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
Date of Report (Date of earliest event reported): May 31, 2002
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SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware 000-11521 23-1701520
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
4 Country View Road Malvern, Pennsylvania 19355
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (610) 647-5930
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Item 2. Acquisition or Disposition of Assets.
On May 31 2002, Systems & Computer Technology Corporation (the
"Company") consummated the previously announced sale of its Global Manufacturing
& Distribution Solutions business (the "Business") to Agilisys International
Limited, a company organized under the laws of the Cayman Islands (formerly
known as High Process Technology, Inc.) (the "Purchaser") and its affiliated
companies pursuant to an Asset Purchase Agreement (the "Purchase Agreement"),
dated April 10, 2002, by and between the Company and the Purchaser, as amended
by that certain Amendment No. 1 (the "Amendment") dated May 31, 2002 by and
between the Company and the Purchaser. Prior to the closing the Business was
conducted through, and was sold by on the closing date, seven of the Company's
wholly-owned subsidiaries (the "GMDS Subsidiaries"). The Purchaser purchased
substantially all of the assets of the Business for $13.2 million in cash,
subject to adjustment in certain circumstances. Due to such adjustments, which
principally related to the collection of receivables by the Company, the net
proceeds received by the Company were $10.476 million. This amount is subject to
further adjustment based upon the preparation of a closing date balance sheet.
The Company may receive up to an additional $3.0 million pursuant to the Royalty
Agreement (as defined below). The aggregate amount of consideration was
determined by arms-length negotiations between the Company and Purchaser. There
was no material relationship between the Company and the Purchaser or any of
their respective affiliates prior to the sale of the Business.
In connection with the Purchase Agreement, the Company entered into a
Royalty Agreement with Agilisys, Inc., a wholly owned subsidiary of the
Purchaser, (the "Royalty Agreement") whereby the Company has the right to
receive up to $3 million based upon the Business achieving certain specified net
sales targets for each of the three years following the execution of the
Purchase Agreement.
In connection with the Purchase Agreement, the Company entered into a
Non-Competition Agreement (the "Non-Competition Agreement") with the Purchaser
and agreed, on behalf of itself and its affiliates, not to engage, for a period
of four years following the execution of the Non-Competition Agreement, in any
business which, subject to certain exceptions, competes with the Business.
Pursuant to the Non-Competition Agreement, for a period of two years following
the execution of the Non-Competition Agreement, neither the Company nor the
Purchaser, nor any of their respective affiliates, may induce or attempt to
induce any employee of the other party to leave the employ of the other party or
hire or solicit employment from the employees of the other party. Additionally,
the Company has agreed, subject to certain exceptions, to withhold from
disclosure any non-public information regarding the Business.
The Purchase Agreement, the Amendment, the Royalty Agreement and the
Non-Competition Agreement are filed as exhibits to this Current Report on Form
8-K and are incorporated herein by reference. The brief summary of the material
provisions of such agreements set forth above does not purport to be complete
and is qualified in its entirety by reference to the agreements filed as
exhibits hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Business Acquired.
Not Applicable.
(b) Pro Forma Financial Information.
On May 31 2002, the Company sold the Business to the Purchaser pursuant
to the Purchase Agreement. The Business was conducted through, and was sold by
on the closing date, the GMDS Subsidiaries. The Purchaser purchased
substantially all of the assets of the Business for $13.2 million in cash,
subject to adjustment in certain circumstances. Due to such adjustments, which
principally related to the collection of receivables by the Company, the net
proceeds received by the Company were $10.476 million. This amount is subject to
further adjustment based upon the preparation of a closing date balance sheet.
The Company may receive up to an additional $3.0 million pursuant to the Royalty
Agreement. The Business provides software and related services to process
manufacturers and distributors in industries such as food and beverage,
chemicals, pharmaceuticals, and consumer packaged goods.
Pro forma financial information is presented below which discloses the
effects to the statement of operations for the twelve-month period ended
September 30, 2001, as if the sale of the Business had occurred at the beginning
of the period. The pro forma condensed consolidated results for the statement of
operations exclude material non-recurring charges directly attributable to the
transaction (see Note 3). A balance sheet as of March 31, 2002 and statement of
operations for the six months ended March 31, 2002 have not been presented in
the following financial information in this Current Report on Form 8-K as such
balance sheet and statement of operations were included as part of the Company's
Quarterly Report on Form 10-Q for the period ending March 31, 2002.
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2001
(in thousands, except per share amounts)
Global
Manufacturing
As & Distribution Pro Forma
Reported Solutions Results
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Revenues:
Outsourcing services 60,160 (5,189) 54,971
Software sales and commissions 51,087 (10,867) 40,220
Maintenance and enhancements 97,533 (12,183) 85,350
Software services 141,069 (27,176) 113,893
Interest and other income 5,291 (101) 5,190
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355,140 (55,516) 299,624
Expenses
Cost of outsourcing services 47,646 (3,984) 43,662
Cost of software sales, commissions,
maintenance and enhancements 81,991 (15,967) 66,024
Cost of software services 101,281 (18,339) 82,942
Selling, general and administrative 109,916 (29,148) 80,768
Retirement and restructuring charges 5,134 0 5,134
Asset impairment charge 7,831 0 7,831
Interest expense 4,742 (541) 4,201
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358,541 (67,979) 290,562
Income (loss) from continuing operations before income taxes (3,401) 12,463 9,062
Provision (benefit) for income taxes (919) 4,667 3,748
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Income (loss) from continuing operations (2,482) 7,796 5,314
Discontinued operations:
Loss from discontinued operations, adjusted for applicable
benefit for income taxes of $1,420 (2,855) (2,855)
Gain on sale of discontinued operations, net of income
taxes of $13,111 20,155 - 20,155
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Gain from discontinued operations 17,300 - 17,300
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Net income 14,818 7,796 22,614
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Income (loss) per share from continuing operations
per common share (0.08) 0.16
per share -- assuming dilution (0.08) 0.16
Income per share from discontinued operations
per common share 0.53 0.53
per share -- assuming dilution 0.53 0.52
Net income
per common share 0.45 0.69
per share -- assuming dilution 0.45 0.68
Common shares and equivalents outstanding:
Average common shares 32,842 32,842
Average common shares -- assuming dilution 32,842 33,278
See notes to unaudited pro forma condensed consolidated financial statements.
SYSTEMS & COMPUTER TECHNOLOGY CORPORATION
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
1. Basis of Presentation
The unaudited pro forma condensed consolidated results of operations for the
year ended September 30, 2001, has been prepared by applying certain pro forma
adjustments to historical financial information, assuming the sale of Systems &
Computer Technology Corporation's Global Manufacturing & Distributions Solutions
business occurred on October 1, 2000, as described in the notes to unaudited pro
forma condensed consolidated financial statements.
The unaudited pro forma condensed consolidated financial information should be
read in conjunction with the consolidated financial statements and notes thereto
of the Company, which were previously reported in the Company's Annual Report on
Form 10-K for the year ended September 30, 2001, its Quarterly Report on Form
10-Q for the quarter ended March 31, 2002, and other information filed with the
Securities and Exchange Commission. This pro forma statement is based on such
consolidated financial statements after giving effect to the transaction and the
assumptions and adjustments described below. The pro forma information does not
purport to be indicative of the results, which would have been reported if the
transaction had been consummated at the dates indicated, nor necessarily
indicative of future operating results or financial position. These financial
statements have been prepared in accordance with the instructions to Form 8-K
and Article XI of Regulation S-X and do not include certain disclosures required
by generally accepted accounting principles.
The "As Reported" unaudited condensed statement of operations for the year ended
September 30, 2001 has been reclassified to reflect certain reimbursed
out-of-pocket expenses as revenue and expense.
2. Results of Operations
The adjustments entered in the unaudited pro forma condensed consolidated
statement of operations in the column captioned "Global Manufacturing &
Distribution Solutions" reflects the elimination of the reported revenue, costs
of sales, and selling, general and administrative expenses directly associated
with the Business for the period presented and the tax effect of these
adjustments.
3. Material Non-recurring Items
The unaudited pro forma condensed consolidated statement of operations is
intended to present the continuing operations of the Company, before
non-recurring items directly attributable to the sale of the Business.
Accordingly, the pro forma results exclude material non-recurring items that
result directly from the transaction and which have been and will be included in
the operating results of the Company for the periods ending March 31, 2002, and
June 30, 2002. These non-recurring items consist primarily of the loss on the
sale of the Business.
4. Consideration Received
The adjustments entered in the unaudited pro forma condensed consolidated
results of operations in the column captioned "Global Manufacturing &
Distribution Solutions" do not reflect earnings on the cash proceeds of $10,476.
(c) Exhibits.
Exhibit
Number Description
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2.1 Asset Purchase Agreement dated as of April 10, 2002, by and between Systems & Computer Technology
Corporation and High Process Technology, Inc.
2.2 Amendment No. 1 to Asset Purchase Agreement dated May 31, 2002, by and between Systems & Computer
Technology Corporation and Agilisys International Limited.
2.3 Royalty Agreement dated May 31, 2002, by and between Systems & Computer Technology Corporation and
Agilisys, Inc.
2.4 Non-Competition Agreement dated May 31, 2002, by and between Systems & Computer Technology
Corporation and Agilisys International Limited.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned duly authorized.
Date: June 6, 2002 Systems & Computer Technology Corporation
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By: /s/ Eric Haskell
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Eric Haskell
Senior Vice President, Finance &
Administration, Treasurer and Chief
Financial Officer
Exhibit Index
Exhibit
Number Description
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2.1 Asset Purchase Agreement dated as of April 10, 2002, by and between Systems & Computer
Technology Corporation and High Process Technology, Inc.*
2.2 Amendment No. 1 to Asset Purchase Agreement dated May 31, 2002, by and between Systems &
Computer Technology Corporation and Agilisys International Limited.*
2.3 Royalty Agreement dated May 31, 2002, by and between Systems & Computer Technology
Corporation and Agilisys, Inc.
2.4 Non-Competition Agreement dated May 31, 2002, by and between Systems & Computer Technology
Corporation and Agilisys International Limited.
* The exhibits and schedules to Exhibits 2.1 and 2.2 are not filed
herewith pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted
schedule or exhibit will be furnished supplementally to the Securities and
Exchange Commission upon request.