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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
REPORT OF FOREIGN ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
Date of Report: January 21, 1999
BAAN COMPANY N.V.
Baron van Nagellstraat 89
3770 AC Barneveld
The Netherlands
and
11911 Freedom Drive, Suite 300
Reston, Virginia USA 20190
(Addresses of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
Yes [ ] No [X]
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b):
82- N.A.
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BAAN COMPANY N.V.
FORM 6-K
Baan Company N.V., a corporation incorporated under the laws of the
Netherlands ("Baan Company"), issued a press release dated January 20, 1999 (the
"Press Release") announcing the following principal events: (1) expected results
for its fiscal fourth quarter ended December 31, 1998; (2) the status of the
Company's previously announced restructuring plan, including associated
non-recurring charges of approximately $160 million; (3) the purchase of the
core assets of Baan Midmarket Solutions (BMS) for a purchase price of a minimum
of approximately $32 million and maximum of approximately $80 million; and (4)
the determination to account for the acquisition of CAPS Logistics Inc. on the
purchase method of accounting rather than a pooling of interests.
The Press Release is attached as Exhibit 99.1 to this Report on Form 6-K
and is incorporated by reference herein. The foregoing summary of the Press
Release is qualified in its entirety by reference to the Press Pelease.
Any statements contained in the Press Release that are not historical facts
are forward-looking statements. In particular, statements using the words
"will," "plans," "expects," "believes," "anticipates," or like terms are by
their nature predictions based upon current plans, expectations, estimates, and
assumptions. These statements are subject to a number of risks and uncertainties
that could significantly affect outcomes, which may differ materially from the
expectations, estimates, or assumptions expressed in or implied by any such
forward-looking statements. Specific risks applicable to such forward-looking
statements include risks associated with the failure to conclude any proposed
agreement and/or changing conditions in the marketplace. Other risks and
uncertainties associated with the businesses of Baan Company may be reviewed in
the Company's public filings, including Baan Company's Report on Form 6-K for
its fiscal quarter ended June 30, 1998 and Baan Company's Report on Form 20-F
for 1997. Those documents are publicly on file with the U.S. Securities and
Exchange Commission.
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EXHIBIT NO. DESCRIPTION
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99.1 Press Release of Baan Company N.V. dated January 20, 1999.
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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, thereunto duly authorized.
BAAN COMPANY N.V.
By: /s/ ROBERT GOUDIE
---------------------------------------
Robert Goudie
Senior Vice President, General Counsel
and Secretary to the Board of Directors
Date: January 21, 1999
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EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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99.1 Press Release of Baan Company N.V. dated January 20, 1999.
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EXHIBIT 99.1
Press Release
BAAN COMPANY ANNOUNCES PROGRESS ON KEY CORPORATE
INITIATIVES AND EXPECTED FOURTH QUARTER RESULTS
Baan Company Acquires Baan Midmarket Solutions
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BARNEVELD, THE NETHERLANDS AND RESTON, VIRGINIA, USA -- JANUARY 20, 1999 --
BAAN COMPANY N.V. (ASE: BAAN, NASDAQ: BAANF), a global provider of business
software, announced today that it will report revenues of approximately $142
million and a net loss of $250 million, or ($1.22) loss per share, for its
fiscal fourth quarter ended December 31, 1998. These results reflect decisions
made in response to the significant changes in the market environment identified
by the Company 100 days ago. In response to those market changes, the Company
embarked on an aggressive restructuring plan and moved forward with plans to
clarify its relationship with Vanenburg Ventures B.V., the Company's largest
shareholder. The Company today announced progress on these two initiatives and
provided perspective on the Company's recently completed fourth quarter where,
despite the identified challenges, the Company generated approximately $100
million of new license contract commitments in 567 customer transactions.
The restructuring plan includes previously announced personnel reductions,
office closures, sale of businesses and write down of certain assets.
Non-recurring charges for these activities will account for approximately $160
million of the quarterly loss.
Additionally, changes in market dynamics from the first half of the year
led the Company to conclude that indirect license sales are likely to grow more
slowly in the near term, prompting a decision to reduce revenue in the fourth
quarter by approximately $50 million. This represents the value of license
revenue to Baan Company for product sold to indirect channel
distributors/resellers which had not been sold through to end-users as of the
end of the third quarter 1998. This consists of approximately $17 million that
was sold through to end-users during the fourth quarter, but not recognized as
revenue by the Baan Company during the fourth quarter. The remaining inventory
in the channel of approximately $33 million was reversed from fourth quarter
revenue and recorded as deferred revenue in the quarter. The total impact of the
non-recurring charges and revenue reduction combine to account for approximately
$210 million of the loss for the fourth quarter.
To clarify the Company's relationship with Vanenburg Ventures, the Company
announced three steps.
o First, Baan Company has purchased the core assets of Baan Midmarket
Solutions, which is the entity that re-sells the Company's products into
the indirect channel. The Baan Company will
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pay $2 million cash up front plus 15 percent of net revenues from the Baan
Company reseller channel over the next three years, with a minimum guaranty
of approximately $32 million and a maximum cap of $80 million. Credit
Suisse First Boston has issued a fairness opinion as to the fairness from a
financial point of view to the Baan Company of the consideration being paid
for BMS. The Company's intent is that beginning in the first quarter of
1999, the Baan Company will have no related party license revenue. In
addition, as part of this purchase, the "Baan" name is being eliminated
from all Vanenburg Venture activities, and Vanenburg entities will be
making name changes accordingly. This structure further improves
transparency of Baan Company operations.
o Second, the Company expects to call an extraordinary meeting of
shareholders for the purpose of approving new members to the Supervisory
Board. It is expected this meeting will be held prior to the end of March
and that the Board will expand from its current three members to a more
traditional level of approximately seven members going forward (which will
include additional outside directors). Jan Baan, founder of Baan Company
(and who with his brother Paul Baan exercise effective control over
Vanenburg Ventures) previously announced that he has resigned from the
Management Board of Baan Company. He also announced that he would not serve
on the Supervisory Board of Directors.
o Third, the Company has entered into negotiations with Vanenburg Ventures
regarding the purchase of other software companies owned by Vanenburg
Ventures that license software to Baan Company for resale. It is expected
that these transactions will occur prior to the end of the first quarter.
Finally, the Baan Company has determined that its treatment of the recent
acquisition of CAPS Logistics should be handled on a "purchase" versus a
"pooling" basis. This change in accounting is due to the fact that Vanenburg
Ventures' ownership of Baan Company has changed materially during the past 90
days from just above 39% to a level just under 25% today. This change in
accounting treatment will likely lead to a reduction in third quarter results by
approximately $10 million of transaction related expense and a $6 million
reduction to the tax benefit recorded for the quarter. As a result, the
operating results for the third quarter 1998 will reflect a loss of ($0.24) per
share versus the ($0.16) loss per share as originally reported. The related
amortization of goodwill to be recorded in the fourth quarter and future periods
is expected to be about $3 million per quarter.
"The fourth quarter was an opportunity to take aggressive steps to
stabilize Baan's business and set the stage for restoring revenue growth and
profitability," said Tom Tinsley, Baan Chairman and Chief Executive Officer. "In
lowering our operating expenses to a level of about $200 million per quarter on
a going forward basis, we feel we are ready to meet the short-term challenges
that the change in market conditions has brought about. Further, through the
continued strengthening of our balance sheet we believe we are in a good
position to participate in the long-term attractiveness of the applications
market."
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The Company noted that its end of quarter cash balances was at $206 million
and its deferred revenue increased by $55 million to a level of $162 million.
The cash position was aided by the recent investment of $75 million from
Fletcher International, Ltd. which was announced earlier in January (with a
potential commitment of an additional $150 million.) "At the end of 1997 our
level of deferred revenue was $33 million. We are pleased to exit this
restructuring phase with these levels of cash and deferred revenue.
Additionally, the charges that we have taken for the restructuring program and
write-down of assets on the balance sheet have positioned us in a conservative
manner going forward," said Tinsley.
"While the fourth quarter proved to be difficult as we anticipated, we
achieved a level of approximately $100 million in new license contracting
commitments. Companies like Volvo, AT&T, Delta Airlines, SPX, KPN, GM-Opel and
Usinor all made substantial commitments to utilizing Baan Company products and
services during the fourth quarter. Additionally, we signed license agreements
with 567 customers; of those 374 are new customer relationships," noted Tinsley.
As part of the restructuring, Baan reduced its workforce by about 1250
employees in the quarter, bringing total headcount to about 4975 worldwide.
Additionally, 50 offices were closed or consolidated, and fourteen businesses
were sold during the quarter (or are in the process of being sold).
Given the complexity of the restructuring, the purchase of BMS, and the
accounting for the Caps Logistics transaction, the Company expects to delay its
formal delivery of fourth quarter and year-end results. The Company has also
created a special web page for investors to understand the different elements of
the restructuring in greater detail. This website can be reached via at
www.baan.com.
ABOUT BAAN COMPANY
Founded in 1978, Baan Company is a leading global provider ofenterprise
business software. Baan Company's comprehensive portfolio of best-in-class,
component-based applications for front office, corporate office, and back
office automation are in use at over 7,000 customer sites worldwide. Baan
Company's products reduce complexity, improve core business processes, are
faster to implement and use, more flexible in adapting to business changes and
optimize the management of information throughout the entire value chain. Baan
Company has dual headquarters in Barneveld, The Netherlands and Reston,
Virginia, USA and can be found on the World Wide Web at www.baan.com.
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For more information, please contact:
BAAN COMPANY INVESTOR RELATIONS:
Mark Wabschall
David Spille
Phone: +1.703.467.3201
Or + 31.342.428.609
Email: [email protected]
[email protected]
BAAN COMPANY PUBLIC RELATIONS:
George Thompson Rinze Terluin
Fleishman-Hillard Fleishman-Hillard
Phone: +1.202.215.0424 Office: +31 20 487 4000
Email: [email protected]
Certain statements in this press release are forward-looking statements
within the meaning of the Securities Exchange Act of 1934, as amended. In
particular, statements using the words "will," "plans," "expects," "believes,"
"anticipates," or like terms are by their nature predictions based upon current
plans, expectations, estimates, and assumptions. These statements are subject to
a number of risks and uncertainties that could significantly affect outcomes,
which may differ materially from the expectations, estimates, or assumptions
expressed in or implied by any such forward-looking statements. Specific risks
applicable to such forward-looking statements include risks associated with the
failure to conclude any proposed agreement and/or changing conditions in the
marketplace. Other risks and uncertainties associated with the businesses of
Baan Company may be reviewed in the Company's public filings, including Baan
Company's Report on Form 6-K for its fiscal quarter ended June 30, 1998 and Baan
Company's Report on Form 20-F for the 1997 fiscal year. Those documents are
publicly on file with the U.S. Securities and Exchange Commission.
"Baan" is a registered trademark of Baan Company, and any trade, product,
or service name referenced in this release using the name "Baan" is a trademark
and/or property of Baan Company. All other trade, product, or service names
referenced in this release may be trademarks or registered trademarks of their
respective holders.
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