SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
June 19, 1998 0-26392
Date of Report (Date of Earliest Commission File Number
Event Reported)
LEVEL 8 SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
New York 11-2920559
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
1250 Broadway
35th Floor
New York, New York 10001
(Address of Principal Executive Offices) (Zip Code)
(212) 244-1234
(Registrant's telephone number, including area code)
Item 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
The registrant submits this Form 8-K/A in order to supply
the pro forma financial information required pursuant to Article
11 of Regulation S-X with respect to the Registrant's disposition
of its wholly owned subsidiary, ProfitKey International, Inc., a
provider of Enterprise Resource Planning software for the make-
to-order manufacturing marketplace. This information should be
read in conjunction with the Registrant's Form 8-K filed with the
Commission on April 21, 1998.
Financial Information of Business Disposed
Exhibit 99.1 Pro Forma Condensed Consolidated Statement of
Earnings for the twelve months ended December 31,
1997.
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 hereunto duly authorized.
LEVEL 8 SYSTEMS, INC.
(Registrant)
Dated: June 19, 1998 By: /s/ Robert Lord
Name: Robert Lord
Title: Executive Vice President
(Duly authorized officer)
Exhibit 99.1
LEVEL 8 SYSTEMS, INC. AND SUBSIDIARIES
Unaudited Pro Forma Condensed Consolidated
Statement of Earnings
The following unaudited pro forma condensed consolidated
statement of earnings for the twelve months ended December 31,
1997 gives effect to the sale by Level 8 Systems, Inc. ("Level
8")of its wholly owned subsidiary, ProfitKey International, Inc.
("ProfitKey"), as if the sale had occurred on January 1, 1997.
The unaudited pro forma condensed consolidated statement of
earnings has been prepared for informational purposes only and
does not purport to present the financial position or the results
of operations of Level 8 had the sale of ProfitKey occurred on
the date indicated, nor is it necessarily indicative of the
results of operations which may be achieved in the future.
The unaudited pro forma condensed consolidated statement of
earnings includes the historical operations of Level 8 and the
historical operations of ProfitKey and should be read in
conjunction with the notes to the unaudited pro forma condensed
consolidated statement of earnings.
<TABLE>
LEVEL 8 SYSTEMS, INC. AND SUBSIDIARIES
Pro Forma Condensed Consolidated Statement of Earnings
For the twelve months ended December 31, 1997
Historical Pro Forma (a),(b)
------------------------ ------------------------
ProfitKey
Level 8 Inter-
Systems, national,
Inc. Inc. Adjustments Adjusted
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUE:
Consulting and
service $ 13,924,256 $ 3,753,634 $ 10,170,622
Software 5,567,860 1,213,748 $ 4,354,112
Other 733,164 577,910 $ 155,254
----------- ----------- -----------
Total revenue 20,225,280 5,545,292 14,679,988
COST OF REVENUE:
Consulting and
service 6,533,409 1,538,276 4,995,133
Software 3,346,825 708,346 2,638,479
Other 543,504 503,538 39,966
----------- ----------- ----------
Total cost of
revenue 10,423,738 2,750,160 7,673,578
GROSS MARGIN 9,801,542 2,795,132 7,006,410
----------- ----------- ----------
OPERATING EXPENSES:
Selling, general and
administrative 7,938,318 2,502,972 5,435,346
Amortization of good-
will and service -
contracts acquired 531,210 - (98,788)(c) 432,422
----------- ----------- ---------- ----------
8,469,528 2,502,972 (98,788) 5,867,768
Operating income
before gain on
sale of business 1,332,014 292,160 98,788 1,138,642
Gain on sale of
business 60,278 - - 60,278
----------- ----------- ------------ ----------
OPERATING INCOME 1,392,292 292,160 98,788 1,198,920
OTHER INCOME (EXPENSE)
Interest income 409,792 - 409,792
Interest expense (22,221) (2,316) (19,905)
----------- ----------- ----------
387,571 (2,316) 389,887
INCOME BEFORE INCOME
TAXES 1,779,863 289,844 98,788 1,588,807
INCOME TAX EXPENSE 690,900 138,214 - 552,686
----------- ----------- ------------ ----------
NET INCOME $ 1,088,963 $ 151,630 $ 98,788 $1,036,121
=========== =========== ============ ==========
NET INCOME PER SHARE
Net income per
share - Basic $ 0.16 $ 0.15
========== ==========
Net income per
share - Diluted $ 0.14 $ 0.14
========== ==========
WEIGHTED AVERAGE
COMMON AND COMMON
EQUIVALENT SHARES
Basic 6,992,398 6,992,398
Diluted 7,561,084 7,561,084
</TABLE>
LEVEL 8 SYSTEMS, INC. AND SUBSIDIARIES
Notes to Unaudited Pro Forma Condensed Consolidated
Statement of Earnings
(a) Level 8 Systems, Inc. ("Level 8") sold ProfitKey
International, Inc. ("ProfitKey") on April 6, 1998. The sale
resulted in a loss of approximately $1,300,000 before a tax
benefit of $270,000. Level 8 recorded this loss in the first
quarter of 1998 as a loss from a discontinued operation. The pro
forma statement of operations for the three months ended March
31, 1998 is not presented here since the sale of ProfitKey was
accounted for as a discontinued operation in Level 8's Quarterly
Report on Form 10-Q for the three months ended March 31, 1998.
(b) Level 8 received $463,615 in cash and a $2,000,000
promissory note from the buyer of ProfitKey. The proceeds from
the sale of ProfitKey were used to repay current working capital
obligations.
(c) To adjust the amortization expense on service contracts and
the related deferred tax benefit arising from the disposition of
ProfitKey.
