<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20459
----------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
----------
January 16, 2001 (December 29, 2000)
Date of Report (Date of earliest event reported)
TYLER TECHNOLOGIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 1-10485 75-2303920
---------------- ----------- -------------------
(State or other (Commission (I.R.S. Employer
jurisdiction of File Number) Identification No.)
incorporation or
organization)
2800 W. Mockingbird Lane
Dallas, Texas 75235
----------------------------------------
(Address of principal executive offices)
(214) 902-5086
----------------------------------------------------
(Registrant's telephone number, including area code)
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<PAGE> 2
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.
TYLER TECHNOLOGIES, INC.
Date: January 16, 2001 By: /s/ Theodore L. Bathurst
------------------------------------------
Theodore L. Bathurst
Vice President and Chief Financial Officer
(principal financial officer)
Date: January 16, 2001 By: /s/ Terri L. Alford
------------------------------------------
Terri L. Alford
Controller
(principal accounting officer)
3
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective December 29, 2000, Tyler Technologies Inc. (Company/Tyler) sold for
cash its land records business unit, Business Resources Corporation (BRC),
including among others, its wholly-owned subsidiaries Government Records
Services, Inc. and Title Records Corporation, to an affiliate of Affiliated
Computer Services, Inc. (ACS). BRC is a provider of outsourced records
management, document workflow, imaging systems and services to state and local
governments, as well as being a provider of real estate title plant services to
title companies in counties in and around the Dallas/Fort Worth metroplex area.
The transaction was valued at approximately $71 million, consisting of
approximately $70.0 million in cash and ACS's assumption of approximately $1.0
million of capital lease obligations.
ITEM 5. OTHER EVENTS
Concurrent with the sale of Business Resources Corporation to ACS, the Board of
Directors of the Company authorized management to dispose of the remaining
operations of the Information and Property Records Services segment of the
Company. These remaining operations consist of NationsData.com, Inc.
(NationsData), Capitol Commerce Reporter, Inc. (CCR), Ram Quest Software, Inc.
and CompactData Solutions, Inc.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of businesses acquired.
Not applicable.
(b) Pro forma financial information.
Unaudited pro forma condensed consolidated financial statements for the
Company are included in this report immediately following the signature
page.
(c) Exhibits.
10.1 Stock Purchase Agreement, dated as of December 29, 2000, among
Affiliated Computer Services, Inc., ACS Enterprise Solutions,
Inc., Tyler Technologies, Inc., and Business Resources
Corporation.
2
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Unaudited Pro Forma Condensed Consolidated Financial Statements of Tyler
Technologies
The unaudited pro forma condensed combined financial statements reflect (i) the
combination of consolidated historical financial data of each of the operating
companies acquired by Tyler since January 1, 1999 (See Note A) (Completed
Acquisition Transactions); (ii) the elimination of the consolidated historical
data of the companies sold by the Company in the Completed Kofile Disposition
Transaction effective September 29, 2000; (See Note B) (iii) the elimination of
the consolidated historical data of the companies sold by the Company in the
Completed ACS Disposition Transaction (See Note C) effective December 29, 2000
and (iv) the elimination of the consolidated historical data of the remaining
companies in the Information and Property Records Services segment to be sold or
abandoned (Pending Disposition Transactions), (See Note D).
The unaudited pro forma condensed combined balance sheet data at September 30,
2000 presents adjustments for the Completed ACS Disposition Transaction and the
Pending Disposition Transactions as if each such transaction had occurred on
September 30, 2000. The unaudited pro forma condensed combined statement of
operations data for the twelve months ended December 31, 1999 and the nine
months ended September 30, 2000 present adjustments for the following
transactions as if each had occurred on January 1, 1999: (i) the Completed
Acquisition Transactions, (ii) the Completed Kofile Disposition Transaction;
(iii) the Completed ACS Disposition Transaction and (iv) the Pending Disposition
Transactions.
The purchase method of accounting for acquisitions has been used in the
preparation of the unaudited pro forma condensed combined financial statements.
Under this method of accounting, the aggregate purchase price is allocated to
assets acquired and liabilities assumed based on their estimated fair values. In
the opinion of the Company's management, all adjustments have been made that are
necessary to present fairly the pro forma data in all material reports.
The unaudited pro forma condensed combined financial statements should be read
in conjunction with the respective financial statements and related notes
thereto of the Company. The unaudited pro forma condensed combined financial
statements are presented for illustrative purposes only and are not necessarily
indicative of the results of operations or financial position that would have
been achieved had the transactions reflected therein been consummated as of the
dates indicated, or of the results of operations or financial positions for any
future periods or dates.
4
<PAGE> 5
Tyler Technologies, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
Year ended December 31, 1999
(In thousands, except per share data)
<TABLE>
<CAPTION>
Completed
Acquisition Pro forma
Historical Transactions(A) as adjusted
------------ --------------- ------------
<S> <C> <C> <C>
Revenues $ 108,401 $ 38,989 $ 147,390
Cost of revenues 54,413 25,848 80,261
------------ ------------ ------------
Gross profit 53,988 13,141 67,129
Selling, general and administrative expenses 37,909 8,018 45,927
Costs of certain acquisition opportunities 1,851 -- 1,851
Amortization of intangibles 7,315 2,794 10,109
------------ ------------ ------------
Operating income (loss) 6,913 2,329 9,242
Interest expense 4,893 1,602 6,495
Interest income (320) -- (320)
------------ ------------ ------------
Income (loss) from continuing operations before
income tax provision (benefit) 2,340 727 3,067
Income tax provision (benefit) 2,404 632 3,036
------------ ------------ ------------
Income (loss) from continuing operations $ (64) $ 95 $ 31
============ ============ ============
Earnings per common share from continuing operations:
Basic $ (0.00) $ 0.00
Diluted $ (0.00) $ 0.00
Weighted average common shares outstanding:
Basic 39,105 2,207 (E4) 41,312
Diluted 39,105 3,480 (E4) 42,585
<CAPTION>
Disposition of Information & Property Records Segment
-----------------------------------------------------------
Completed Kofile Completed ACS Pending
Disposition Disposition Disposition
Transaction(B) Transaction(C) Transactions(D)
---------------- --------------- ---------------
<S> <C> <C> <C>
Revenues $ 10,296 $ 23,801 $ 5,844
Cost of revenues 3,637 12,222 4,412
--------------- --------------- ---------------
Gross profit 6,659 11,579 1,432
Selling, general and administrative expenses 3,273 4,329 2,010
Costs of certain acquisition opportunities -- -- --
Amortization of intangibles 350 1,612 1,065
--------------- --------------- ---------------
Operating income (loss) 3,036 5,638 (1,643)
Interest expense 11 593 52
Interest income -- -- --
--------------- --------------- ---------------
Income (loss) from continuing operations before
income tax provision (benefit) 3,025 5,045 (1,695)
Income tax provision (benefit) 1,382 2,415 (254)
--------------- --------------- ---------------
Income (loss) from continuing operations $ 1,643 $ 2,630 $ (1,441)
=============== =============== ===============
Earnings per common share from continuing operations:
Basic
Diluted
Weighted average common shares outstanding:
Basic
Diluted
<CAPTION>
Pro forma Pro forma
adjustments(E) Tyler
-------------- ------------
<S> <C> <C>
Revenues $ -- $ 107,449
Cost of revenues -- 59,990
------------ ------------
Gross profit -- 47,459
Selling, general and administrative expenses -- 36,315
Costs of certain acquisition opportunities -- 1,851
Amortization of intangibles -- 7,082
------------ ------------
Operating income (loss) -- 2,211
Interest expense (5,839)(E2) --
Interest income -- (320)
------------ ------------
Income (loss) from continuing operations before
income tax provision (benefit) 5,839 2,531
Income tax provision (benefit) 2,160 (E3) 1,653
------------ ------------
Income (loss) from continuing operations $ 3,679 $ 878
============ ============
Earnings per common share from continuing operations:
Basic $ 0.02
Diluted $ 0.02
Weighted average common shares outstanding:
Basic 500 (E4) 41,812
Diluted 500 (E4) 43,085
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
5
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Tyler Technologies, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
Nine months ended September 30, 2000
(In thousands, except per share data)
<TABLE>
<CAPTION>
Disposition of Information & Property Records Segment
--------------------------------------------------------
Completed Kofile Completed ACS Pending
Disposition Disposition Disposition
Historical Transaction(B) Transaction(C) Transactions(D)
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Revenues $ 99,008 $ 6,682 $ 21,758 $ 3,668
Cost of revenues 59,907 3,255 11,222 3,370
--------------- --------------- --------------- ---------------
Gross profit 39,101 3,427 10,536 298
Selling, general and administrative expenses 34,944 2,565 2,336 5,460
Litigation defense costs 1,264 -- -- 1,264
Amortization of intangibles 7,550 263 1,192 919
--------------- --------------- --------------- ---------------
Operating income (loss) (4,657) 599 7,008 (7,345)
Other income 251 -- -- --
Interest expense, net 7,442 33 350 167
--------------- --------------- --------------- ---------------
Income (loss) from continuing operations before
income tax provision (benefit) (11,848) 566 6,658 (7,512)
Income tax provision (benefit) (2,161) 365 2,883 (2,360)
--------------- --------------- --------------- ---------------
Income (loss) from continuing operations $ (9,687) $ 201 $ 3,775 $ (5,152)
=============== =============== =============== ===============
Earnings per common share from continuing operations:
Basic $ (0.22)
Diluted $ (0.22)
Weighted average common shares outstanding:
Basic 44,953
Diluted 44,953
<CAPTION>
Pro forma Pro forma
adjustments(E) Tyler
--------------- ---------------
<S> <C> <C>
Revenues $ -- $ 66,900
Cost of revenues -- 42,060
--------------- ---------------
Gross profit -- 24,840
Selling, general and administrative expenses -- 24,583
Litigation defense costs -- --
Amortization of intangibles -- 5,176
--------------- ---------------
Operating income (loss) -- (4,919)
Other income (251)(E1) --
Interest expense, net (6,892)(E2) --
--------------- ---------------
Income (loss) from continuing operations before
income tax provision (benefit) 6,641 (4,919)
Income tax provision (benefit) 2,457 (E3) (592)
--------------- ---------------
Income (loss) from continuing operations $ 4,184 $ (4,327)
=============== ===============
Earnings per common share from continuing operations:
Basic $ (0.10)
Diluted $ (0.10)
Weighted average common shares outstanding:
Basic 500 (E4) 45,453
Diluted 500 (E4) 45,453
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
6
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Tyler Technologies, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
September 30, 2000
(In thousands)
<TABLE>
<CAPTION>
Completed ACS Disposition
Transaction(C)
----------------------------------
ACS Pro Forma Adjusted
Historical Disposition(C) Adjustments Pro Forma
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 555 $ -- $ -- $ 555
Accounts receivable, net 41,571 (6,648) -- 34,923
Income taxes receivable 1,912 -- (1,396)(C8) 516
Prepaid expenses and other current assets 2,806 (760) -- 2,046
Net assets of discontinued operations held for sale -- -- -- --
Deferred income taxes 2,402 -- -- 2,402
------------ ------------ ------------ ------------
Total current assets 49,246 (7,408) (1,396) 40,442
Property and equipment, net 13,250 (5,232) -- 8,018
Investment securities available-for-sale 7,375 -- -- 7,375
Goodwill and other intangibles, net 160,352 (58,902) -- 101,450
Other receivables 3,960 (565) -- 3,395
Sundry 1,647 (5) -- 1,642
------------ ------------ ------------ ------------
$ 235,830 $ (72,112) $ (1,396) $ 162,322
============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,998 $ (447) $ -- $ 3,551
Accrued liabilities 10,486 (119) -- 10,367
Current portion of long-term obligations 22,615 -- (21,922)(C7) 693
Deferred revenue 21,808 (1,619) -- 20,189
------------ ------------ ------------ ------------
Total current liabilities 58,907 (2,185) (21,922) 34,800
Long-term obligations, less current portion 47,313 (1,045) (45,027)(C7) 1,241
Deferred income taxes 12,734 (3,210) -- 9,524
Other liabilities 4,974 -- -- 4,974
Shareholders' equity 111,902 (65,672) 66,949 (C7) 111,783
-- -- (1,396)(C8) --
------------ ------------ ------------ ------------
$ 235,830 $ (72,112) $ (1,396) $ 162,322
============ ============ ============ ============
<CAPTION>
Pending Disposition
Transactions(D)
------------------------------
Pending Pro Forma Pro Forma
Dispositions(D) Adjustments Tyler
--------------- ------------ ------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 234 $ -- $ 789
Accounts receivable, net (654) -- 34,269
Income taxes receivable (2) -- 514
Prepaid expenses and other current assets (180) -- 1,866
Net assets of discontinued operations held for sale -- 1,033 (D4) 1,033
Deferred income taxes -- -- 2,402
------------ ------------ ------------
Total current assets (602) 1,033 40,873
Property and equipment, net (3,171) -- 4,847
Investment securities available-for-sale -- -- 7,375
Goodwill and other intangibles, net (15,937) -- 85,513
Other receivables -- -- 3,395
Sundry (9) -- 1,633
------------ ------------ ------------
$ (19,719) $ 1,033 $ 143,636
============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ (57) $ -- $ 3,494
Accrued liabilities (94) -- 10,273
Current portion of long-term obligations (693) -- --
Deferred revenue (265) -- 19,924
------------ ------------ ------------
Total current liabilities (1,109) -- 33,691
Long-term obligations, less current portion (912) -- 329
Deferred income taxes (2,013) -- 7,511
Other liabilities -- -- 4,974
Shareholders' equity (15,685) 1,033 (D4) 97,131
-- -- --
------------ ------------ ------------
$ (19,719) $ 1,033 $ 143,636
============ ============ ============
</TABLE>
See accompanying notes to unaudited pro forma condensed combined financial
statements.
7
<PAGE> 8
TYLER TECHNOLOGIES, INC.
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(IN THOUSANDS)
A. COMPLETED ACQUISITION TRANSACTIONS
During 1999 and through January 3, 2000, the Company completed the acquisitions
of certain companies, as follows:
On April 21, 1999, the Company acquired Process Incorporated d/b/a Computer
Center Software (MUNIS) which designs and develops integrated financial and land
management information systems for counties, cities, schools and not-for-profit
organizations. MUNIS provides software solutions to customers primarily located
throughout the northeastern and southeastern United States.
On November 4, 1999, the Company acquired selected assets and assumed selected
liabilities of Cole Layer Trumble Company, (CLT) a division of a privately held
company, in an asset purchase agreement with an effective date of October 29,
1999. CLT provides appraisal software and services to governments.
On January 3, 2000, the Company acquired the stock of Capitol Commerce Reporter,
Inc. (CCR) of Austin, Texas. CCR provides public records research, primarily
UCC's in Texas.
During 1999 and through January 3, 2000, the Company also made other
acquisitions which were immaterial.
The Company accounted for all of the aforementioned acquisitions using the
purchase method of accounting for business combinations. Results of operations
of the acquired entities are included in the Company's consolidated historical
financial statements from their respective dates of acquisition. The excess
purchase price over the fair value of the net identifiable assets of the
acquired companies (goodwill) is amortized using the straight-line method of
amortization over their respective estimated useful lives.
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<PAGE> 9
(1) The detail of the historical financial data of the companies acquired for
periods prior to the respective acquisitions has been obtained from the
historical financial statements of the respective acquired companies and
represents pro forma adjustments related to the Completed Acquisition
Transactions for the year ended December 31, 1999 and is summarized below:
<TABLE>
<CAPTION>
Pro Forma Adjustments:
MUNIS CLT CCR
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $ 6,648 $ 27,248 $ 3,011
Cost of revenues 3,182 19,729 2,108
------------ ------------ ------------
Gross profit 3,466 7,519 903
Selling, general and administrative expenses 1,699 4,379 322
Amortization of intangibles -- -- --
------------ ------------ ------------
Operating income (loss) 1,767 3,140 581
Interest expense, net -- -- --
------------ ------------ ------------
Income (loss) from continuing operations before
income tax provision (benefit) 1,767 3,140 581
Income tax provision (benefit) 654 1,162 215
------------ ------------ ------------
Income (loss) from continuing operations $ 1,113 $ 1,978 $ 366
============ ============ ============
<CAPTION>
Pro Forma Adjustments: Other Pro Forma As
acquisitions Adjustments Adjusted
------------ ------------ ------------
<S> <C> <C> <C>
Revenues $ 2,082 $ -- $ 38,989
Cost of revenues 829 -- 25,848
------------ ------------ ------------
Gross profit 1,253 -- 13,141
Selling, general and administrative expenses 1,618 -- 8,018
Amortization of intangibles -- 2,794 (A2) 2,794
------------ ------------ ------------
Operating income (loss) (365) (2,794) 2,329
Interest expense, net -- 1,602 (A3) 1,602
------------ ------------ ------------
Income (loss) from continuing operations before
income tax provision (benefit) (365) (4,396) 727
Income tax provision (benefit) (135) (1,264)(A4) 632
------------ ------------ ------------
Income (loss) from continuing operations $ (230) $ (3,132) $ 95
============ ============ ============
</TABLE>
(2) Reflects incremental goodwill and related intangible asset amortization
related to the Completed Acquisition Transactions from January 1, 1999 to
the date of each companies respective acquisition:
<TABLE>
<CAPTION>
Net tangible Goodwill and
Total Assets Other Identifiable Incremental
Purchase (Liabilities) Intangibles Intangible
Company acquired Price Acquired Acquired Amortization
---------------- --------------- --------------- ------------------ ---------------
<S> <C> <C> <C> <C>
MUNIS 30,970 949 30,021 762
CLT 10,278 441 9,837 735
CCR 7,019 246 6,773 677
Other 20,636 (2,329) 22,965 620
--------------- --------------- --------------- ---------------
$ 68,903 $ (693) $ 69,596 $ 2,794
=============== =============== =============== ===============
</TABLE>
(3) Reflects incremental interest expense at an effective annual interest rate
of 8.7% related to the Completed Acquisition Transactions from January 1,
1999 to the date of each companies respective acquisitions:
<TABLE>
<CAPTION>
Common Value of Total Incremental
Date Stock Common Cash Other Total Purchase Interest
Company acquired Acquired Issued Stock Paid Indebtedness Debt Price Expense
---------------- ------------- ---------- ---------- ---------- ------------ ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Munis April 1999 2,703 $ 14,561 $ 16,250 $ 159 $ 16,409 $ 30,970 $ 416
CLT November 1999 1,000 4,275 3,000 3,003 6,003 10,278 435
CCR January 2000 -- -- 3,000 4,019 7,019 7,019 611
Other Various 2,283 12,954 5,500 2,182 7,682 20,636 140
---------- ---------- ---------- ---------- ---------- ---------- ----------
5,986 $ 31,790 $ 27,750 $ 9,363 $ 37,113 $ 68,903 $ 1,602
========== ========== ========== ========== ========== ========== ==========
</TABLE>
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<PAGE> 10
(4) Reflects the income tax provision related to pro forma adjustments at an
effective combined statutory federal and state income tax rate of 37% and
adjusted, if necessary, for non-deductible goodwill amortization. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
B. COMPLETED KOFILE DISPOSITION TRANSACTION
On September 29, 2000, the Company sold for cash certain non-core assets for an
aggregate cash sale price of $14,350, which is prior to estimated transaction
costs of $483. The assets sold consisted of certain net assets of Kofile, Inc.
and another subsidiary, the Company's interest in a certain intangible work
product, and the sale and leaseback of a building and related building
improvements. The building was sold for $5,500 (net carrying value of $5,800),
the intangible work product was assigned a value of $350 and the remainder of
the net proceeds was assigned to the sold subsidiaries. The net proceeds of the
sale were used to repay a $472 existing obligation of one of the companies sold,
and to reduce the Company's borrowings under its senior credit facility. The
building that was sold is the headquarters for the Company's subsidiaries that
were sold to ACS and ACS assumed the lease (see Note C).
The assets were sold to investment entities beneficially owned by Mr. William D.
Oates, a principal shareholder, Director and Chairman of the Executive Committee
of the Company. In connection with the sale, the Company recorded an aggregate
gain of $251, after estimating the effects of the post closing adjustments and
estimated transaction costs.
(1) The detail of the historical financial data of the companies sold in the
Completed Kofile Disposition Transaction for the year ended December 31,
1999 and the nine months ended September 30, 2000 has been obtained from
the historical financial statements of the respective companies sold and
are summarized as follows:
<TABLE>
<CAPTION>
Year ended December 31, 1999
Other Pro Forma As
Kofile Dispositions Adjustments Adjusted
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 8,181 $ 2,115 $ -- $ 10,296
Cost of revenues 2,160 1,477 -- 3,637
------------ ------------ ------------ ------------
Gross profit 6,021 638 -- 6,659
Selling, general and administrative expenses 2,319 254 700 (B2) 3,273
Amortization of intangibles 350 -- -- 350
------------ ------------ ------------ ------------
Operating income 3,352 384 (700) 3,036
Intercompany interest expense 1,682 287 (1,969)(B3) --
Interest expense, net 4 7 -- 11
------------ ------------ ------------ ------------
Income from continuing operations before
income tax provision 1,666 90 1,269 3,025
Income tax provision 879 33 470 (B4) 1,382
------------ ------------ ------------ ------------
Income from continuing operations $ 787 $ 57 $ 799 $ 1,643
============ ============ ============ ============
</TABLE>
10
<PAGE> 11
<TABLE>
<CAPTION>
Nine months ended September 30, 2000
Other Pro Forma As
Kofile Dispositions Adjustments Adjusted
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenues $ 4,700 $ 1,982 $ -- $ 6,682
Cost of revenues 1,728 1,527 -- 3,255
------------ ------------ ------------ ------------
Gross profit 2,972 455 -- 3,427
Selling, general and administrative expenses 1,660 380 525 (B2) 2,565
Amortization of intangibles 263 -- -- 263
------------ ------------ ------------ ------------
Operating income 1,049 75 (525) 599
Intercompany interest expense 994 285 (1,279)(B3) --
Interest expense, net 2 31 -- 33
------------ ------------ ------------ ------------
Income (loss) from continuing operations before
income tax provision (benefit) 53 (241) 754 566
Income tax provision (benefit) 175 (89) 279 (B4) 365
------------ ------------ ------------ ------------
Income (loss) from continuing operations $ (122) $ (152) $ 475 $ 201
============ ============ ============ ============
</TABLE>
(2) Represents the elimination of corporate expenses for specifically
identifiable employee salaries and related benefits which will no longer be
incurred subsequent to the Completed Kofile Disposition Transaction and the
Completed ACS Disposition Transaction. Such costs aggregated $1,400 for the
year ended December 31, 1999 and $1,050 for the nine months ended September
30, 2000. Of the aggregated costs, 50% or $700 in 1999 and $525 in 2000
were allocated to the Completed ACS Disposition.
(3) The historical financial statements of companies included in the
Information and Property Records Services segment primarily include only
expenses clearly and directly applicable to the individual subsidiaries.
Tyler, the parent company and Business Resources Corporation (the holding
company for the Information and Property Records Services segment, (BRC)),
provide certain services to each subsidiary of Tyler. Accordingly, the
historical financial statements of each subsidiary do not reflect the
results of operations as if the subsidiary was a separate, stand alone
entity for the periods presented since certain overhead expenses and common
support expenses provided by Tyler and BRC have not been allocated. Tyler
and BRC provide corporate officer support, payroll and benefits
administration, centralized legal and insurance services, information
technology support and all of the accounting, payable and billing support.
In determining the pro forma adjustment to reduce historical consolidated
Tyler selling, general and administrative expenses, only those incremental,
specifically identifiable costs which will be eliminated have been
presented as discussed in Note B (2). Intercompany interest expense has
been allocated to each of the operating companies and eliminated in the pro
forma adjustment column.
(4) Reflects the income tax provision related to pro forma adjustments at an
effective combined statutory federal and state income tax rate of 37% and
adjusted, if necessary, for non-deductible goodwill amortization. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
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<PAGE> 12
C. COMPLETED ACS DISPOSITION
On December 29, 2000, the Company sold for cash its land records business unit,
Business Resources Corporation (BRC), including, among others, BRC's
wholly-owned subsidiaries Government Records Services, Inc. (GRS) and Title
Records Corporation (TRC), to an affiliate of Affiliated Computer Services, Inc.
(ACS). The sale price was valued at $71,000 and consisted of $69,955 in cash and
ACS assumed certain capital lease obligations amounting to $1,045. The net
proceeds of the sale were used to repay an existing obligation of one of the
companies sold amounting to $3,027, and to reduce the Company's borrowings under
its senior credit facility.
Transaction costs and certain costs directly related to the sale are estimated
to be $3,850 for investment, legal, tax and accounting advisory services,
severance payments, bonus payments directly related to the Completed ACS
Transaction and the issuance of 500 shares of restricted Tyler common stock.
(1) The detail of the historical financial data of the companies sold in the
Completed ACS Disposition Transaction for the year ended December 31, 1999
and the nine months ended September 30, 2000 has been obtained from the
historical financial statements of the respective companies sold and is
summarized as follows:
<TABLE>
<CAPTION>
Year ended December 31, 1999 Other Pro Forma As
BRC GRS TRC dispositions Adjustments Adjusted
------- ------- ------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ -- $15,156 $ 6,625 $ 2,020 $ -- $23,801
Cost of revenues -- 8,003 3,551 668 -- 12,222
------- ------- ------- ------- ------- -------
Gross profit -- 7,153 3,074 1,352 -- 11,579
Selling, general and administrative expenses 1,281 1,706 742 -- (100)(C2) 4,329
700(C3) --
Amortization of intangibles 1,605 -- 7 -- -- 1,612
------- ------- ------- ------- ------- -------
Operating income (loss) (2,886) 5,447 2,325 1,352 (600) 5,638
Intercompany interest expense (598) 2,098 2,581 136 (4,217)(C4) --
Interest expense, net -- 216 377 -- -- 593
------- ------- ------- ------- ------- -------
Income (loss) from continuing operations before
income tax provision (benefit) (2,288) 3,133 (633) 1,216 3,617 5,045
Income tax provision (benefit) (398) 1,214 (219) 480 1,338 (C5) 2,415
------- ------- ------- ------- ------- -------
Income (loss) from continuing operations $(1,890) $ 1,919 $ (414) $ 736 $ 2,279 $ 2,630
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Nine months ended September 30, 2000 Other Pro Forma As
BRC GRS TRC dispositions Adjustments Adjusted
------- ------- ------- ------------ ----------- --------
<S> <C> <C> <C> <C> <C> <C>
Revenues $ -- $14,402 $ 5,816 $ 1,540 $ -- $21,758
Cost of revenues -- 7,928 2,805 489 -- 11,222
------- ------- ------- ------- ------- -------
Gross profit -- 6,474 3,011 1,051 -- 10,536
Selling, general and administrative expenses 55 1,122 709 -- (75)(C2) 2,336
525(C3) --
Amortization of intangibles 1,186 -- 6 -- -- 1,192
------- ------- ------- ------- ------- -------
Operating income (loss) (1,241) 5,352 2,296 1,051 (450) 7,008
Intercompany interest expense (54) 1,918 1,489 93 (3,446)(C4) --
Interest expense, net -- 135 215 -- -- 350
------- ------- ------- ------- ------- -------
Income (loss) from continuing operations before
income tax provision (benefit) (1,187) 3,299 592 958 2,996 6,658
Income tax provision (benefit) (118) 1,305 209 378 1,109 (C5) 2,883
------- ------- ------- ------- ------- -------
Income (loss) from continuing operations $(1,069) $ 1,994 $ 383 $ 580 $ 1,887 $ 3,775
======= ======= ======= ======= ======= =======
</TABLE>
12
<PAGE> 13
<TABLE>
<CAPTION>
September 30, 2000
Other
BRC GRS TRC Dispositions
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5 $ (185) $ (289) $ 2
Accounts receivable, net -- 5,323 1,222 103
Income taxes receivable -- 29 -- --
Prepaid expenses and other current assets -- 705 -- --
Deferred income taxes -- -- -- --
--------------- --------------- --------------- ---------------
Total current assets 5 5,872 933 105
Property and equipment, net -- 4,082 1,182 --
Investment securities available-for-sale -- -- -- --
Goodwill and other intangibles, net 44,522 702 13,678 --
Other receivables -- -- 565 --
Sundry -- 5 -- --
--------------- --------------- --------------- ---------------
$ 44,527 $ 10,661 $ 16,358 $ 105
=============== =============== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ -- $ 419 $ 28 $ --
Accrued liabilities 37 286 143 --
Current portion of long-term obligations -- 706 2,601 --
Deferred revenue -- 478 1,141 --
--------------- --------------- --------------- ---------------
Total current liabilities 37 1,889 3,913 --
Long-term obligations -- 1,332 -- --
Deferred income taxes 833 (655) 3,032 --
Other liabilities -- -- -- --
Shareholders' equity 43,657 8,095 9,413 105
--------------- --------------- --------------- ---------------
$ 44,527 $ 10,661 $ 16,358 $ 105
=============== =============== =============== ===============
<CAPTION>
Adjustments
for Tyler As Adjusted
Total Assumed Sold
Historical Activity(C6) Balance Sheet
--------------- --------------- ---------------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ (467) $ 467 $ --
Accounts receivable, net 6,648 -- 6,648
Income taxes receivable 29 (29) --
Prepaid expenses and other current assets 705 55 760
Deferred income taxes -- --
--------------- --------------- ---------------
Total current assets 6,915 493 7,408
Property and equipment, net 5,264 (32) 5,232
Investment securities available-for-sale -- -- --
Goodwill and other intangibles, net 58,902 -- 58,902
Other receivables 565 -- 565
Sundry 5 -- 5
--------------- --------------- ---------------
$ 71,651 $ 461 $ 72,112
=============== =============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 447 $ -- $ 447
Accrued liabilities 466 (347) 119
Current portion of long-term obligations 3,307 (3,307) --
Deferred revenue 1,619 -- 1,619
--------------- --------------- ---------------
Total current liabilities 5,839 (3,654) 2,185
Long-term obligations 1,332 (287) 1,045
Deferred income taxes 3,210 -- 3,210
Other liabilities -- -- --
Shareholders' equity 61,270 4,402 65,672
--------------- --------------- ---------------
$ 71,651 $ 461 $ 72,112
=============== =============== ===============
</TABLE>
(2) Represents the incremental rental expense to the continuing historical
financial statements of Tyler in connection with the sale and leaseback of
a building and the subsequent assumption of the lease by ACS (see Note B).
Such incremental rent represents the facility cost for the Tyler corporate
headquarters.
(3) Reflects the elimination of corporate expenses for specifically
identifiable employee salaries and related benefits which will no longer be
incurred subsequent to the Completed Kofile Disposition Transaction and the
Completed ACS Disposition Transaction. Such costs aggregated $1,400 for the
year ended December 31, 1999 and $1,050 for the nine months ended September
30, 2000. Of the aggregated costs, 50% or $700 in 1999 and $525 in 2000
were allocated to the Completed Kofile Disposition.
(4) Reflects the elimination of intercompany interest expense.
(5) Reflects the income tax provision related to pro forma adjustments at an
effective combined statutory federal and state income tax rate of 37% and
adjusted, if necessary, for non-deductible goodwill amortization. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
(6) Reflects the assumption of certain liabilities of the sold companies by
Tyler and other excluded assets or liabilities pursuant to the Stock
Purchase Agreement. Tyler remains obligated for the income tax effects of
the sale transaction.
13
<PAGE> 14
(7) Reflects the sale of BRC and related subsidiaries to ACS by reducing the
Company's indebtedness and to calculate the loss on the transaction:
<TABLE>
<S> <C> <C>
Sale value 71,000
Less capital lease obligations assumed by Buyer 1,045
-------
Net cash proceeds 69,955(a)
Less estimated transaction costs and certain costs
directly related to the sale:
Cash 3,006(a)
Non-cash stock issuance 844
-------
(3,850)
-------
66,105
Net assets of companies sold, after adjustments for certain
liabilities assumed by Tyler 65,672
-------
Gain on sale 433
=======
</TABLE>
(a) Represents the adjustment to pro forma shareholders equity and
the reduction in current and non-current long term obligations
(8) Reflects the current income tax due on the sale, after consideration of the
utilization of existing capital loss carryforwards and before consideration
of operating losses incurred during the nine months ended September 30,
2000.
D. PENDING DISPOSITION TRANSACTIONS
Concurrent with the sale of Business Resources Corporation to ACS and on
December 29, 2000, the Board of Directors of the Company authorized management
to dispose of the remaining operations of the Information and Property Records
Services segment of the Company by December 31, 2001. These remaining operations
consist of NationsData.com, Inc. (NationsData), Capitol Commerce Reporter, Inc.
(CCR), Ram Quest Software, Inc. and CompactData Solutions, Inc. NationsData is a
start-up company which was in the process of constructing a national repository
of public records data, and this database has web-enabled property tax
information for thousands of parcels of real property nationwide. CCR was
purchased on January 3, 2000 and provides public records research, principally
UCC's in Texas. The interdependency of these operations with those of Business
Resources Corporation (BRC) resulted in the Company's decision to discontinue
the development of the database and other related products and exit the land
records business when the Company elected to sell BRC.
The sale of CCR and the orderly liquidation of the remaining assets are
considered by management to realize aggregate net estimated proceeds of $4,750.
(1) The detail of the historical financial data of the companies to be sold in
the Pending Disposition Transaction for the year ended December 31, 1999
and the nine months ended September 30, 2000 has been obtained from the
historical financial statements of the respective companies to be sold and
is summarized as follows:
14
<PAGE> 15
<TABLE>
<CAPTION>
Year ended December 31, 1999
Other Pro Forma As
CCR NationsData dispositions Adjustments Adjusted
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 3,011 $ 18 $ 2,815 $ -- $ 5,844
Cost of revenues 2,108 115 2,189 -- 4,412
------------ ------------ ------------ ------------ ------------
Gross profit 903 (97) 626 -- 1,432
Selling, general and administrative expenses 322 841 847 -- 2,010
Litigation defense costs -- -- -- -- --
Amortization of intangibles 677 89 299 -- 1,065
------------ ------------ ------------ ------------ ------------
Operating income (loss) (96) (1,027) (520) -- (1,643)
Intercompany interest expense -- 240 523 (763)(D2) --
Interest expense, net -- 52 -- -- 52
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations before
income tax provision (benefit) (96) (1,319) (1,043) 763 (1,695)
Income tax provision (benefit) 215 (446) (290) 267 (D3) (254)
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations $ (311) $ (873) $ (753) $ 496 $ (1,441)
============ ============ ============ ============ ============
</TABLE>
<TABLE>
<CAPTION>
Nine months ended September 30, 2000
Other Pro Forma As
CCR NationsData dispositions Adjustments Adjusted
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues $ 2,394 $ 61 $ 1,213 $ -- $ 3,668
Cost of revenues 1,968 256 1,146 -- 3,370
------------ ------------ ------------ ------------ ------------
Gross profit 426 (195) 67 -- 298
Selling, general and administrative expenses 150 4,420 890 -- 5,460
Litigation defense costs -- 1,264 -- -- 1,264
Amortization of intangibles 507 189 223 -- 919
------------ ------------ ------------ ------------ ------------
Operating income (loss) (231) (6,068) (1,046) -- (7,345)
Intercompany interest expense 628 389 293 (1,310)(D2) --
Interest expense, net (1) 168 -- -- 167
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations before
income tax provision (benefit) (858) (6,625) (1,339) 1,310 (7,512)
Income tax provision (benefit) (123) (2,283) (413) 459 (D3) (2,360)
------------ ------------ ------------ ------------ ------------
Income (loss) from continuing operations $ (735) $ (4,342) $ (926) $ 851 $ (5,152)
============ ============ ============ ============ ============
</TABLE>
15
<PAGE> 16
<TABLE>
<CAPTION>
Balance Sheet at September 30, 2000 As Adjusted to
Other be Sold Balance
NationsData CCR Dispositions Sheet
------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ (128) $ (87) $ (19) $ (234)
Accounts receivable, net 10 379 265 654
Income taxes receivable 2 -- -- 2
Prepaid expenses and other current assets 163 15 2 180
Deferred income taxes -- -- -- --
------------ ------------ ------------ ------------
Total current assets 47 307 248 602
Property and equipment, net 2,901 37 233 3,171
Investment securities held-for-sale -- -- -- --
Goodwill and other intangibles, net 7,415 6,267 2,255 15,937
Sundry 9 -- -- 9
------------ ------------ ------------ ------------
$ 10,372 $ 6,611 $ 2,736 $ 19,719
============ ============ ============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 42 $ 19 (4) 57
Accrued liabilities 44 20 30 94
Current portion of long-term obligations 693 -- -- 693
Deferred revenue -- -- 265 265
------------ ------------ ------------ ------------
Total current liabilities 779 39 291 1,109
Long-term obligations, less current portion 882 -- 30 912
Deferred income taxes 1,807 -- 206 2,013
Other liabilities -- -- -- --
Shareholders' equity 6,904 6,572 2,209 15,685
------------ ------------ ------------ ------------
$ 10,372 $ 6,611 $ 2,736 $ 19,719
============ ============ ============ ============
</TABLE>
(2) Reflects the elimination of intercompany interest expense.
(3) Reflects the income tax provision related to pro forma adjustments at an
effective combined statutory federal and state income tax rate of 35% and
adjusted, if necessary, for non-deductible goodwill amortization. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
16
<PAGE> 17
(4) Reflects the estimated net loss of the dispositions of the remaining
operations of the Information and Property Records Services segment:
<TABLE>
<S> <C> <C>
Estimated net proceeds (net of costs to dispose) $ 4,750(a)
Net assets of companies to be disposed:
Total allocated net assets 15,685
Add allocated debt of the sold companies 1,605 (a)
-----------
Net assets including debt 17,290
Estimated operating losses from the measurement date of December 29,
2000 to the expected disposition date, primarily as a result of the
effects of settlement of certain employment contracts, losses on real
property leases, severance costs and similar closing related costs
3,250 (a)
Income tax benefit on future operating losses (1,138)(a) 19,402
----------- -----------
Loss on disposition 14,652
===========
</TABLE>
(a) Represents net assets of discontinued operations held for sale.
In determining the ranges of amounts of estimated net proceeds and the
estimated operating losses during the disposition period management used
estimates, which it considered reasonable. Because of the uncertainty
regarding dispositions of this nature, it is reasonably possible that the
amounts recorded could change upon the ultimate dispositions of these
companies.
E. OTHER PRO FORMA ADJUSTMENTS
(1) Reflects the elimination of other income from continuing operations in
connection with the Completed Kofile Disposition Transaction.
(2) Reflects the reduction to interest expense in connection with the
consummation of the Completed Kofile Disposition and the Completed ACS
Disposition:
<TABLE>
<CAPTION>
Year Ended Nine Months Ended
December 31, 1999 September 30, 2000
----------------- ------------------
<S> <C> <C>
Estimated net proceeds after cash transaction
costs and certain other costs
directly related to the sale:
Completed Kofile Disposition (Note B) $ 13,867 $ 13,867
Completed ACS Disposition (Note C) 66,949 66,949
--------------- ---------------
80,816 80,816
=============== ===============
Reduction in interest expense on external indebtedness based on average
effective interest rate (after consideration of amortization of debt issue
costs) of 8.7% for the year ended December 31, 1999 and 12.4%
for the nine months ended September 30, 2000 $ 7,031 $ 7,516
=============== ===============
Limitation on reduction of interest expense to the
historical amount reported, adjusted for incremental
interest expense in connection with companies acquired 5,839 6,892
--------------- ---------------
Pro forma reduction in interest expense $ 5,839 $ 6,892
=============== ===============
</TABLE>
17
<PAGE> 18
(3) Reflects the income tax provision related to pro forma adjustments at an
effective combined statutory federal and state income tax rate of 37% and
adjusted, if necessary, for non-deductible goodwill amortization. The
adjustment to income taxes reflects the application of the estimated
effective tax rate on a pro forma basis to income (loss) before income
taxes for historical and pro forma adjustment amounts.
(4) Reflects the incremental number of shares of common stock issued as if all
the acquisitions and dispositions occurred on January 1, 1999 as follows:
<TABLE>
<CAPTION>
Nine Months
Year Ended Ended
December 31, 1999 September 30, 2000
-------------------- --------------------
<S> <C> <C>
Historical basic weighted average shares outstanding 39,105 44,953
Incremental weighted average shares relating to
acquisitions and dispositions:
Issuance of shares of common stocks in conjunction
with acquisitions consummated throughout 1999 weighted for
the period prior to the acquisition 2,207 --
Issuance of 500 shares of common stock in connection with
the Completed ACS Transaction 500 500
-------------------- --------------------
Basic weighted average common shares outstanding 41,812 45,453
Effect of dilutive securities:
Employee stock options and warrants 1,273 --
-------------------- --------------------
Diluted weighted average common shares outstanding 43,085 45,453
==================== ====================
</TABLE>
18
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.1 Stock Purchase Agreement, dated as of December 29,
2000, among Affiliated Computer Services, Inc., ASC
Enterprise Solutions, Inc., Tyler Technologies, Inc.,
and Business Resource Corporation
</TABLE>
