<PAGE>
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
December 10, 1999
- --------------------------------------------------------------------------------
Date of Report
INFERENCE CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Delaware 000-26334 953436352
- --------------------------------------------------------------------------------------------
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
100 Rowland Drive
Novato, California 94945
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 893-7200
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
================================================================================
<PAGE>
Item 5. Other Events.
-------------
On November 18, 1999, Inference Corporation, a Delaware corporation
("Inference") announced management changes and financial results for the quarter
ended October 31, 1999. A copy of Inference's press release announcing these
management changes and financial results is attached as Exhibit 99.1 hereto and
incorporated by reference herein.
The press release filed as an exhibit to this report includes certain
statements about Inference's business which are "forward-looking" rather than
"historic." The press release also states that a more thorough discussion of
factors affecting Inference's operating results is included in Inference's
public reports filed with the Securities and Exchange Commission, including,
without limitation, Inference's Quarterly Reports on Form 10-Q, Annual Report on
Form 10-K, Current Reports on Form 8-K and Registration Statement on Form S-3.
Item 7. Financial Statements and Exhibits.
---------------------------------
(c) Exhibits.
--- ---------
99.1 Press Release dated November 18, 1999.
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.
INFERENCE CORPORATION
A Delaware Corporation
By: /s/ CHARLES W. JEPSON
-----------------------------------
Charles W. Jepson
President and Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------------------------------------------
99.1 Press Release dated November 18, 1999
<PAGE>
EXHIBIT 99.1
INFERENCE CORPORATION ANNOUNCES THIRD QUARTER RESULTS, MANAGEMENT CHANGES
INCLUDING DEPARTURE OF CFO
RESULTS INCLUDE INVESTMENT IN MAJOR PRODUCTS FOR E-BUSINESS
SALES AND SUPPORT
Novato, Calif. - November 18, 1999 - Inference Corporation (NASDAQ: INFR)
reported that total revenues for the third quarter ended October 31, 1999 were
$5.5 million, a 34% decrease from revenues of $8.3 million during the same
quarter last year. Loss from operations for the quarter was $4.2 million,
compared to operating income of $200,000 in the same quarter last year. The net
loss for the quarter amounted to $3.9 million, or 52 cents per share, as
compared to net income of $400,000, or six cents per share, a year ago.
"Our third quarter results continue to reflect the revenue shortfall
experienced in the first two quarters of the year, as well as increased
investments in product development, sales and marketing. These investments have
resulted in the introduction of two new web-architected products: k-Commerce(TM)
Support Enterprise and k-Commerce(TM) Sales," said Charles Jepson, president and
chief executive officer.
"With the current release of k-Commerce Support Enterprise and the release of
k-Commerce Sales in July, we now have a suite of complimentary products that
solidifies our position as a leading provider of personalized one-to-one sales,
service and support products for the Web. k-Commerce Support Enterprise is
currently available via a hosted service through which Inference builds, manages
and hosts an Internet-based self-service solution to address our customer's
specific Customer Relationship Management (CRM) needs. The Windows NT version is
targeted for release later this year. Momentum is also building for k-Commerce
Sales as evidenced by multiple pilot projects that will be announced in the
coming quarter," continued Jepson.
<PAGE>
"To best capitalize on the opportunities presented by our new offerings, we
have refocused and realigned our resources into two separate product divisions.
Ralph Barletta, former senior vice president of research and development, has
been promoted to senior vice president and general manager of the k-Commerce
Support Enterprise Division while Bob Tatemichi continues his responsibilities
as vice president and general manager of the k-Commerce Sales Division,"
concluded Jepson.
In other management moves, Nigel Doust has been named vice president of
international operations. Nobby Akiha will resume responsibilities as vice
president of marketing and business development. The responsibilities of Greg
Pappas, vice president of human resources, have been expanded to cover all
administrative functions.
Mark A. Wolf, chief financial officer, and Steven Gal, vice president of
marketing will be leaving the Company effective December 3, 1999. The Company
will begin a search for a CFO immediately.
Additional Financial Detail
. Product revenues for the third quarter were $2.3 million, a decrease of 53%
as compared to $4.9 million during the same quarter last year.
. Service revenues were $3.2 million, a decrease of six percent from $3.4
million in the same period last year.
. Revenues from Americas operations were $3.2 million, a 29% decrease from $4.5
million during the same quarter last year.
. International revenues for the quarter were $2.3 million, a 39% decrease from
$3.8 million a year earlier.
. Product revenues from Americas operations were $1.3 million, a decrease from
$2.6 million for the same period last year.
. International product revenues were $1.0 million, down from $2.3 million in
the third quarter of fiscal 1999.
<PAGE>
About Inference Corporation
Inference Corporation (NASDAQ: INFR) is a leading provider of software and
services for customer relationship management and e-business. Inference's k-
Commerce product family leverages a company's knowledge, integrating
personalized, one-to-one sales, service and support across the Web and Contact
Center. Inference helps companies raise customer care to the next level while
taking e-Commerce beyond the transaction.
Headquartered in the San Francisco Bay Area, with international headquarters
near London, England, Inference supports its customers from offices throughout
North America, Europe and Asia Pacific through a global professional services
organization. For further information, contact Inference at 415-893-7200, send
an e-mail to [email protected] or visit www.inference.com.
In addition to historical information contained herein, this news release
contains forward-looking statements that are subject to certain risks, trends
and uncertainties that could cause actual results to differ materially from
those expressed in or implied by such forward looking statements. Factors that
could cause or contribute to differences in the final results include, but are
not limited to, timeliness of new k-Commerce product releases including the
Windows NT version of k-Commerce Support Enterprise, fluctuations in quarterly
operating results, the size and timing of customer orders for product licenses,
changes in the competitive marketplace, market acceptance and customer demand
for k-Commerce product offerings, risks of entering markets in which the company
has limited or no prior experience and the potential loss of key employees.
Third quarter financial results are not an indication of future results. Further
information on potential factors that may affect future results are discussed
from time to time in the Company's public reports filed with the Securities and
Exchange Commission, including, without limitation, the Company's Quarterly
Reports on Form 10-Q, Annual Report on Form 10-K, Current Reports on Form 8-K
and Registration Statement on Form S-3.
<PAGE>
INFERENCE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
[Amounts in thousands, except net income (loss) per share]
[unaudited]
<TABLE>
<CAPTION>
Three months ended Nine months ended
October 31, October 31,
--------------------- --------------------
1999 1998 1999 1998
--------------------- --------------------
<S> <C> <C> <C> <C>
Revenues:
Products.............................................. $ 2,294 $4,912 $ 7,503 $ 12,105
Services.............................................. 3,220 3,412 9,911 10,080
--------------------- -------------------
Total revenues.......................................... 5,514 8,324 17,414 22,185
Operating costs and expenses:
Cost of revenues - products........................... 339 233 744 611
Cost of revenues - services........................... 1,533 1,615 4,915 5,177
Product development................................... 2,167 1,358 5,556 3,860
Sales and marketing................................... 4,546 3,807 12,008 11,278
General and administrative............................ 1,021 853 2,796 3,100
Amortization of intangibles........................... 61 0 122 0
Acquisition related................................... 0 0 677 0
Restructuring......................................... 0 282 0 1,856
--------------------- -------------------
Total operating costs and expenses...................... 9,667 8,148 26,818 25,882
--------------------- -------------------
Income (loss) from operations.......................... (4,153) 176 (9,404) (3,697)
Interest income and other, net.......................... 205 337 718 953
--------------------- -------------------
Income (loss) before income taxes....................... (3,948) 513 (8,686) (2,744)
Provision for income taxes.............................. 0 100 0 100
--------------------- -------------------
Net income (loss)....................................... ($3,948) $ 413 ($8,686) ($2,844)
===================== ===================
Net income (loss) per share:
Basic and diluted..................................... ($0.52) $0.06 ($1.18) ($0.39)
===================== ===================
Shares used in computing net income (loss) per share:
Basic................................................. 7,598 6,992 7,370 7,224
===================== ===================
Diluted............................................... 7,598 7,083 7,370 7,224
===================== ===================
</TABLE>
<PAGE>
INFERENCE CORPORATION
CONSOLIDATED BALANCE SHEETS
[Amounts in thousands]
[unaudited]
<TABLE>
<CAPTION>
October 31, January 31,
1999 1999
---------------- ---------------
<S> <C> <C>
ASSETS
- ------
Current assets:
Cash and cash equivalents.................................. $ 18,813 $ 25,761
Accounts receivable, net................................... 4,945 7,063
Other current assets....................................... 836 433
---------------- ---------------
Total current assets.................................... 24,594 33,257
Property and equipment, net.................................. 1,810 1,607
Intangible assets............................................ 945 0
Other assets................................................. 515 511
---------------- ---------------
$ 27,864 $ 35,375
================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities:
Accounts payable........................................... $ 607 $ 819
Accrued salaries and related items......................... 2,295 2,371
Other accrued liabilities.................................. 2,218 2,785
Deferred revenue........................................... 4,553 4,642
---------------- ---------------
Total current liabilities............................... 9,673 10,617
Shareholders' equity:
Common stock............................................... 76 70
Additional paid-in capital................................. 48,478 46,328
Accumulated deficit........................................ (29,998) (21,312)
Accumulated other comprehensive loss....................... (365) (328)
---------------- ---------------
Total shareholders' equity.............................. 18,191 24,758
---------------- ---------------
$ 27,864 $ 35,375
================ ===============
</TABLE>
