SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 8-K
CURRENT REPORT
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): August 4, 1997
Computervision Corporation
(Exact name of registrant as specified in charter)
Delaware 1-7760/0-20290 04-2491912
- ---------------- -------------- --------------
(State or other (Commission IRS Employer
jurisdiction File Numbers) Identification
of incorporation) Number)
100 Crosby Drive, Bedford, MA 01730
(Address of principal executive offices)
(617) 275-1800
(Registrant's telephone number, including area code)
(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets
- ---------------------------------------------
On July 18, 1997, Computervision Corporation completed the sale of its
Open Service Solutions business unit to CVSI, Inc.. As a result of this
transaction, Computervision received $32.6 million in cash, of which $7.6
million was paid by M.D. Sass Investors Services, Inc. (the "Buyer"), which
owns 17% of Computervision's outstanding common stock, for 76% of CVSI's
Class A voting stock. The remaining $25 million was paid to Computervision
by CVSI, and, in addition, Computervision received a subordinated note from
CVSI in the principal amount of $10 million. Computervision will retain 24%
of CVSI's Class A voting common stock (to which it has currently assigned a
nominal value) and 100% of its Class B non-voting stock. The Buyer has been
provided incentive options to purchase the remaining 24% Class A common stock
held by Computervision should it retire within the first year the $10 million
subordinated note as well as purchase all of the Class B non-voting stock for
$15 million. In addition, Computervision has agreed that if CVSI does not
achieve certain specified levels of product revenues and operating margins from
Computervision-initiated referrals, CVSI will have the option to purchase, at
a nominal price, some or all of the remaining Class A stock held by
Computervision. However, in no instance can CVSI raise additional funds
without the proceeds first going to retire the $10 million subordinated note
and purchase Class B stock for $15 million. Computervision anticipates that
cash proceeds will be used to repay debt and for other general corporate
purposes.
Item 7. Financial Statements and Exhibits
- ------------------------------------------
(a) Financial Statements of business acquired:
Not applicable
(b) Pro Forma financial information
The accompanying pro forma balance sheet assumes the transaction was
completed as of March 30, 1997. The accompanying pro forma statements of
operations assume the transaction was completed as of January 1, 1996. The
pro forma financial statements do not purport to be indicative of what the
results of operations of Computervision Corporation would have been if the
disposition had occurred as of January 1, 1996 or what the results of
operations may be in the future.
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COMPUTERVISION CORPORATION
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
Historical
Statements Pro forma Pro forma
ASSETS March 30, 1997 Adjustments Results
<S> <C> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $27,557 $32,600(1) $60,157
Accounts receivable, less allowance for
Doubtful accounts of $2,823 76,792 0 76,792
Current deferred income taxes 7,190 0 7,190
Prepaid expenses and other current assets 16,654 0 16,654
-------- -------- --------
TOTAL CURRENT ASSETS 128,193 32,600 160,793
PROPERTY AND EQUIPMENT, NET 26,765 (13,462)(2) 13,303
DEFERRED INCOME TAX ASSETS 3,769 0 3,769
CAPITALIZED SOFTWARE 1,186 0 1,186
DEFERRED FINANCE COSTS 3,332 0 3,332
OTHER ASSETS 3,375 0 3,375
-------- -------- --------
$166,620 $19,138 $185,758
======== ======== ========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $21,753 $0 $21,753
Notes payable and current portion of
long-term debt 10,298 0 10,298
Accrued compensation, severance and
related costs 50,659 0 50,659
Deferred revenue and customer advances 45,279 (11,476)(3) 33,803
Accrued and deferred income taxes 14,661 0 14,661
Other current liabilities and
accrued expenses 81,083 30,614(4) 111,697
-------- -------- --------
TOTAL CURRENT LIABILITIES 223,733 19,138 242,871
-------- -------- --------
DEFERRED INCOME TAXES 30,078 0 30,078
LONG-TERM DEBT, LESS CURRENT PORTION 217,367 0 217,367
OTHER LONG-TERM LIABILITIES 48,961 0 48,961
STOCKHOLDERS' DEFICIT
Preferred stock, $0.01 par value;
5,000,000 Shares authorized; none issued
and outstanding
Common stock, $0.01 par value; 100,000,000
shares authorized; 63,573,899 shares
issued and outstanding 636 0 636
Capital in excess of par value 1,186,331 0 1,186,331
Retained deficit (1,545,092) 0( 1,545,092)
Cumulative translation adjustment 4,606 0 4,606
-------- -------- --------
TOTAL STOCKHOLDERS' DEFICIT (353,519) 0 (353,519)
-------- -------- --------
$166,620 $19,138 $185,758
======== ======== ========
See Notes to Consolidated Pro Forma Financial Statements
</TABLE>
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COMPUTERVISION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Historical Pro forma Pro forma
Statements Adjustments Results
<S> <C> <C> <C>
SOFTWARE REVENUE
Product $191,728 $0 $191,728
Services 111,087 0 111,087
-------- -------- --------
Total Software Revenue 302,815 0 302,815
OTHER SERVICES REVENUE 174,384 (174,384) 0
-------- -------- --------
Total Revenue 477,199 (174,384) 302,815
COST OF SALES
Software
Product 16,382 0 16,382
Services 67,748 0 67,748
Other services 134,686 (134,686) 0
-------- -------- --------
Total Cost of Sales 218,816 (134,686) 84,130
-------- -------- --------
GROSS PROFIT 258,383 (39,698) 218,685
SELLING AND ADMINISTRATIVE EXPENSE
Software 119,465 0 119,465
Other Services 23,501 (23,501) 0
RESEARCH, DEVELOPMENT AND
ENGINEERING EXPENSE
Software 40,144 0 40,144
Other Services 700 (700) 0
NON-RECURRING CHARGES
Software 14,500 0 14,500
Other Services 5,000 (5,000) 0
-------- -------- --------
OPERATING INCOME (LOSS)
Software 44,576 0 44,576
Other Services 10,497 (10,497) 0
-------- -------- --------
Total Operating Income (Loss) 55,073 (10,497) 44,576
INTEREST AND OTHER EXPENSE, NET 30,806 0 30,806
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES 24,267 (10,497) 13,770
PROVISION FOR INCOME TAXES 2,610 0 2,610
-------- -------- --------
NET INCOME (LOSS) $21,657 ($10,497) $11,160
======== ======== ========
EARNINGS (LOSS) PER SHARE $0.33 ($0.16) $0.17
======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 64,784 64,784 64,784
======== ======== ========
See Notes to Consolidated Pro Forma Financial Statements
</TABLE>
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COMPUTERVISION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
FOR THE THREE MONTHS ENDED MARCH 30, 1997
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Historical Pro forma Pro forma
Statements Adjustments Results
<S> <C> <C> <C>
SOFTWARE REVENUE
Product $16,609 $0 $16,609
Services 24,752 0 24,752
-------- -------- --------
Total Software Revenue 41,361 0 41,361
OTHER SERVICES REVENUE 36,448 (36,448) 0
-------- -------- --------
Total Revenue 77,809 (36,448) 41,361
COST OF SALES
Software
Product 2,077 0 2,077
Services 16,789 0 16,789
Other services 33,494 (33,494) 0
-------- -------- --------
Total Cost of Sales 52,360 (33,494) 18,866
-------- -------- --------
GROSS PROFIT 25,449 (2,954) 22,495
SELLING AND ADMINISTRATIVE EXPENSE
Software 28,586 0 28,586
Other Services 5,582 (5,582) 0
RESEARCH, DEVELOPMENT AND
ENGINEERING EXPENSE
Software 10,303 0 10,303
Other Services 131 (131) 0
NON-RECURRING CHARGES
Software 0 0 0
Other Services 7,000 (7,000) 0
-------- -------- --------
OPERATING INCOME (LOSS)
Software (16,394) 0 (16,394)
Other Services (9,759) 9,759 0
-------- -------- --------
Total Operating Income (Loss) (26,153) 9,759 (16,394)
INTEREST AND OTHER EXPENSE, NET 7,791 0 7,791
-------- -------- --------
INCOME (LOSS) BEFORE INCOME TAXES (33,944) 9,759 (24,185)
PROVISION FOR INCOME TAXES 0 0 0
-------- -------- --------
NET INCOME (LOSS) ($33,944) $9,759 ($24,185)
======== ======== ========
EARNINGS (LOSS) PER SHARE ($0.53) $0.15 ($0.38)
======== ======== ========
WEIGHTED AVERAGE SHARES OUTSTANDING 63,567 63,567 63,567
======== ======== ========
See Notes to Consolidated Pro Forma Financial Statements
</TABLE>
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Notes to Consolidated Pro forma Financial Statements
1. The pro forma adjustment to cash in the Consolidated Balance Sheet
represents the total proceeds received as a result of the transaction.
2. The pro forma adjustment to property and equipment in the Consolidated
Balance Sheet represents the removal of field spares and other equipment
included in the sale transaction.
3. The pro forma adjustment to deferred revenue and customer advances in the
Consolidated Balance Sheet represents the removal of deferred revenues
related to the Open Service Solutions ("OSS") business unit.
4. The pro forma adjustment to other current liabilities and accrued expenses
in the Consolidated Balance Sheet represents liabilities for reimbursement of
deferred revenues to CVSI, Inc. ("CVSI"), transaction-related costs, and
shutdown costs related primarily to facilities not transferred to CVSI.
4. Other services amounts included in the Consolidated Statements of
Operations represent the OSS business and, therefore, have been eliminated
in entirety.
6. After transaction costs, the Company does not expect to record a material
gain as a result of the sale transaction, and therefore, no gain has been
included in the pro forma adjustments to the accompanying pro forma financial
statements.
(c) Exhibits:
None
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Computervision Corporation
(Registrant)
By /S/ William A. Wilson
William A. Wilson
Senior Vice President Finance and
Chief Financial Officer
Date: August 4, 1997
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