<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO CURRENT REPORT
on
FORM 8-K/A
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): OCTOBER 31, 1996
APPLIX, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS
- --------------------------------------------------------------------------------
(State or other jurisdiction of incorporation)
0-25040 04-2781676
- ------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
112 TURNPIKE ROAD, WESTBORO, MASSACHUSETTS 01581-2831
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(508) 870-0300
- --------------------------------------------------------------------------------
(Registrant's Telephone Number, including area code)
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
The undersigned registrant hereby amends Item 7 of its Current Report on
Form 8-K, dated October 31, 1996, which excluded certain financial statements
because they were not available at the time of filing, to read in its entirety
as follows:
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial statements of business acquired.
See pages 4 through 16 hereof.
(b) Pro forma financial information.
See pages 17 through 21 hereof.
The unaudited pro forma consolidated balance sheet was prepared as if the
acquisition had occurred on September 30, 1996. The unaudited pro forma
consolidated statements of operations for the nine months ended September 30,
1996 and for the year ended December 31, 1995 were prepared as if the
acquisition had taken place on January 1, 1995.
The unaudited pro forma financial information was prepared utilizing the
accounting policies of the respective companies. The policies of the Company are
consistent with those of Sinper Corporation. The unaudited pro forma financial
information reflects the allocation of the purch price in accordance with
generally accepted accounting principles.
For the purposes of this presentation, these pro forma adjustments have
been made to the results of operations and balance sheet to provide information
as to how the acquisition might have affected the statement of operations and
balance sheet. This unaudited pro forma financial information does not purport
to be indicative of the results of operations that would have been obtained if
the operations had been combined as of the beginning of the period presented,
and is not intended to be a projection of future results.
(c) Exhibits.
See Exhibit Index attached hereto at page 22.
<PAGE> 3
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
APPLIX, INC.
- ------------------------------------------
(Registrant)
/s/ Patrick J. Scannell, Jr.
- ------------------------------------------
Patrick J. Scannell, Jr.
Vice President, Finance & Administration,
Chief Financial Officer and Treasurer
January 14, 1997
- ------------------------------------------
Date
<PAGE> 4
Sinper Corporation
Financial Statements
April 30, 1996
-4-
<PAGE> 5
SINPER CORPORATION
FINANCIAL STATEMENTS
APRIL 30, 1996
CONTENTS
Independent Auditors' Report
Balance Sheet
Statement of Income and Retained Earnings
Statement of Cash Flows
Notes to the Financial Statements
Statement of Costs of Sales and Selling, General and
Administrative Expenses
-5-
<PAGE> 6
gustavo e. casado, certified public accountant
Independent Auditors' Report
----------------------------
To The Directors of Sinper Corporation
We have audited the accompanying balance sheet of Sinper Corporation (a
Florida corporation) as of April 30, 1996 and the related statements of
income and retained earnings, and cash flows for the year 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 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 report.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Sinper Corporation as of April
30, 1996 and the results of its operations and its cash flows for the year then
ended in conformity with generally accepted accounting principles.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole of Sinper Corporation. The accompanying statement of
costs of sales and selling, general and administrative expenses is presented
for purposes of additional analysis and is not a required part of the basic
financial statements. Such information has been subjected to the audit
procedures applied in the audit of the basic financial statements and, in our
opinion, is fairly stated, in all material respects, in relation to the basic
financial statements taken as a whole.
/s/ Gustavo E. Casado
Miami, Florida
June 14, 1996
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<PAGE> 7
SINPER CORPORATION
<TABLE>
BALANCE SHEET
APRIL 30, 1996
ASSETS
<S> <C>
Current assets
- --------------
Cash and cash equivalents $ 990,600
Accounts receivable, less allowance for doubtful accounts 348,881
of $40,100
Marketable Securities 302,457
Deferred income taxes 349,000
Prepaid Royalties 155,172
----------
Total Current Assets 2,146,110
Property and equipment - net 73,097
Other Assets
- ------------
Intangibles 37,517
Security Deposits 10,500
----------
Total other assets 48,017
----------
Total assets $2,267,224
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
- -------------------
Accounts payable and accrued expenses $ 271,998
Income taxes payable 459,688
Deferred royalties 1,125,000
----------
Total current liabilities 1,856,686
----------
Stockholders' equity:
- ---------------------
Preferred stock 212,500
Common Stock 11,014
Retained Earnings 187,024
----------
Total stockholders' equity 410,538
----------
Total liabilities and stockholders' equity $2,267,224
==========
</TABLE>
The accompanying notes are an integral part of the consolidated
financial statements.
-7-
<PAGE> 8
SINPER CORPORATION
STATEMENT OF INCOME AND RETAINED EARNINGS
FOR THE YEAR ENDED APRIL 30, 1996
<TABLE>
<S> <C>
Revenues
Net Sales $1,979,176
Royalties 350,000
----------
2,329,176
Costs and Expenses
Costs of sales 656,328
Selling, general and administrative 1,670,440
Depreciation 20,827
----------
Total expenses 2,347,595
----------
Loss from Operations (18,419)
Interest Income 25,412
----------
Income Before Provision for Income Taxes 6,993
Provision for Income Taxes
Currently Payable (466,000)
Deferred Benefit 492,000
----------
26,000
----------
32,993
Net Income
Retained earnings -- May 1, 1995 176,088
Dividends paid (22,057)
----------
Retained Earnings -- April 30, 1996 $ 187,024
==========
</TABLE>
The accompanying notes are an integral part of this statement.
-8-
<PAGE> 9
SINPER CORPORATION
<TABLE>
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED APRIL 30, 1996
<S> <C>
Increased (Decrease) in Cash and Cash Equivalents
- -------------------------------------------------
Cash flows from operating activities
- ------------------------------------
Net income $ 32,993
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 20,827
Change in assets and liabilities:
Decrease in accounts receivable 20,859
Increase in deferred income taxes (492,000)
Increase in prepaid royalties (155,172)
Increase in intangibles (14,802)
Increase in deposits (5,500)
Increase in accounts payable and accrued expenses 253,760
Increase in income taxes payable 454,715
Increase in deferred royalties 1,125,000
----------
Net cash provided by operating activities 1,240,680
----------
Cash flows from investing activities:
- -------------------------------------
Investing activities:
Purchase of marketable securities (302,457)
Acquisitions of property and equipment (79,082)
----------
Net cash used in investing activities (381,539)
Cash flows from financing activities:
- -------------------------------------
Dividends paid (22,057)
----------
Net increase in cash and cash equivalents 837,084
Cash and cash equivalents at May 1, 1995 153,516
----------
Cash and cash equivalents at April 30, 1996 $ 990,600
==========
Supplemental disclosures of cash flows information:
- ---------------------------------------------------
Cash paid during the year for interest none
Cash paid during the year for income taxes none
</TABLE>
The accompanying notes are an integral part of this statement.
-9-
<PAGE> 10
SINPER CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1996
NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Nature of Operations
- --------------------
The Company developed proprietary On Line Analytical Processing software
(OLAP) known as TM1 that works in conjunction with various spreadsheet
programs and supports decision tasks including planning, budgeting,
profitability analysis, product line analysis and financial information
systems. The Company markets TM1 worldwide primarily through licensed
resellers as well as licensing its technology for use in other OLAP
systems implementations.
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid investments purchased with a
maturity of three months or less to be cash equivalents for purposes of the
statement of cash flows.
At April 30, 1996, the Company maintained substantially all of its cash and
cash equivalents in two accounts with a large financial institution. These
deposits were not covered by federal deposit insurance. In lieu of such
coverage, the financial institution maintains insurance for the protection of
customer funds.
Revenue Recognition
- -------------------
Revenue from sales is recognized when products are shipped to customers.
Royalty revenues are recognized when earned or according to the provisions of
the underlying licensing agreements.
Software Development Costs
- --------------------------
The Company's policy is to charge software development costs to operations until
technological feasibility is established. Thereafter, the costs of producing
product masters are capitalized. The amortization of the capitalized costs
commences when the products are ready for general release to customers. Quality
control, revisions and update costs are not considered software development
costs and are charged to operations.
The development costs of the product masters for the Company's current
generation of software were not significant and were charged to operations
in prior years.
Inventories
- -----------
The Company's products are assembled generally as needed for shipment.
Accordingly, inventories at year end were not significant.
-10-
<PAGE> 11
SINPER CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1996
Property, Equipment and Depreciation
- ------------------------------------
Property and equipment is stated at cost. Depreciation for financial reporting
purposes is provided on the straight-line basis over the estimated useful lives
of the respective assets, generally five years. For federal income tax purposes,
depreciation is computed using the modified accelerated cost recovery system.
Intangibles
- -----------
Intangibles are stated at acquisition cost and consist of legal costs related
to patent applications. Patents will be amortized on the straight-line basis
over the legal lives of the patents when granted.
Income Taxes
- ------------
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due or deferred related
primarily to differences between the bases of certain assets and liabilities
for financial and tax reporting purposes. The Company prepares its tax returns
on the cash basis of accounting. Deferred taxes represent the future
consequences of differences, which will either be taxable or deductible when
the assets and liabilities are recovered or settled.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting standards requires management to make estimates and assumptions that
affect certain reported amounts and disclosures. Accordingly, actual results
could differ from those estimates.
NOTE 2 -- MARKETABLE SECURITIES
Marketable securities consist of a U.S. Treasury note, at 7%, maturing in
September 1996. The Company intends to hold this security to maturity and as a
result it is carried at amortized cost. The security is held by a financial
institution and is fully insured. At April 30, 1996, the carrying and fair
values of the security were $302,457 and $302,016, respectively. Fair value was
determined based on published market quotations as of April 30, 1996.
NOTE 3 -- PROPERTY AND EQUIPMENT
<TABLE>
At April 30, 1996, property and equipment consisted of the following:
<S> <C>
Office and computer equipment $117,301
Furniture and fixtures 38,746
-------
Total 156,047
Less accumulated depreciation 82,950
-------
$ 73,097
========
</TABLE>
-11-
<PAGE> 12
SINPER CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1996
NOTE 4 - CAPITAL STOCK
The Company has authorized 20 million shares of $0.001 par value common stock
and 5 million shares of $0.01 par value preferred stock, Class A "convertible".
At April 30, 1996, there were issued and outstanding 11,013,752 common stock
shares and 1,700,000 preferred stock shares.
The preferred shares are convertible into common stock on a share per share
basis at the option of the holder and have a liquidation preference of $0.125
per share.
NOTE 5 - RELATED PARTY
Two of the Company's shareholders are licensed resellers of the Company's
products. During the year ended April 30, 1996, sales to these shareholders
totalled $128,142 and $92,814, respectively. The sales were made in accordance
with standard sales and credit terms. At April 30, 1996, accounts receivable
included $2,425 and $42,205 outstanding from these shareholders, respectively.
NOTE 6 - MAJOR CUSTOMERS
During the year ended April 30, 1996, sales to three major customers totaled
$1,059,115 or 53% of total sales. At year-end, the amount due from the three
major customers totaled $171,744 or 45% of net accounts receivable.
NOTE 7 - DEFERRED ROYALTY REVENUE
In November 1995, the Company granted a non-exclusive, worldwide, perpetual
license to use and distribute the Company's OLAP software, in source code and
object form, to a software vendor unrelated to the Company. The licensing
agreement provided for royalties of 15% of revenues derived by the licensee
from the use of the software and for the payment of a certain deposit to be
applied to future royalties due the Company. On the later of January 1, 2001,
or the first date that the licensee has paid royalties of $4 million, the
licensee will be deemed to have a fully-paid license in perpetuity and no other
royalties will be due and the Company will have no additional software support
responsibilities.
At April 30, 1996, the Company had received deposits totaling $1.375 million of
which it recognized as revenue the non-refundable portion of $250,000.
NOTE 8 - TERRITORIAL ROYALTIES EXPENSE
The Company has granted exclusive licenses or distribution rights within
certain geographical areas to two resellers. The first arrangements is
described herein, the other arrangement is described in Note 9 below.
One reseller has exclusive distribution rights in Europe except for Germany,
Austria and German-speaking Switzerland, where the rights are non-exclusive.
Under the agreement, the Company is required to pay royalties to this reseller
on sales made by others within the exclusive territories equivalent to 50%
on sales of standard products and 25% on sales of non-standard products. In
addition, the Company is required to pay royalties of 20% on sales made by
others within the non-exclusive territories. The agreement expires on October
31, 1997. The Company has the right to terminate the exclusive distribution
rights should the reseller not fulfill specified minimum sales quotas.
-12-
<PAGE> 13
SINPER CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1996
NOTE 9 -- PREPAID ROYALTIES EXPENSE
In November 1995, the Company executed an agreement terminating previously
granted exclusive distribution rights to a reseller. The agreement provides for
royalties to be paid on revenues received by the Company from customers outside
the United States, Canada and Sweden during the three years ending March 1999.
The royalty payments will be based on 25%, 20% and 15% of revenues received
during the first, second and third year, respectively.
In accordance with the termination agreement, the Company paid $100,000 to and
credited $143,337 in receivables due from the reseller. Of these amounts,
$155,172 was recorded as prepaid royalties and $88,165 was charged to
operations.
NOTE 10 -- DEFERRED INCOME TAXES
Deferred tax assets and liabilities are determined based on the differences
between the financial statements and tax basis of assets and liabilities,
measured using enacted tax rates.
At April 30, 1996, net deferred tax assets of $349,000 arose primarily from
temporary differences related to the recognition of deferred royalties,
accounts receivable and payable and depreciation expense.
NOTE 11 -- PENSION PLANS
The Company maintains a qualified deferred compensation plan and a defined
contribution pension plan covering substantially all employees. Company and
employee contributions to either plan are voluntary. For the year ended April
30, 1996, the Company elected to contribute $11,102 to the pension plan
consisting of 3% of covered compensation.
NOTE 12 -- COMMITMENTS
The Company leases its facilities under a noncancelable operating lease
expiring in March 1997. At April 30, 1996, the minimum rental commitments under
this lease totaled $63,800. The lease has a one year month-to-month renewal
option. The Company will be liable to the landlord for $23,400 for costs of
modifying the premises if the second year option is not exercised. These costs
are to be amortized at $1,950 per month during the option year. During the year
ended April 30, 1996, $50,885 was charged as rent expense to operations.
The Company entered into several operating leases for telephone equipment,
computers, office equipment and an automobile driven by an officer. The
remaining lease obligations for each of the next five years and in the aggregate
are as follows:
<TABLE>
<S> <C>
1997 $19,914
1998 14,754
1999 8,159
2000 6,794
2001 4,528
-------
$54,149
=======
</TABLE>
-13-
<PAGE> 14
SINPER CORPORATION
NOTES TO THE FINANCIAL STATEMENTS
APRIL 30, 1996
NOTE 13 - SUBSEQUENT EVENTS
At April 30, 1996, the Company was negotiating stock option agreements with
four of its executives. The agreements had not be finalized as to the date of
this report.
Subsequent to year-end, the Company accepted certain terms and conditions for a
proposed issuance of additional convertible preferred stock. An investment
company proposed to provide a capital infusion of $2.5 million to be used for
working capital purposes. The significant terms and conditions include
anti-dilution provisions, appointment of a member to the board of directors,
limiting the board to five members, assigning voting rights to the preferred
shares equal to the rights of common stock shares, specified participation and
co-sale rights, and significant preference entitlements in the event of the
liquidation, sale or merger of the Company.
Also subsequent to year-end, the Company entered into negotiations for
licensing its OLAP software products to an unrelated software distributor for
inclusion in the distributor's own line of software products. Under the
agreement, the Company is to develop compatible versions of its TM1 products.
The distributor would have non-exclusive worldwide rights to use, distribute
and sublicense the object code of existing and future TM1 products under its
own name and trademarks. The proposed agreement requires the distributor to
advance $1 million to the Company within one year, payable in four installments
of $250,000 beginning with the signing of the agreement. The advanced monies
will be offset against earned future royalties and may become refundable or be
forfeited by failures of either party to meet specified conditions, such as
product delivery and performance.
-14-
<PAGE> 15
SUPPLEMENTARY INFORMATION
-15-
<PAGE> 16
SINPER CORPORATION
<TABLE>
STATEMENT OF COSTS OF SALES AND SELLING GENERAL
AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED APRIL 30, 1996
<S> <C>
Cost of Sales
- -------------
Territorial royalties $ 201,420
Materials 127,160
Telemarketing 86,446
Trade shows 84,549
Sales commissions 51,216
Quality control services 47,000
Shipping 32,528
Equipment purchased for resale 23,623
Credit card charges 2,386
----------
$ 656,328
==========
Selling General and Administrative Expenses:
- --------------------------------------------
Salaries, payroll taxes and benefits $ 802,706
Consultants 132,287
Marketing costs 101,366
Marketing materials 103,181
Travel and entertainment 91,454
Legal Fees 77,792
Public relations 64,780
Rent 50,885
Advertising 48,738
Provision for doubtful accounts 40,100
Telephone 32,720
Office expense and supplies 31,583
Insurance 21,451
Investment banking fees 25,479
Auditing and accounting 22,600
Automobile 9,397
License and taxes 4,457
Utilities 4,082
Dues and subscriptions 2,323
Equipment leasing 2,632
Bank charges 427
----------
$1,670,440
==========
</TABLE>
The accompanying notes are an integral part of this statement.
-16-
<PAGE> 17
UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
OF
APPLIX, INC.
-17-
<PAGE> 18
<TABLE>
APPLIX, INC.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1996
(IN THOUSANDS)
<CAPTION>
PRO FORMA PRO FORMA
APPLIX, INC. SINPER CORP. ADJS. REF ADJUSTED
------------ ------------ --------- --- ---------
<S> <C> <C> <C> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $26,050 $ 655 $ (5,000) (3) $ 21,705
Accounts receivable, net 7,648 457 8,105
Other current assets 2,108 108 2,216
Deferred Tax Asset 4,168 572 4,740
------- ------ -------- --------
Total current assets 39,974 1,792 (5,000) 36,766
Property and equipment, at cost 8,694 175 (87) (5) 8,770
(12) (3)
Less accumulated amortization and
depreciation (4,853) (87) 87 (5) (4,853)
------- ------ -------- --------
Net property and equipment 3,841 88 (12) 3,917
Capitalized software costs, net 319 -- 319
Other assets 972 48 471 (3) 1,491
------- ------ -------- --------
Total assets $45,106 $1,928 $ (4,541) $ 42,493
======= ====== ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable $ 1,482 $ 214 $ -- $ 1,696
Accrued liabilities 8,171 206 1,500 (3) 9,877
Deferred revenue 6,852 1,019 -- 7,871
------- ------ -------- --------
Total current liabilities 16,505 1,439 1,500 19,444
Stockholders' equity:
Preferred Stock -- 212 (212) (4) --
Common Stock 25 11 (11) (4) 25
Capital in excess of par value 32,671 -- 5,000 37,671
Accumulated deficit (2,891) 266 (266) (4) (13,443)
(10,552) (2)
Treasury stock (933) -- -- (4) (933)
Foreign currency translation adjustment (271) -- (271)
------- ------ -------- --------
Total stockholders' equity 28,601 489 (6,041) 23,049
------- ------ -------- --------
Total liabilities and stockholders'
equity $45,106 $1,928 $ (4,541) $ 42,493
======= ====== ======== ========
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
consolidated financial statements.
-18-
<PAGE> 19
<TABLE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
(IN THOUSANDS)
<CAPTION>
PRO- PRO-
APPLIX, SINPER FORMA FORMA
INC. CORP. ADJS. REF ADJUSTED
------- ------ ----- --- --------
<S> <C> <C> <C> <C> <C>
License revenue $26,097 $2,107 $ -- $28,204
Service revenue 10,161 -- 10,161
------- ------ ---- -------
Total revenues 36,258 2,107 -- 38,365
Cost of license revenue 1,714 605 2,319
Cost of service revenue 3,623 86 3,709
------- ------ ---- -------
Gross margin 30,921 1,416 -- 32,337
Operating expenses:
Selling and marketing 15,491 1,116 16,607
Research and development 4,709 572 72 (1) 5,353
General and administrative 2,487 580 3,067
------- ------ ---- -------
Total operating expenses 22,687 2,268 72 25,027
------- ------ ---- -------
Operating income 8,234 (852) (72) 7,310
Interest income (expense), net 985 45 1,030
------- ------ ---- -------
Net income (loss) before
income taxes 9,219 (807) (72) 8,340
Provision for Income taxes
Current (benefit) payable 3,226 (237) 2,989
Deferred (benefit) payable -- 10 10
------- ------ ---- -------
Provision for Income taxes 3,226 (227) 2,999
------- ------ ---- -------
Net income (loss) $ 5,993 $ (580) $(72) $ 5,341
======= ====== ==== =======
Net income per common and
common equivalent share
(see Note C) $ 0.56 $ 0.49
======= =======
Weighted average common
and common equivalent
shares outstanding 10,707 10,859
======= =======
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
consolidated financial statements.
-19-
<PAGE> 20
APPLIX, INC.
<TABLE>
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<CAPTION>
TARGET PRO- PRO-
APPLIX, SYSTEMS FORMA FORMA
INC. CORP. ADJS. REF ADJUSTED
------- -------- -------- --- --------
<S> <C> <C> <C> <C> <C>
License revenue $23,682 $2,219 $ -- $ 25,901
Service revenue 8,661 -- 8,661
------- ------ -------- --------
Total revenues 32,343 2,219 -- 34,562
Cost of license revenue 2,446 271 2,717
Cost of service revenue 3,382 -- 3,382
------- ------ -------- --------
Gross margin 26,515 1,948 -- 28,463
Operating expenses:
Selling and marketing 14,316 573 -- 14,889
Research and development 4,180 382 96 (1) 4,658
General and administrative 2,481 325 -- 2,806
In Process Research & Development 6,200 -- 10,552 (2) 16,752
------- ------ -------- --------
Total operating expenses 27,177 1,280 10,648 39,105
------- ------ -------- --------
Operating income (loss) (662) 668 (10,648) (10,642)
Interest income (expense), net 1,326 13 -- 1,339
------- ------ -------- --------
Net income (loss) before income taxes 664 681 (10,648) (9,303)
Provision for Income taxes
Current (benefit) payable 4,168 143 4,311
Deferred (benefit) payable (4,168) (178) (4,346)
------- ------ -------- --------
-- (35) (35)
------- ------ -------- --------
Net income (loss) $ 664 $ 716 $(10,648) $ (9,268)
======= ====== ======== ========
Net income (loss) per common and common
equivalent share (see Note C) $ 0.07 $ (0.90)
======= ========
Weighted average common and common
equivalent shares outstanding 10,184 10,336
======= ========
</TABLE>
The accompanying notes are an integral part of the unaudited pro forma
consolidated financial statements.
-20-
<PAGE> 21
APPLIX, INC.
NOTES TO UNAUDITED PRO FORMA
CONSOLIDATED FINANCIAL STATEMENTS
ADJUSTMENT REFERENCES:
(1) COMPLETED TECHNOLOGY-OLAP
The current Sinper completed technology runs on a PC platform and is
written in Visual basic. The income forecast method was used in the valuation
of the completed technology by discounting the present value of the projected
cash flows generated by this product over its remaining economic life. The
completed technology will be amortized over a 5 year period during which time
Applix will continue to sell the product. The annual amortization will be
approximately $96,000.
(2) IN-PROCESS R&D TECHNOLOGY
The Company intends to expend significant research and development effort
to create a new product that is run on a 32 bit UNIX platform based on the
acquired technology. The Company considers this UNIX based technology to be
in-process research and development for the following reasons: 1) the current
product is not what Applix expects to ultimately market; 2) the product must be
rewritten to run on the new UNIX platform; and 3) there is not a detailed
design for the product that is to be developed. This UNIX based in-process
technology does not qualify for capitalization under SFAS 86. The income
forecast method was used in the valuation of this technology. Due to the time
and effort necessary to complete the development of this UNIX product, and
numerous uncertainties related to the successful development of the product at
the time of the acquisition, the proper accounting treatment is to immediately
expense $10,552,000 of the purchase price as in-process R&D technology.
<TABLE>
(3) ALLOCATION OF THE PURCHASE PRICE
The aggregate purchase price ($11.5 million) of Sinper consists of cash
of $5.0 million and common stock valued at $5.0 million and the estimated
acquisition costs of approximately $1.5 million. Since the combined valuation
of the completed technology (PC based), in-process R&D technology (UNIX based),
and net book value of assets acquired exceeds the purchase price, the
difference is allocated as negative goodwill. The following shows the
allocation of the purchase price:
<S> <C>
Completed Technology $ 471
In-Process R&D Technology 10,552
Net Book Value of Assets 477
-------
Aggregate Purchase Price $11,500
=======
</TABLE>
(4) THE CAPITAL ACCOUNTS OF SINPER HAVE BEEN ELIMINATED.
(5) THE FIXED ASSET COST IS ADJUSTED TO NET BOOK VALUE AND ACCUMULATED
DEPRECIATION IS ELIMINATED.
-21-
<PAGE> 22
Exhibit Index
-------------
Exhibit
Number Description
- ------ -----------
2.1* Agreement and Plan of Merger dated as
of October 17, 1996 by and among the
Registrant, Applix Acquisition Corp.
and Sinper Corporation. For a list of
omitted Exhibits and Schedules, see
page (iii) of the Table of Contents to
the Agreement and Plan of Merger. The
Registrant will furnish a copy of any
omitted exhibit or schedule to the
Securities and Exchange Commission
upon request.
23.1 Consent of Gustavo E. Casado, Certified Public Accountants
- ------------------------
* Included as an exhibit to the Company's Current Report on Form 8-K, dated
October 31, 1996.
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANT
I consent to the incorporation of my report dated June 14, 1996 on my audit
of the balance sheet of Sinper Corporation (a Florida corporation) as of April
30, 1996 and the related statements of income and retained earnings and cash
flows for the year then ended, which is included in this Current Report on Form
8-K/A and into the Company's previously filed Registration Statements on Forms
S-8, File Nos. 33-89382, 33-87882, 33-87776, 33-32340, 333-2340, 333-06303 and
333-16963.
/s/ Gustavo E. Casado
--------------------------
Gustavo E. Casado,
Certified Public Accountant
Miami, Florida
January 13, 1996
