:
Accounts payable (659,730) 1,793,183 614,470
Accrued expenses 275,702 168,096 (3,891)
Deferred revenue 698,767 (46,398) -
Payments under line of credit agreement (11,749,853) (10,364,618) (13,521,457)
----------------- ---------------- -----------------
----------------- ---------------- -----------------
Net cash provided by operating activities 4,064,638 2,841,065 2,921,339
----------------- ---------------- -----------------
----------------- ---------------- -----------------
Cash Flows from Investing Activities:
Proceeds on disposition of property and equipment - - 16,250
Purchase of equipment (442,880) (534,417) (276,910)
Loan to related parties (585,901) (556,833) -
Capitalized software development cost (1,136,259) (269,537) -
----------------- ---------------- -----------------
----------------- ---------------- -----------------
Net cash used in investing activities (2,165,040) (1,360,787) (260,660)
----------------- ---------------- -----------------
----------------- ---------------- -----------------
Cash Flows from Financing Activities:
Distributions (2,115,814) (1,773,840) (3,441,153)
Payments on capital lease obligation (8,065) - -
----------------- ---------------- -----------------
----------------- ---------------- -----------------
Net cash used in financing activities (2,123,879) (1,773,840) (3,441,153)
----------------- ---------------- -----------------
----------------- ---------------- -----------------
Net decrease in cash and cash equivalents (224,281) (293,562) (780,474)
Cash and cash equivalents, beginning of year 317,501 611,063 1,391,537
----------------- ---------------- -----------------
----------------- ---------------- -----------------
Cash and equivalents, end of year $ 93,220 $ 317,501 $ 611,063
----------------- ---------------- -----------------
----------------- ---------------- -----------------
Supplemental disclosures of cash flow information -
interest paid $ 664,283 $ 411,997 $ 236,142
Supplemental schedule of non-cash investing and
financing activities:
Line of credit draws to acquire inventory $ 14,196,141 $ 12,885,897 14,855,613
Shareholder loan charged to distributions 556,883 - -
Capital lease obligation incurred for purchase of
equipment 25,209 - -
Equipment purchased on account 25,000 - -
See Notes to Financial Statements.
</TABLE>
10
<PAGE>
PROGRESSIVE SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- ------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies
NATURE OF BUSINESS: The Company is an International Business Machines
Corporation (IBM) Remarketer and Business partner specializing in point-of-sale
and back office applications for restaurant and retail customers located
throughout the United States. The Company's warehouse and corporate office is
located in Charlotte, North Carolina. The Company also maintains offices in
Washington, Colorado, Georgia, Indiana and California. IBM hardware and service
is combined with design, software, implementation, and support services provided
by the Company to provide customized solutions for each customer's needs.
A summary of the Company's significant accounting policies follows:
CASH AND CASH EQUIVALENTS: For the purpose of reporting cash flows, the Company
considers all cash and temporary investments (overnight cash investments) to be
cash and cash equivalents.
CREDIT RISK: The corporation maintains demand deposits with the bank, the
balances of which at times throughout the year exceed federally insured amounts.
INVENTORY: Inventory, which consists entirely of computer equipment used with
the software applications developed and installed by the Company, is stated at
the lower of cost, as measured on a weighted-average basis, or market value.
EQUIPMENT: Equipment and leasehold improvements are stated at cost. Depreciation
expense, which includes amortization of assets acquired under capital leases, is
computed primarily by the straight line method over the following estimated
useful lives:
<TABLE>
<CAPTION>
Useful Life
in Years
<S> <C>
Computer equipment 5
Furniture and fixtures 7
Leasehold improvements 7
Vehicles 5
</TABLE>
REVENUE RECOGNITION: Revenue includes hardware sales, design, implementation and
support of software systems, and related consultation services. Revenue on
hardware and software sales is recognized upon delivery to the customer. Service
revenue is recognized as the related services are performed.
COST OF SALES: Cost of sales includes those material costs incurred related to
hardware/software packages sold.
DEFERRED REVENUE: Deferred revenue includes cash received for services not yet
performed or when the earnings process is not yet complete.
CAPITALIZED SOFTWARE AND PRODUCT DEVELOPMENT EXPENSES: In accordance with the
provisions of Financial Accounting Standards Number 86, during 1996 and 1997,
the Company capitalized a total of $1,405,796 of production costs related to the
development of the windows version of the Company's computer software products,
which is being amortized over a period of five years. According to FASB 86,
capitalization of computer software development should begin when technological
feasibility exists, which is defined as the completion of a working model. The
initial working model was rolled out for testing in October 1996. Product
development expenses of $1,367,665, $1,245,894 and $219,950 incurred during the
years ended December 31, 1997, 1996 and 1995, respectively, include the costs of
developing the Windows version of the computer software up to the point of
technological feasibility and the continual enhancements to the DOS version of
the software. These costs are expensed when incurred.
CONCENTRATION OF CREDIT RISK: Substantially all of the Company's sales are to
the restaurant and retail industries located throughout the United States. The
Company generally does not require collateral for its accounts receivable. The
Company performs ongoing credit evaluations of its customers' financial
conditions.
11
<PAGE>
PROGRESSIVE SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Note 1. Nature of Business and Significant Accounting Policies (Continued)
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make certain estimates and assumptions. These 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.
INCOME TAXES: The Company has elected to be treated as an S Corporation for
federal and North Carolina state income tax purposes. As such, substantially all
income or losses of the Company are reported by the stockholder of the Company
on his individual tax return. Therefore, the Company does not provide for income
taxes or tax liabilities in its financial statements. The Company's policy is to
distribute amounts adequate to cover the stockholder's tax obligation resulting
from the taxable income of the Company. Historically the Company has distributed
amounts in excess of tax obligation of the shareholder.
Note 2. Line of Credit
The Company has a $10,000,000 line of credit with IBM. The line of credit is for
equipment financing under its remarketing agreement. The outstanding balance is
due on demand and is secured by the Company's accounts receivable and inventory.
Principal and interest are due on the fifth, fifteenth and twenty-fifth of each
month according to the terms of each billing statement received. Interest is due
on these dates, ranging from prime rate plus 1.25% to prime rate plus 1.50%,
depending on the payment option elected (30 to 180-day terms). The prime rate
was 8.50% and 8.25% at December 31, 1997 and 1996, respectively. The Company had
$8,763,938 and $6,317,650 outstanding as of December 31, 1997 and 1996,
respectively. The line of credit is personally guaranteed by the shareholder of
the Company. In addition, the line of credit contains various restrictions on
operations and other matters and requires certain financial ratios to be
maintained and requires all other debt to be subordinate to the line of credit.
As of December 31, 1997 and 1996, the Company was not in compliance with certain
of these loan covenant provisions. IBM has waived these covenant violations as
of December 31, 1997 and 1996; however, they have not been waived through the
maturity date and IBM has the right to request the line of credit to be paid on
demand. See note 7.
Note 3. Commitments
The Company leases a building under an operating lease agreement expiring
December 31, 2000, from a limited partnership in which the shareholder of
Progressive Software, Inc. is a partner. The lease requires annual rent of
$342,000. The agreement also requires the Company to pay all property taxes,
normal maintenance, and insurance on the property.
The Company leases a vehicle under a capital lease agreement, which requires
monthly payments of $793 through December of 1999, and is collateralized by the
vehicle with a carrying value of $24,671.
The Company leases certain vehicles and office space that are accounted for as
operating leases.
As of December 31, 1997, future minimum rental payments, under the above leases
are as follows:
<TABLE>
<CAPTION>
Years ending December 31 Capital Lease Operating Leases Total
- ---------------------------------------------- -------------------- -------------------- -------------------
<C> <C> <C> <C>
1998 $ 9,514 $ 414,629 $ 424,143
1999 9,108 382,328 391,436
2000 - 342,000 342,000
-------------------- -------------------- -------------------
-------------------- -------------------
-------------------- -------------------
Total minimum lease payments $ 18,622 $ 1,138,957 $ 1,157,579
-------------------- -------------------
-------------------- -------------------
Less the amount representing interest (1,478)
--------------------
--------------------
--------------------
Present value of net minimum lease
payments $ 17,144
--------------------
--------------------
</TABLE>
Total rent expense included in the statement of income is $538,041 for 1997,
$420,936 for 1996 and $212,174 for 1995.
12
<PAGE>
PROGRESSIVE SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
Note 3. Commitments (continued)
The Company has sales to customers located in numerous states. Some of these
sales may be subject to state and local sales taxes if the customer is not
exempt or self-assessing. The Company has recognized an accrued expense of
approximately $100,000 as an estimate of their liability at December 31, 1997.
Note 4. Major Customers
Net sales for the years ended December 31, 1997, 1996 and 1995 include sales to
the following major customers, together with the receivables due from those
customers as of December 31, 1997 and 1996:
<TABLE>
<CAPTION>
Amount of Net Sales For Year Ended
December 31,
-------------------------------------------------------------
1997 1996 1995
-------------------- -------------------- -------------------
-------------------- -------------------- -------------------
<S> <C> <C> <C>
Customer A $ 3,187,508 $ 5,066,245 $ 918,447
Customer B 432,634 3,858,346 -
Customer C 7,774,149 6,151,357 4,412,917
Customer D 1,634,522 2,989,101 -
Customer E 3,624,086 - -
-------------------- -------------------- -------------------
-------------------- -------------------- -------------------
$ 16,652,899 $ 18,065,049 $ 5,331,364
-------------------- -------------------- -------------------
-------------------- -------------------- -------------------
</TABLE>
<TABLE>
<CAPTION>
Accounts Receivable As Of
December 31,
-----------------------------------------
1997 1996
-------------------- --------------------
-------------------- --------------------
<S> <C> <C>
Customer A $ 187,768 $ 300,056
Customer B - 21,632
Customer C 1,610,501 529,290
Customer D 181,787 1,007,710
Customer E 15,373 -
-------------------- --------------------
-------------------- --------------------
$ 1,995,429 $ 1,858,688
-------------------- --------------------
-------------------- --------------------
</TABLE>
Note 5. Profit-Sharing 401(k) Plan
The Company has a qualified profit-sharing 401(k) plan for all employees who
work 1,000 hours or more a year, upon the attainment of age 21 and the
completion of one year of service. The Company matches 50% of the participant's
contribution up to 6% of their compensation, but not in excess of $750. The
amount charged to expense was $46,252 for 1997, $21,305 for 1996 and $18,836 for
1995.
Note 6. Related Party Transactions
At December 31, 1997, in addition to the lease described in note 3 and the
distributions of $2,672,647 reflected on the statement of stockholder's equity,
the Company has an unsecured, noninterest bearing demand note for $585,901 from
a corporation in which the shareholder of Progressive Software, Inc. is also a
shareholder
Note 7. Subsequent Event - Sale of Business
On April 17, 1998, the Company's shareholder sold the business to Tridex
Corporation, an unrelated entity, based on the market value of the Company.
Tridex Corporation repaid the line of credit with IBM in full.
Note 8. Future Reporting Requirements
The American Institute of Certified Public Accountants has issued Statement
of Position 97-2, Software Revenue Recognition, which the Company has not
been required to adopt as of December 31, 1997. The Statement is effective
for all software contracts entered into on or after January 1, 1998.
According to the Statement of Position, revenue is to be recognized when the
following four criteria have been met: 1) persuasive evidence of an
arrangement exists, 2) delivery has occurred, 3) the vendor's fee is fixed or
determinable and, 4) collectibility is probable. Management anticipates that
the effect of adopting Statement of Position 97-2 will not have a significant
impact on the Company.
13
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL INFORMATION
The Unaudited Pro Forma Consolidated Condensed Statements of Income of Tridex
Corporation ("Tridex" or the "Company") for the year ended December 31, 1997
and the quarter ended March 31, 1998 and the Unaudited Pro Forma Consolidated
Condensed Balance Sheet as of March 31, 1998 (collectively the "Pro Forma
Financial Statements") have been prepared to illustrate the estimated effects
of the acquisition of Progressive Software Inc. ("Progressive") by the
Company. The Pro Forma Financial Statements do not reflect any anticipated
cost savings or any other benefits that are anticipated to result from the
Progressive acquisition and there can be no assurance that any such cost
savings or other benefits will occur. The Unaudited Pro Forma Consolidated
Condensed Statements of Income give pro forma effect to the Progressive
acquisition as if it had occurred January 1, 1997. The Unaudited Pro Forma
Consolidated Condensed Balance Sheet gives pro forma effect to the
acquisition of Progressive as if it occurred on March 31, 1998. The Pro Forma
Financial Statements do not purport to be indicative of the results of
operations or financial position of the Company that would have actually been
obtained had such transactions been completed as of the assumed dates and for
the periods presented or which may be obtained in the future. The pro forma
adjustments are described in the accompanying notes and are based on
available information and certain assumptions that the Company believes are
reasonable. These Pro Forma Financial Statements should be read in
conjunction with: (i) the separate historical consolidated financial
statements included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997 and Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998 and (ii) the financial statements of Progressive and the
notes thereto included elsewhere in this Form 8-K/A.
A preliminary allocation of purchase price has been estimated based on available
information and is subject to the final purchase price settlement. The actual
allocation of purchase price and the resulting effect on income from operations
may differ significantly from the pro forma amounts included herein.
Consequently the Pro Forma Financial Statements are subject to change and the
final amounts may differ substantially.
14
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
Pro Forma Consolidated Condensed Statement of Income
For the Year Ended December 31, 1997
(Dollars in thousands, except per share amounts)
UNAUDITED
<TABLE>
<CAPTION>
Progressive
Tridex Software,
Corporation Inc. Pro Forma
Historical Historical Adjustments Pro Forma
- -------------------------------------------- --------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net sales $ 25,833 $ 33,818 $ 59,651
Operating costs and expenses:
Cost of sales 19,629 23,773 43,402
Engineering, design and product
development costs 693 1,368 2,061
Selling, administrative and general
expenses 5,661 6,378 12,039
Depreciation and amortization expense 864 280 $ 2,960 (a) 4,104
--------------- --------------- ---------------- ---------------
--------------- --------------- ---------------- ---------------
26,847 31,799 2,960 61,606
--------------- --------------- ---------------- ---------------
--------------- --------------- ---------------- ---------------
Operating income (loss) (1,014) 2,019 (2,960) (1,955)
Other charges (income):
Interest (income) expense, net (603) 681 2,531 (b) 2,609
Other, net 201 201
--------------- --------------- ---------------- ---------------
--------------- --------------- ---------------- ---------------
Income (loss) before income taxes (612) 1,338 (5,491) (4,765)
Income tax benefit (44) (1,528)(c) (1,572)
--------------- --------------- ---------------- ---------------
--------------- --------------- ---------------- ---------------
Income (loss) from continuing operations (568) 1,338 $ (3,963) $ (3,193)
---------------- ---------------
---------------- ---------------
Discontinued operations 533
--------------- ---------------
--------------- ---------------
Net income (loss) $ (35) $ 1,338
--------------- ---------------
--------------- ---------------
Loss per share - basic and diluted:
Loss from continuing operations $ (0.11) $ (0.52)
---------------
---------------
Income from discontinued operations 0.10
---------------
---------------
Net loss $ (0.01)
---------------
---------------
Average common shares outstanding 5,157,000 999,714 (d) 6,156,714
--------------- ---------------- ---------------
--------------- ---------------- ---------------
</TABLE>
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
Pro Forma Consolidated Condensed Statement of Income
For the Quarter Ended March 31, 1998
(Dollars in thousands, except per share amounts)
UNAUDITED
<TABLE>
<CAPTION>
Progressive
Tridex Software,
Corporation Inc. Pro Forma
Historical Historical Adjustments Pro Forma
- -------------------------------------------- --------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Net sales $ 6,212 $ 4,917 $ 11,129
Operating costs and expenses:
Cost of sales 4,746 2,911 7,657
Engineering, design and product
development costs 280 948 1,228
Selling, administrative and general
expenses 1,091 1,374 2,465
Depreciation and amortization expense 229 58 $ 740 (a) 1,027
--------------- --------------- ---------------- ---------------
--------------- --------------- ---------------- ---------------
6,346 5,291 740 12,377
--------------- --------------- ---------------- ---------------
--------------- --------------- ---------------- ---------------
Operating loss (134) (374) (740) (1,248)
Other charges (income):
Interest (income) expense, net (226) 267 620 (b) 661
Other, net (1) (1)
--------------- --------------- ---------------- ---------------
--------------- --------------- ---------------- ---------------
Income (loss) before income taxes 93 (641) (1,360) (1,908)
Income tax provision (benefit) 46 (695)(c) (649)
--------------- --------------- ---------------- ---------------
--------------- --------------- ---------------- ---------------
Net income (loss) $ 47 $ (641) $ (665) $ (1,259)
--------------- --------------- ---------------- ---------------
--------------- --------------- ---------------- ---------------
Earnings (loss) per share basic and diluted:
Net income (loss) $ 0.01 $ (0.20)
--------------- ---------------
--------------- ---------------
Average common shares outstanding 5,351,000 999,714 (d) 6,350,714
--------------- ---------------- ---------------
--------------- ---------------- ---------------
</TABLE>
16
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
Pro Forma Consolidated Condensed Balance Sheet
March 31, 1998
(Dollars in thousands)
UNAUDITED
<TABLE>
<CAPTION>
Pro Forma Adjustments
------------------------------
-------------- ---------------
Proceeds
Progressive from Payment of
Tridex Software, Issuance of Purchase Price
Corporation Inc. Debt and
Historical Historical Stock Pro Forma
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
(e) (f)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,708 $ 26,751 $ (43,051) $ 408
Receivables 3,445 $ 3,845 2,251 (h) 9,541
Inventories 3,839 4,583 8,422
Deferred taxes and other
current assets 817 451 (451) 817
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
Total current assets 24,809 8,879 26,751 (41,251) 19,188
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
Plant and equipment, net 1,212 1,073 2,285
Excess of cost over fair value of
net assets acquired and
other intangibles 2,392 14,801 17,193
Deferred tax assets 206 10,520 10,726
Other assets 300 1,338 (1,338) 300
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
$ 28,919 $ 11,290 $ 26,751 $ (17,268) $ 49,692
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
LIABILITIES AND
SHAREHOLDERS' EQUITY
Current liabilities:
Bank loan payable $ 9,137 $ 1,751 $ (9,137) $ 1,751
Current portion of long term debt 1,200 1,200
Accounts payable, accrued liabilities
and income taxes payable $ 4,638 1,927 1,835 8,400
Deferred revenue 1,042 1,042
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
Total current liabilities 4,638 12,106 2,951 (7,302) 12,393
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
Long term debt, less current portion:
Term loan payable 10,800 10,800
Senior subordinated notes,
net of discount 9,772 9,772
------------- ------------- -------------- --------------- ------------
0 0 20,572 0 20,572
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
Shareholders' equity:
Common stock, at stated value 1,377 1,815 71 (g) (1,636)(g) 1,627
Additional paid-in capital 25,273 3,157 (g) 4,819 (g) 33,249
Accumulated deficit (626) (2,631) (13,149)(g) (16,406)
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
26,024 (816) 3,228 (9,966) 18,470
Receivable from sale of stock (801) (801)
Common shares held in
treasury, at cost (942) (942)
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
24,281 (816) 3,228 (9,966) 16,727
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
$ 28,919 $ 11,290 $ 26,751 $ (17,268) $ 49,692
------------- ------------- -------------- --------------- ------------
------------- ------------- -------------- --------------- ------------
</TABLE>
17
<PAGE>
TRIDEX CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED PRO FORMA CONSOLIDATED CONDENSED
FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(a) The additional amortization expense is the amortization of purchased
software technology and the excess of cost over fair value of net
assets acquired ($14,801 over five years).
(b) Reflects adjustments for additional interest expense assuming the
Progressive acquisition occurred on January 1, 1997 as follows:
<TABLE>
<CAPTION>
Year ended Three months
Imputed December 31, Ended March 31,
Rate Amount 1997 1998
---- ------ ---- ----
<S> <C> <C> <C> <C>
Term loan 8.15% $11,550 $941 $244
Subordinated debt 13.86% $11,000 1,525 381
Working capital facility 8.15% $1,751 143 36
------------------- ------------------
Total pro forma interest expense 2,609 661
Less historical Tridex/Progressive interest expense (78) (41)
------------------- ------------------
------------------- ------------------
Total pro forma interest expense adjustment $2,531 $620
------------------- ------------------
------------------- ------------------
</TABLE>
The Company estimates that an increase or decrease in interest rates
on variable rate debt of 1/8% would increase or decrease annual
interest expense by approximately $17. The Company has obtained
instruments that hedge against interest rate movements on one-half
of the term loan balance.
(c) The adjustment to the provision for income taxes eliminates the
provision for income taxes recorded by Tridex and records the net tax
benefit at an estimated rate of 33% in the year ended December 31,
1997 and 34% in the quarter ended March 31, 1998.
(d) The additional shares represent (i) 714,000 shares issued (at $7.00
per share) to the selling shareholder of Progressive, as part of the
purchase price for Progressive and (ii) 285,714 shares sold to
Massachusetts Mutual Life Insurance Company and certain related
entities at $7.00 per share to finance part of the cash portion of the
purchase price. In connection with the acquisition, the Company also
(i) adopted the 1998 Non-Executive Long Term Incentive Plan, under
which options to purchase 195,500 shares of Common Stock at $7.00 per
share were granted to non-executive employees of Progressive and (ii)
issued options to certain officers of Progressive under the existing
1997 Long Term Incentive Plan to purchase 65,000 shares of Common
Stock at $7.00 per share.
(e) Reflects the sources and uses of funds for the Progressive
acquisition, assuming the Progressive acquisition occurred as of March
31, 1998:
<TABLE>
<CAPTION>
<S> <C>
Sources of funds:
Cash of the Company $16,300
Issuance of common stock and warrants 3,228
Senior term loan 12,000
Revolving line of credit 1,751
Senior subordinated notes 9,772
-------------------------
-------------------------
Total sources of funds $43,051
-------------------------
-------------------------
Uses of funds:
Cash consideration for Progressive acquisition $33,914
Repayment of Progressive line of credit 9,137
-------------------------
-------------------------
Total uses of funds $43,051
-------------------------
-------------------------
</TABLE>
18
<PAGE>
(f) The estimated purchase price and preliminary adjustments to the
historical book value of Progressive are as follows:
<TABLE>
<CAPTION>
<S> <C>
Purchase price:
Estimated value of cash and stock issued $46,249
Book value of net liabilities assumed 816
Acquisition expenses 1,835
-------------------------
-------------------------
Purchase price in excess of net liabilities assumed $48,900
-------------------------
-------------------------
Preliminary allocation of purchase price in excess of net liabilities
assumed:
Assumed debt $9,137
Write-off of capitalized software cost (1,338)
In-process technology 26,300
Estimated goodwill and other intangibles 14,801
-------------------------
-------------------------
Total $48,900
-------------------------
-------------------------
</TABLE>
The Company estimates that $26,300 of the purchase price represents
purchased in-process technology that has not yet reached technological
feasibility and has no alternative future use. This amount will be
expensed as a non-recurring charge upon completion of the acquisition.
This amount has been reflected as an increase to accumulated deficit
and has not been included in the Pro Forma Consolidated Condensed
Statement of Income due to its non-recurring nature.
(g) The adjustments to common stock, additional paid-in capital and
accumulated deficit as a result of the Progressive acquisition are as
follows:
<TABLE>
<CAPTION>
Pro Forma Adjustments
--------------------------------------
Issuance of Payment of
Common stock: Common Stock Purchase Price
----------------- -------------------
<S> <C>
Issuance of common stock, stated value $ 71 $ 179
Elimination of Progressive common stock (1,815)
----------------- -------------------
Total pro forma adjustments $ 71 $(1,636)
----------------- -------------------
----------------- -------------------
Additional paid in capital:
Issuance of common stock $ 1,929 $ 4,819
Value of warrants issued in connection with senior
subordinated notes 1,228
----------------- -------------------
Total pro forma adjustments $ 3,157 4,819
----------------- -------------------
----------------- -------------------
Accumulated deficit:
Elimination of Progressive accumulated deficit $ 2,631
Write-off of in-process technology, net of income
tax benefit (15,780)
----------------- -------------------
----------------- -------------------
Total pro forma adjustments $(13,149)
----------------- -------------------
----------------- -------------------
</TABLE>
(h) Represents estimate of amount due from seller based on certain purchase
price adjustments.
19
<PAGE>
Exhibit 24.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Tridex Corporation
Registration Statements on Form S-8 (No. 333-52555, No. 333-52557 and No.
333-52559) and in the related Prospectuses, of our report, dated February 4,
1998, except for the last sentence of Note 2 and Note 7 as to which the date is
April 17, 1998, relating to the financial statements of Progressive Software,
Inc., included in the Form 8-K/A Amendment No. 1 for the years ended December
31, 1997 and 1996.
/s/ McGLADREY & PULLEN, LLP
Charlotte, NC
June 30, 1998
20
<PAGE>
Exhibit 24.2
Consent of Independent Accountants
As independent public accountants, we hereby consent to the incorporation by
reference of our report dated November 21, 1996, on the statements of income,
stockholder's equity and cash flow of Progressive Software, Inc. for the year
ended December 31, 1995, included on page 6 of this Form 8-K/A, into the
Registration Statement on Form S-8 of the Tridex Corporation 1997 Long Term
Incentive Plan (file number 333-52559), Registration Statement on Form S-8 of
the Tridex Corporation Non-Employee Directors' Stock Plan (file number
333-52555) and Registration Statement on Form S-8 of the 1998 Tridex Corporation
Non-Executive Long Term Incentive Plan (file number 333-52557).
/s/ Arthur Andersen, LLP
Charlotte, North Carolina
June 30, 1998
21
