<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 Earliest Event Reported: August 6, 1999
USDATA CORPORATION
------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 0-25936 75-2405152
(State or other jurisdiction of (Commission File Number) (IRS Employer
incorporation or organization) Identification No.)
2435 North Central Expressway
Richardson, Texas 75080-2722
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (972) 680-9700
<PAGE> 2
EXPLANATORY NOTE
This Form 8-K/A amends Item 7 of the current report on Form 8-K filed
by USDATA Corporation (the "Company") on August 16, 1999 to include financial
statements that were not available at the time of the filing of the initial
report. The financial statements are required as a result of the August 6, 1999
purchase by the Company of substantially all of the assets and the assumption of
certain liabilities of Smart Shop Software, Inc. ("SSSI").
ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL STATEMENTS
(a). Financial Statements of Smart Shop Software, Inc. as of December 31, 1998
and 1997.
Financial Statements of Smart Shop Software, Inc. as of June 30, 1999,
included in Item 7(b).
2
<PAGE> 3
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and
Shareholders of Smart Shop Software, Inc.
In our opinion, the accompanying balance sheets and the related statements of
operations, of changes in shareholders' deficit and of cash flows present
fairly, in all material respects, the financial position of Smart Shop Software,
Inc. at December 31, 1998 and 1997, and the results of its operations, its
changes in shareholders' deficit and its cash flows for the two years ended
December 31, 1998 in conformity with generally accepted accounting principles.
These financial statements are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
As discussed in Note 8, Smart Shop Software, Inc. has been acquired by USDATA
Corporation. These financial statements do not reflect any adjustments arising
from this transaction.
August 12, 1999
3
<PAGE> 4
SMART SHOP SOFTWARE, INC.
<TABLE>
<CAPTION>
BALANCE SHEETS
- -------------------------------------------------------------------------------------------
December 31,
--------------------------
1998 1997
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 39,805 $ 149,737
Trade accounts receivable, net 128,310 106,431
Prepaid expenses and other current assets 46,059 34,179
----------- -----------
Total current assets 214,174 290,347
----------- -----------
Property and equipment, net 193,573 102,840
----------- -----------
Total assets $ 407,747 $ 393,187
=========== ===========
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Trade accounts payable $ 300,617 $ 158,598
Other accrued liabilities 50,761 12,323
Accrued employee costs 173,295 85,654
Deferred revenue 299,309 221,594
Current portion of capital lease obligation 28,154 7,005
Current portion of note payable to Bank -- 10,000
Current portion of long-term debt 92,427 --
----------- -----------
Total current liabilities 944,563 495,174
Pension contribution payable 13,858 45,961
Capital lease obligation, net of current portion 33,801 22,364
Long-term debt, net of current portion 444,561 256,075
----------- -----------
Total liabilities 1,436,783 819,574
Shareholders' deficit:
Common Stock, $1.00 par value; 100,000 shares authorized;
1,000 shares issued and outstanding 1,000 1,000
Capital in excess of par 10,700 10,700
Retained deficit (1,040,736) (438,087)
----------- -----------
Total shareholders' deficit (1,029,036) (426,387)
----------- -----------
Total liabilities and shareholders' deficit $ 407,747 $ 393,187
=========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 5
SMART SHOP SOFTWARE, INC.
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
- -----------------------------------------------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
--------------- ---------------
<S> <C> <C>
Revenues:
Software licenses $ 1,517,658 $ 1,506,340
Services, including maintenance 877,040 518,614
--------------- ---------------
2,394,698 2,024,954
Cost of revenues 180,465 109,733
--------------- ---------------
Gross margin 2,214,233 1,915,221
--------------- ---------------
Operating expenses:
General and administrative 2,084,413 1,428,567
Sales and marketing 678,488 435,120
--------------- ---------------
Total operating expenses 2,762,901 1,863,687
--------------- ---------------
Income (loss) from operations (548,668) 51,534
Other expense:
Interest expense (53,981) (15,703)
--------------- ---------------
Net income (loss) $ (602,649) $ 35,831
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 6
SMART SHOP SOFTWARE, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIT
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------------
CAPITAL
NUMBER OF IN EXCESS RETAINED
SHARES AMOUNT OF PAR DEFICIT TOTAL
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Balance at
December 31, 1996 1,000 $ 1,000 $ 10,700 $ (473,918) $ (462,218)
Net income 35,831 35,831
----------- ----------- ----------- ----------- -----------
Balance at
December 31, 1997 1,000 1,000 10,700 (438,087) (426,387)
Net loss (602,649) (602,649)
----------- ----------- ----------- ----------- -----------
Balance at
December 31, 1998 1,000 $ 1,000 $ 10,700 $(1,040,736) $(1,029,036)
=========== =========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE> 7
SMART SHOP SOFTWARE, INC.
STATEMENTS OF CASH FLOWS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997
--------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ (602,649) $ 35,831
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 61,832 48,430
Changes in operating assets and liabilities:
Accounts receivable (21,879) (85,552)
Other current and noncurrent assets (11,880) (26,477)
Accounts payable 142,019 93,487
Other accrued liabilities 6,335 18,303
Accrued employee costs 87,641 47,042
Deferred revenue 77,715 67,583
--------------- ---------------
Net cash provided by (used in) operating activities (260,866) 198,647
--------------- ---------------
Cash flows from investing activities:
Capital expenditures, net (97,577) (70,504)
--------------- ---------------
Net cash used in investing activities (97,577) (70,504)
--------------- ---------------
Cash flows from financing activities:
Proceeds from issuance of debt 350,000 --
Repayment of long-term debt (79,087) (30,266)
Repayments of lease obligation (22,402) (483)
--------------- ---------------
Net cash provided by (used in) financing activities 248,511 (30,749)
--------------- ---------------
Change in cash and cash equivalents (109,932) 97,394
Cash and cash equivalents, beginning of period 149,737 52,343
--------------- ---------------
Cash and cash equivalents, end of period $ 39,805 $ 149,737
=============== ===============
Supplemental disclosure of cash flow information -
Interest paid $ 32,851 $ 3,878
Non-cash financing activities:
Lease obligation for the lease of equipment $ 54,988 $ 29,852
</TABLE>
The accompanying notes are an integral part of these financial statements.
7
<PAGE> 8
SMART SHOP SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BACKGROUND
Smart Shop Software, Inc. (the "Company") was incorporated in March 1993,
under the laws of the state of Idaho. The Company is engaged in the
development, manufacturing and marketing of management software
applications, principally for customers in the United States. The Company
is based in Post Falls, Idaho.
FINANCIAL INSTRUMENTS
The fair market value of financial instruments is determined by reference
to various market data and other valuation techniques as appropriate. The
Company believes that the fair values of financial instruments
approximate their recorded values.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand and short-term investments
with original maturities of three months or less.
CONCENTRATIONS OF CREDIT RISK
The Company's financial instruments exposed to concentrations of credit
risk consist primarily of cash and receivables. Cash balances exceeding
the federally insured limits are maintained in financial institutions;
however, management believes the institutions are of high credit quality.
As a consequence, management considers concentrations of credit risks to
be limited.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost and depreciated over their
estimated useful lives of three to seven years. Repair and maintenance
expenditures are charged to operations as incurred, while building
improvements are capitalized and depreciated over the lesser of the lease
term or life of the building. Upon retirement or sale of an asset, the
cost of the asset and the related accumulated depreciation or
amortization are removed from the accounts and any resulting gain or loss
is credited or charged to operations.
REVENUES
Revenue from licensing of standard software is recognized upon delivery
of the software. Revenue from the maintenance of such software and for
transaction fees is recorded over the period such services are provided.
The Company records deferred revenue for amounts invoiced prior to
revenue recognition.
Effective January 1, 1998, the Company adopted Statement of Position No.
97-2, "Software Revenue Recognition" ("SOP 97-2") that was issued by the
Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants ("AICPA") in October 1997. The adoption did
not have a material effect on the Company's financial position or its
results of operations.
8
<PAGE> 9
SMART SHOP SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
ADVERTISING COSTS
The Company's policy for advertising costs is to expense such costs as
incurred. Advertising costs for the years ended December 31, 1998 and
1997 were $161,289 and $99,189, respectively.
RESEARCH AND DEVELOPMENT
Research and development costs are charged to operations in the year
incurred.
INCOME TAXES
The Company has elected to be treated as an S Corporation under
Subchapter S of the Internal Revenue Code. Therefore, no income tax
amounts have been reflected in the financial statements as all income tax
consequences of the Company's activities are passed through to the
Company shareholders.
MANAGEMENT ESTIMATES
In preparing the financial statements in conformity with generally
accepted accounting principles, management is required to make estimates
and assumptions that affect the reported amounts of assets, liabilities,
revenues, and expenses. Actual results may differ significantly from
those estimates.
NEW ACCOUNTING PRONOUNCEMENTS
In December 1998, the AICPA's Accounting Standards Executive Committee
issued Statement of Position No. 98-9, "Modification of SOP 97-2,
Software Revenue Recognition, with Respect to Certain Transactions" ("SOP
98-9"), which amends SOP 97-2 regarding the provisions associated with
vendor specific objective evidence. SOP 98-9 is effective for
transactions entered into beginning after March 15, 1999. The Company
believes the adoption of this statement will not have a material effect
on the Company's financial position or results of operations.
2. PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Computers and equipment $ 291,065 $ 195,576
Furniture 94,477 53,841
Building improvements 16,440 --
------------ ------------
401,982 249,417
Less: Accumulated depreciation (208,409) (146,577)
------------ ------------
Property and equipment, net $ 193,573 $ 102,840
============ ============
</TABLE>
9
<PAGE> 10
SMART SHOP SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
Depreciation and amortization expense on property and equipment was
$61,832 and $48,430 during the years ended December 31, 1998 and 1997,
respectively.
3. LONG-TERM DEBT
In January 1998, the Company entered into a note payable with First Bank
in the amount of $350,000 of which $312,811 was outstanding at December
31, 1998. The note requires monthly installments of $5,810 including
interest at US prime rate plus 1.5% (9.25% at December 31, 1998). The
note is collateralized by all accounts, chattel paper, inventory, general
intangibles, equipment and fixtures, and has a maturity date of January
5, 2005. The note is 90% guaranteed by the United States Department of
Agriculture. At December 31, 1998, the Company was in violation of
certain debt covenants which were subsequently waived by First Bank.
As of December 31, 1997, the Company had a note with US Bank in the
amount of $12,568 that carried an interest rate of US prime rate plus
1.75% (10.25% at December 31, 1997) with monthly payments of principal
and interest of $669. This note was collateralized by equipment. This
note was scheduled to mature on August 15, 1999, but was entirely paid
off in 1998.
As of December 31, 1997, the Company had a note with US Bank in the
amount of $9,390 that carried an interest rate of US prime rate plus
1.75% (10.25% at December 31, 1997) with monthly payments of principal
and interest of $468. This note was collateralized by equipment. This
note was scheduled to mature on September 20, 1999, but was entirely paid
off in 1998.
Principal maturities of long-term debt outstanding at December 31, 1998,
are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
<S> <C>
1999 $ 92,427
2000 46,522
2001 225,129
2002 55,936
2003 61,335
Thereafter 55,639
-----------
$ 536,988
===========
</TABLE>
4. NOTE PAYABLE TO BANK
During 1997, the Company carried a revolving line of credit in the amount
of $10,000 with US Bank at an interest rate of US prime rate plus 1.50%
with monthly payments of interest at the aforementioned rate (10.0% at
December 31, 1997). The line was paid off and closed in 1998.
10
<PAGE> 11
SMART SHOP SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
5. LEASE OBLIGATIONS
The cost and (accumulated depreciation) for equipment under capital
leases as of December 31, 1998 and 1997 was $84,840 and ($25,225) and
$29,852 and ($0), respectively, and is included in property, plant and
equipment.
The future minimum lease payments required under capital leases and the
present value of the net minimum lease payments at December 31, 1998 are
as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1999 $ 40,045
2000 38,702
2001 1,993
-------------
80,740
Less amount representing interest (18,785)
-------------
Present value of net minimum lease payments 61,955
Less amounts due within one year (28,154)
-------------
$ 33,801
=============
</TABLE>
Certain equipment was leased in 1998 under an operating lease that
expires in 2002. The lease requires the Company to maintain the equipment
during the lease term. Approximate minimum lease commitments under
noncancelable operating leases at December 31, 1998 are as follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
------------
<S> <C>
1999 $ 116,018
2000 115,027
2001 21,689
-------------
$ 252,734
=============
</TABLE>
Rent expense for the years ended December 31, 1998 and 1997 was
approximately $118,491 and $52,035, respectively.
6. ACCRUED PENSION BENEFITS
All Company employees are covered by a pension plan maintained by the
Company. This plan is a noncontributory defined benefit plan. Company
contributions are made to the extent allowed for federal income tax
purposes. The benefits for the plan are based primarily on years of
service and employees' qualifying compensations during the final years of
employment. Plan assets consist primarily of money market funds.
11
<PAGE> 12
SMART SHOP SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
In February 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 132, "Employer's
Disclosure about Pensions and Other Postretirement Benefits." This
statement is effective for fiscal years beginning after December 31,
1997. The company adopted this statement for the fiscal year ended
December 31, 1998.
The actuarial assumptions used in determining the pension obligation
under the plan were:
<TABLE>
<CAPTION>
PENSION BENEFITS
DECEMBER 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Weighted average assumptions:
Discount rate 6.00% 6.00%
Expected return on plan assets 5.00% 5.00%
</TABLE>
The following table summarizes the plan's funded and amounts recognized
in the balance sheet:
<TABLE>
<CAPTION>
PENSION BENEFITS
DECEMBER 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Benefit obligation $ (111,092) $ (94,700)
Fair value of plan assets 138,942 94,682
------------ ------------
Funded (unfunded) status $ 27,850 $ (18)
============ ============
Accrued benefit costs $ 13,858 $ 45,961
============ ============
</TABLE>
The following table discloses net periodic benefit cost recognized,
employer contributions, and benefits paid as of the end of plan year:
<TABLE>
<CAPTION>
PENSION BENEFITS
DECEMBER 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Benefit cost $ 16,994 $ 31,484
Employer contributions $ 41,708 $ 45,961
Benefits paid $ -- $ --
</TABLE>
7. RELATED PARTY TRANSACTIONS
The Company has a noninterest-bearing note payable to a shareholder, due
on demand, in the amount of $174,117 and $184,117 at December 31, 1998
and 1997, respectively. Although this note is due on demand, it is not
anticipated to be paid within the next year and has therefore been
classified as non-current.
12
<PAGE> 13
SMART SHOP SOFTWARE, INC.
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The Company has a noninterest-bearing note payable to a brother of a
shareholder, due on demand, in the amount of $50,000 at December 31, 1998
and 1997. This note is anticipated to be paid off within the year and
therefore has been classified as current.
8. SUBSEQUENT EVENTS
Effective July 1, 1999, the Company executed an agreement with USDATA
Corporation ("USDATA") whereby USDATA purchased substantially all of the
Company's assets and liabilities for a purchase price of $8.2 million.
These financial statements do not reflect any adjustments arising from
this transaction.
13
<PAGE> 14
ITEM 7. FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL STATEMENTS
(b). Pro Forma Financial Information.
On August 6, 1999, the Company, through its newly formed wholly owned
subsidiary Smart Shop Software, Inc. (Delaware), completed the purchase of
substantially all of the assets of Smart Shop Software, Inc. ("SSSI"). In
exchange for the assets, the Company assumed certain liabilities, paid to SSSI
$6.4 million and issued an aggregate of 500,000 shares of the Company's common
stock to SSSI's shareholders. The unaudited pro forma combined financial
statements have been prepared from and should be read in conjunction with the
consolidated financial statements and notes thereto for the Company included in
its Annual Report on Form 10-K for the year ended December 31, 1998, and the
audited financial statements of SSSI for the years ended December 31, 1998 and
1997, which are included in this report.
The pro forma combined balance sheet assumes that the acquisition took
place on June 30, 1999 and combines the Company's unaudited June 30, 1999
balance sheet and SSSI's unaudited June 30, 1999 balance sheet.
The pro forma combined statement of operations assumes the acquisition
took place as of the beginning of the periods presented. The combined statement
of operations for the six months ended June 30, 1999 combines the Company's
unaudited condensed consolidated statement of operations for the six months
ended June 30, 1999 and SSSI's unaudited combined statement of operations for
the six months ended June 30, 1999. The combined statement of operations for the
year ended December 31, 1998 combines the Company's audited consolidated
statement of operations for the year ended December 31, 1998 and SSSI's audited
combined statement of operations for the year ended December 31, 1998.
In management's opinion, the pro forma results of operations are not
indicative of the actual results that would have occurred had the acquisition
been consummated at the beginning of the periods presented and is not intended
to be a projection of future results. Pro forma adjustments that give effect to
actions taken by management or other efficiencies expected to be realized as a
result of the transactions, are not reflected in the following pro forma results
of operations. The Company has not completed the allocation of the purchase
price for this acquisition, therefore, the amount of cost in excess of fair
value of tangible net assets purchased may be adjusted once the allocation is
finalized.
14
<PAGE> 15
USDATA CORPORATION
PRO FORMA COMBINED BALANCE SHEET
JUNE 30, 1999
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA
USDATA SSSI ADJUSTMENTS COMBINED
-------- ------ ------------- ----------
ASSETS
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 3,078 $ 66 $ (6,450)(c) $
10,000(d) 6,694
Accounts receivable, net of allowance for doubtful
accounts 4,929 570 -- 5,499
Deferred income taxes 533 -- -- 533
Other current assets 568 25 (16)(a) 577
-------- ------ ------------- ----------
Total current assets 9,108 661 3,534 13,303
-------- ------ ------------- ----------
Property and equipment, net 1,633 181 (27)(a) 1,787
Capitalized computer software development costs, net 4,641 -- -- 4,641
Software held for resale, net 1,168 -- -- 1,168
Excess of cost over fair value of net assets of acquired business -- -- 9,298(b) 9,298
Other assets 140 -- -- 140
-------- ------ ------------- ----------
Total assets $ 16,690 $ 842 $ 12,805 $ 30,337
======== ====== ============= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 893 $ 328 $ (17)(a) $ 1,204
Deferred revenue 1,910 930 -- 2,840
Accrued compensation and benefits 891 94 (13)(a) 972
Other accrued liabilities 1,111 16 (12)(a) 1,115
Current portion of capital lease obligation -- 42 -- 42
Current portion of long-term debt -- 114 (50)(a) 64
-------- ------ ------------- ----------
Total current liabilities 4,805 1,524 (92) 6,237
-------- ------ ------------- ----------
Long-term debt -- 403 403
-------- ------ ------------- ----------
Total liabilities 4,805 1,927 (92) 6,640
-------- ------ ------------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock -- -- 1(d) 1
Common stock 143 1 12(d)
(1)(e) 155
Additional paid-in capital 16,719 11 27(c)
4,988(d)
4,999(d)
(11)(e) 26,733
Retained earnings 5,980 (1,097) 1,097(e) 5,980
Treasury stock (10,332) -- 1,785(c) (8,547)
Other comprehensive income (625) -- -- (625)
-------- ------ ------------- ----------
Total stockholders' equity 11,885 (1,085) 12,897 23,697
-------- ------ ------------- ----------
Total liabilities and stockholders' equity $ 16,690 $ 842 $ 12,805 $ 30,337
======== ====== ============= ==========
</TABLE>
See notes to unaudited pro forma combined financial statements
15
<PAGE> 16
USDATA CORPORATION
PRO FORMA COMBINED STATEMENT OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1999
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA
USDATA SSSI ADJUSTMENTS COMBINED
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $ 12,772 $ 1,628 $ -- $ 14,400
Cost of sales 854 125 -- 979
-------- ------- -------- --------
Gross profit 11,918 1,503 -- 13,421
-------- ------- -------- --------
Operating expenses:
Selling 6,887 477 -- 7,364
Product development 1,225 -- -- 1,225
General and administrative 2,867 1,059 232 (f) 4,158
-------- ------- -------- --------
Total operating expenses 10,979 1,536 232 12,747
-------- ------- -------- --------
Income (loss) from operations 939 (33) (232) 674
Interest income (expense) 35 (23) -- 12
-------- ------- -------- --------
Income (loss) from continuing operations before income taxes 974 (56) (232) 686
Income tax provision (100) -- -- (100)
-------- ------- -------- --------
Net income (loss) 874 (56) (232) 586
======== ======= ======== ========
Other comprehensive income, net of tax:
Foreign currency translation adjustment (66) -- -- (66)
======== ======= ======== ========
Comprehensive income (loss) $ 808 $ (56) $ (232) $ 520
======== ======= ======== ========
Earnings per share (basic & dilutive): $ 0.08 $ 0.04
======== ======= ======== ========
Weighted average shares outstanding:
Basic 11,332 1,705 (c)(d) 13,037
Diluted 11,333 2,780 (c)(d) 14,113
======== ======= ======== ========
</TABLE>
See notes to unaudited pro forma combined financial statements
16
<PAGE> 17
USDATA CORPORATION
PRO FORMA COMBINED STATEMENT OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 1998
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
PRO FORMA
USDATA SSSI ADJUSTMENTS COMBINED
-------- --------- ----------- --------
<S> <C> <C> <C> <C>
Net sales $ 22,861 $ 2,395 $ -- $ 25,256
Cost of sales 1,396 181 -- 1,577
-------- -------- -------- --------
Gross profit 21,465 2,214 -- 23,679
-------- -------- -------- --------
Operating expenses:
Selling 16,052 679 -- 16,731
Product development 2,862 -- -- 2,862
General and administrative 4,910 2,084 464 (f) 7,458
-------- -------- -------- --------
Total operating expenses 23,824 2,763 464 27,051
-------- -------- -------- --------
Loss from operations (2,359) (549) (464) (3,372)
Interest income (expense) 198 (54) -- 144
-------- -------- -------- --------
Loss from continuing operations before income taxes (2,161) (603) (464) (3,228)
Income tax benefit (provision) 67 -- -- 67
-------- -------- -------- --------
Loss from continuing operations (2,094) (603) (464) (3,161)
-------- -------- -------- --------
Discontinued operations:
Loss from discontinued Systems Operations (219) -- -- (219)
Loss on disposal of discontinued System Operations,
including operating losses of $250 (1,500) -- -- (1,500)
-------- -------- -------- --------
Loss from discontinued operations (1,719) -- -- (1,719)
-------- -------- -------- --------
Net loss $ (3,813) $ (603) $ (464) $ (4,880)
======== ======== ======== ========
Other comprehensive income, net of tax:
Foreign currency translation adjustment (559) -- -- (559)
-------- -------- -------- --------
Comprehensive loss $ (4,372) $ (603) $ (464) $ (5,439)
======== ======== ======== ========
Earnings per share:
Basic:
Loss from continuing operations $ (0.19) $ (0.25)
Loss from discontinued operations (0.15) (0.13)
-------- --------
Net loss $ (0.34) $ (0.38)
======== ========
Diluted:
Loss from continuing operations $ (0.19) $ (0.23)
Loss from discontinued operations (0.15) (0.12)
-------- --------
Net loss $ (0.34) $ (0.35)
======== ========
Weighted average shares outstanding:
Basic 11,196 1,704 (c)(d) 12,900
Diluted 11,196 2,780 (c}(d) 13,976
======== ======== ========
</TABLE>
See notes to unaudited pro forma combined financial statements
17
<PAGE> 18
USDATA CORPORATION
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
The following adjustments give pro forma effect to the transaction:
(a) Adjustments to reflect both SSSI assets not acquired and SSSI liabilities
not assumed by the Company as part of the acquisition.
(b) Adjustment to reflect the excess of cost over fair value of the tangible
net assets acquired, resulting from a preliminary allocation of the
purchase price.
(c) Adjustment to reflect cash paid and issuance of 500,000 shares of common
stock to SSSI shareholders.
(d) Adjustment to reflect issuance of 1,204,819 shares of common stock and
50,000 shares of preferred stock.
(e) Eliminate equity accounts of acquired company.
(f) Adjustment to reflect amortization of excess of cost over fair value of the
tangible net assets acquired over an estimated life of 20 years.
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SIGNATURE
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, thereunto duly authorized.
Dated: October 20, 1999
USDATA Corporation
By: /s/ Robert Drury
-------------------------------------
Name: Robert Drury
Title: Chief Financial Officer
19
