<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 8-K/A
CURRENT REPORT
---------------
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) December 30, 1998
--------------------
PLATINUM SOFTWARE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as Specified in Charter)
Delaware 0-20740 33-0277592
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
195 Technology Drive, Irvine, California 92618
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (949) 453-4000
---------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed, since last report)
<PAGE> 2
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
The following financial statements and exhibits are filed as part
of this Report, where indicated.
(a) Financial statements of business acquired, prepared pursuant to
Rule 3.05 of Regulation S-X. (Incorporated herein by reference to
Registrant's Registration Statement on Form S-4 (No. 333-67577).)
(b) Pro forma financial information required pursuant to Article 11
of Regulation S-X.
(c) Exhibits in accordance with Item 601 of Regulation S-K:
Exhibit No. Description
----------- -----------
23.1 Consent of Ernst & Young LLP, Independent
Auditors
23.2 Consent of PricewaterhouseCoopers LLP,
Independent Accountants
2
<PAGE> 3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following unaudited pro forma condensed combined financial statements give
effect to the acquisition by Platinum Software Corporation ("Platinum") of all
the outstanding shares of DataWorks Corporation ("DataWorks") in a transaction
accounted for as a purchase business combination and reflect adjustments based
on the completion of an independent appraisal.
The unaudited pro forma condensed combined financial information is based on the
consolidated financial statements of Platinum giving effect to the Merger under
the assumptions and adjustments outlined in the accompanying notes to unaudited
pro forma condensed combined balance sheet and statements of income. Such pro
forma adjustments are based upon available information and upon certain
assumptions that Platinum's management believes are reasonable under the
circumstances. These pro forma financial statements are presented for
illustrative purposes only and therefore are not necessarily indicative of the
operating results or financial position that might have been achieved had the
Merger occurred as of an earlier date, nor are they necessarily indicative of
operating results or financial position which may occur in the future.
The pro forma condensed combined balance sheet is provided as of September 30,
1998, giving effect to the Merger as though it had been consummated on that
date. Pro forma combined condensed statements of income are provided for the
three-month period ended September 30, 1998 and the fiscal year ended June 30,
1998, giving effect to the Merger as though it had occurred at the beginning of
the earliest period presented.
Platinum's condensed financial information included in these pro forma financial
statements is derived from its June 30, 1998 audited consolidated financial
statements, and its September 30, 1998 unaudited condensed consolidated
financial statements, not included herein. DataWorks' condensed financial
information included in these pro forma financial statements was derived from
its historical financial statements which are based on a fiscal year ending
December 31. Accordingly, the results of operations for DataWorks included in
the unaudited pro forma condensed combined statements of operations for the year
ended June 30, 1998 and the three- month period ended September 30, 1998 were
derived from its audited consolidated financial statements for the year ended
December 31, 1997 and its unaudited consolidated financial statements for the
nine months ended September 30, 1998, not included herein, and its unaudited
financial statements for the six months ended June 30, 1998 not included herein.
Platinum's unaudited condensed consolidated financial statements as of and for
the three-month period ended September 30, 1998, and DataWorks' unaudited
condensed consolidated financial statements as of and for the nine months ended
September 30, 1998 have been prepared in accordance with generally accepted
accounting principles applicable to interim financial information and, in the
opinions of Platinum's and DataWorks' respective managements, include all
adjustments necessary for a fair presentation of financial information for such
interim periods.
3
<PAGE> 4
PLATINUM SOFTWARE CORPORATION AND DATAWORKS CORPORATION
PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF SEPTEMBER 30, 1998
(in thousands)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Platinum DataWorks Adjustments Notes Combined
-------- --------- ----------- ----- ---------
<S> <C> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 6,640 $ 23,785 $ 30,425
Short-term investments 12,553 9,897 22,450
Accounts receivable, net 27,702 56,635 $ (2,358) 2 81,979
Other current assets 6,842 12,267 (43) 2 20,959
(1,322) 3
(821) 4
4,036 8
-------- --------- -------- ---------
Total current assets 53,737 102,584 (508) 155,813
Equipment, furniture and fixtures, net 9,335 11,077 (520) 2 14,116
(5,157) 5
(619) 5
Capitalized software costs, net 3,753 9,287 (10,093) 5 2,947
Intangible assets, net 192 10,977 (2,372) 2 27,933
19,136 5
Assets held for sale -- -- 3,762 2 3,762
Other assets 1,473 3,921 (82) 2 5,143
(169) 5
-------- --------- -------- ---------
Total assets $ 68,490 $ 137,846 $ 3,378 $ 209,714
======== ========= ======== =========
Current liabilities:
Accounts payable $ 3,862 $ 11,569 $ (594) 2 $ 16,441
1,604 3
Other accrued liabilities 8,185 13,218 4,173 1 32,925
(385) 2
1,500 3
5,934 6
300 7
Deferred revenue 15,474 15,192 (758) 2 29,908
Current portion of long-term
liabilities -- 893 893
-------- --------- -------- ---------
Total current liabilities 27,521 40,872 11,774 80,167
Long-term liabilities 26 2,381 9,081 8 11,488
Shareholders' equity:
Preferred stock 7,501 7,501
Common stock 28 87,661 (87,661) 1 40
12 1
Additional paid-in capital 148,631 83,488 1 232,119
Less: notes receivable from officers (11,563) (11,563)
Retained earnings (deficit) (103,029) 6,296 (6,296) 1 (109,413)
(6,384) 5
Cumulative foreign currency
translation (625) 636 (636) 1 (625)
-------- --------- -------- ---------
Total shareholders' equity 40,943 94,593 (17,477) 118,059
-------- --------- -------- ---------
Total liabilities and shareholders'
equity $ 68,490 $ 137,846 $ 3,378 $ 209,714
======== ========= ======== =========
</TABLE>
4
<PAGE> 5
PLATINUM SOFTWARE CORPORATION AND DATAWORKS CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
YEAR ENDED JUNE 30, 1998
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Platinum DataWorks Adjustments Notes Combined
-------- --------- ----------- ----- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Software licenses $ 57,577 $ 84,657 $142,234
Maintenance & other services 40,406 70,331 110,737
Hardware -- 11,140 11,140
Royalty income 505 505
-------- -------- ------- --------
Total revenues 98,488 166,128 -- 264,616
Cost of revenues:
Software licenses 5,990 10,186 16,176
Maintenance & other services 23,971 51,475 75,446
Hardware -- 8,563 8,563
-------- -------- ------- --------
Total cost of revenues 29,961 70,224 -- 100,185
-------- -------- ------- --------
Gross profit 68,527 95,904 -- 164,431
Operating expenses:
Sales and marketing 38,177 45,165 83,342
Research and development 11,724 12,290 24,014
General and administrative 7,145 21,310 $ 3,352 9 30,548
(1,259) 10
Acquisition and related costs -- 15,565 15,565
-------- -------- ------- --------
Total operating expenses 57,046 94,330 2,093 153,469
Income (loss) from operations 11,481 1,574 (2,093) 10,962
Other income, net 1,866 1,457 3,323
-------- -------- ------- --------
Income (loss) before income taxes 13,347 3,031 (2,093) 14,285
Provision (benefit) for income taxes -- 3,242 (837) 8 2,405
-------- -------- ------- --------
Net income (loss) $ 13,347 $ (211) $(1,256) $ 11,880
======== ======== ======= ========
Income (loss) before extraordinary gain
per common share - basic $ 0.56 $ (0.02) $ 0.34
Weighted average common shares 23,956 14,062 35,456
Income (loss) before extraordinary gain
per common share - diluted $ 0.45 $ (0.02) $ 0.29
Weighted average common shares,
assuming dilution 29,716 14,062 41,392
</TABLE>
5
<PAGE> 6
PLATINUM SOFTWARE CORPORATION AND DATAWORKS CORPORATION
PRO FORMA CONDENSED COMBINED STATEMENT OF INCOME
QUARTER ENDED SEPTEMBER 30, 1998
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Pro Forma Pro Forma
Platinum DataWorks Adjustments Notes Combined
-------- --------- ----------- ----- ---------
<S> <C> <C> <C> <C> <C>
Revenues:
Software licenses $16,177 $18,550 $ 34,727
Maintenance & other services 14,039 22,865 36,904
Hardware -- 1,790 1,790
Royalty income 113 -- 113
------- -------- ----- --------
Total revenues 30,329 43,205 -- 73,534
Cost of revenues:
Software licenses 2,795 2,295 5,090
Maintenance & other services 7,271 16,819 24,090
Hardware -- 1,434 1,434
------- -------- ----- --------
Total cost of revenues 10,066 20,548 -- 30,614
------- -------- ----- --------
Gross profit 20,263 22,657 -- 42,920
Operating expenses:
Sales and marketing 10,953 12,881 23,834
Research and development 2,797 3,687 6,484
General and administrative 1,936 5,913 $ 838 9 8,372
(315) 10
Acquisition and related costs -- 527 527
------- -------- ----- --------
Total operating expenses 15,686 23,008 523 39,217
Income (loss) from operations 4,577 (351) (523) 3,703
Other income, net 298 240 538
------- -------- ----- --------
Income (loss) before income taxes 4,875 (111) (523) 4,241
Provision (benefit) for income taxes 180 (40) (209) 8 (69)
------- -------- ----- --------
Net income (loss) $ 4,695 $ (71) $(314) $ 4,310
======= ======= ===== =======
Income before extraordinary gain
per common share - basic $ 0.17 $ 0.00 $ 0.11
Weighted average common shares 28,330 14,402 39,830
Income before extraordinary gain
per common share - diluted $ 0.16 $ 0.00 $ 0.10
Weighted average common shares,
assuming dilution 30,009 14,402 41,681
</TABLE>
6
<PAGE> 7
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
(DOLLARS IN THOUSANDS)
1. To record the issuance of 11.7 million shares of Platinum Common Stock in
exchange for all outstanding shares of DataWorks, including the elimination
of DataWorks' historical equity accounts. The total purchase price was
determined as follows:
Value of Platinum Common Stock $83,500
Other direct acquisition expenses 2,500
-------
$86,000
=======
The valuation of the Platinum Common Stock is based on its weighted average
closing price three days prior to and three days following the announcement
of the Merger.
In addition, DataWorks expects to incur approximately $1,673 in expenses to
consummate the Merger.
2. To reclassify certain assets held for sale.
3. To write-off prepaid royalties and establish reserves related to the
termination of certain contractual arrangements between DataWorks and third
parties under which DataWorks had agreed to sell third party software in
connection with sales of DataWorks products.
4. To write-off DataWorks marketing literature and inventories that will be
rendered obsolete by the Merger.
5. To write-off $10,093 of capitalized software for in-process projects that
will be discontinued upon consummation of the merger, and to adjust the
carrying value of DataWorks fixed assets, intangibles and other assets to
fair value. Additionally, Platinum expects to allocate approximately $6,384
of the purchase price to the estimated value of DataWorks' in-process
research and development, which will be immediately expensed upon
consummation of the Merger.
In the fourth calendar quarter of 1998, DataWorks expects to record
non-recurring expenses of approximately $3,000. As a result, Platinum
expects amounts assigned to intangible assets in the purchase price
allocation, and annual and quarterly amortization thereof, to increase by
$3,000, $600, and $150, respectively, from amounts reflected in the
accompanying pro forma condensed combined balance sheet and statements of
income.
6. To record estimated costs of severing DataWorks employees and office
consolidations associated with the Merger. In addition, Platinum expects to
incur approximately $6,000 of costs associated with severing its employees.
Such amounts will be recorded in operations in the period that such costs
are incurred, and are not reflected in the accompanying pro forma financial
information.
7. To record estimated cost to settle customer disputes related to the
discontinuance of certain DataWorks development projects.
8. To adjust deferred tax assets and liabilities from the Merger for the
adjustments noted in 1. through 7. above and to record the tax benefit
associated with the net increase in depreciation and amortization. Platinum
currently has recorded a $46,495 valuation allowance on its net deferred tax
assets, the majority of which pertains to net operating loss carryforwards,
while DataWorks has paid taxes of approximately $4,000 in the past two
years. No benefit has been recognized in the accompanying pro forma
condensed combined balance sheet for the net deferred tax asset expected to
be generated as a result of the acquisition. Any deferred tax assets that
may be recognized upon consummation of the merger, would result in a
corresponding reduction in the amount of the purchase price allocated to
intangible assets.
9. To record additional amortization expense related to net increase in
intangible assets. Such amounts are expected to be amortized over a period
of five years.
10. To adjust depreciation of fixed assets resulting from its adjustment to fair
value.
7
<PAGE> 8
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.
PLATINUM SOFTWARE CORPORATION
Date: February 12, 1999 By: /s/ PAUL MAZZARELLA
-------------------------------
Paul Mazzarella
Principal Accounting Officer
8
<PAGE> 9
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
23.1 Consent of Ernst & Young LLP, Independent
Auditors
23.2 Consent of PricewaterhouseCoopers LLP,
Independent Accountants
<PAGE> 1
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Current Report on Form 8-K/A
dated February 12, 1999 of Platinum Software Corporation of our report dated
January 26, 1998 with respect to the consolidated financial statements of
DataWorks Corporation for the years ended December 31, 1995, 1996, and 1997
included in the Registration Statement (Form S-4 No. 333-67577) of Platinum
Software Corporation filed with the Securities and Exchange Commission.
/s/ ERNST & YOUNG LLP
San Diego, California
November 19, 1998
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Current Report on
Form 8-K/A dated February 12, 1999 of Platinum Software Corporation of our
report dated April 5, 1996 relating to the financial statements of DCD
Corporation, which appears on page F-3 of the Registration Statement on Form S-4
(No. 333-67577) of Platinum Software Corporation.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Minneapolis, Minnesota
November 19, 1998
