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
AUGUST 24, 2001
Date of Report
(Date of earliest event reported)
MEMBERWORKS INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 0-21527 06-1276882
(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
9 West Broad Street
Stamford, Connecticut 06902
(Address of principal executive offices,
including zip code)
(203) 324-7635
(Registrant's telephone number,
including area code)
MEMBERWORKS INCORPORATED
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On August 24, 2001, pursuant to an Agreement and Plan of Merger dated as of
August 7, 2001, as amended by a First Amendment to the Agreement and Plan of
Merger dated as of August 24, 2001, MemberWorks Incorporated ("MemberWorks"), a
Delaware Corporation, sold its subsidiary, iPlace, Inc. ("iPlace"), to
Homestore.com, Inc. ("Homestore"). MemberWorks received approximately $51
million in cash (including the repayment of debt) and 1.6 million shares of
Homestore stock valued at approximately $35 million as of the closing date.
Under the terms of the merger, MemberWorks is prohibited from selling any
Homestore stock for a period of 120 days after the closing date and subsequently
may only sell 1/12th of the shares in any calendar month.
The purchase price paid by Homestore and the other material terms of the Merger
Agreement and related transaction documents were determined by arms-length
negotiations between the Stockholders of iPlace and Homestore.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
Not applicable.
(b) Pro Forma Financial Information
Unaudited Pro Forma Consolidated Condensed Balance Sheet as of June 30,
2001.
Unaudited Pro Forma Consolidated Condensed Statement of Operations for the
year ended June 30, 2001.
Notes to Unaudited Pro Forma Consolidated Condensed Financial Statements.
(c) Exhibits
The following exhibits are included as part of this report:
2.1* Agreement and Plan of Merger by and among Homestore.com, Inc., iPlace,
Inc. and the Stockholders of iPlace, Inc.
2.2* First Amendment to the Agreement and Plan of Merger.
99.1* Press release of Registrant, dated August 27, 2001.
* Previously filed with the Commission with the initial Form 8-K on September
7, 2001.
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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 hereunto duly authorized.
MEMBERWORKS INCORPORATED
(Registrant)
Date: November 6, 2001 By: /s/ Gary A. Johnson
______________________________________
Gary A. Johnson, President and
Chief Executive Officer
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MEMBERWORKS INCORPORATED
The accompanying unaudited pro forma consolidated condensed financial statements
and related notes are presented in accordance with Securities and Exchange
Commission (the "Commission") rules and regulations to illustrate the pro forma
effect of the sale by MemberWorks Incorporated (the "Company") of its
subsidiary, iPlace, Inc. ("iPlace"), to Homestore.com, Inc. ("Homestore")
pursuant to an Agreement and Plan of Merger dated as of August 7, 2001, and
amended by a First Amendment to the Agreement and Plan of Merger dated as of
August 24, 2001.
The unaudited pro forma consolidated condensed balance sheet is based on the
assumption that the sale was completed on June 30, 2001. The unaudited pro forma
consolidated condensed statement of operations is based on the assumption that
the sale was completed on July 1, 2000.
Pro forma data are based on assumptions and include adjustments as explained in
the notes to the unaudited pro forma consolidated condensed financial
statements. The pro forma data are not necessarily indicative of the financial
results that would have occurred had the transaction been effective on July 1,
2000 or June 30, 2001 and should not be viewed as indicative of operations in
future periods. The unaudited pro forma consolidated condensed financial
statements should be read in conjunction with the notes thereto and the
financial statements and footnotes thereto included in the Company's Annual
Report on Form 10-K for the fiscal year ended June 30, 2001.
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MEMBERWORKS INCORPORATED
CONSOLIDATED CONDENSED PRO FORMA BALANCE SHEET (UNAUDITED)
JUNE 30, 2001
(IN THOUSANDS)
MemberWorks iPlace
Historical Pro Forma Historical Pro Forma
June 30, 2001 Adjustments June 30, 2001 Combined
------------- ----------- ------------- ---------
ASSETS
Current assets:
Cash and cash equivalents $ 22,736 $48,836 a,b $ (1,528) $ 70,044
Marketable securities -- 34,540 b -- 34,540
Accounts receivable 20,446 -- (2,423) 18,023
Prepaid membership materials 3,903 -- -- 3,903
Prepaid expenses 5,857 -- (3,109) 2,748
Membership solicitation and other deferred costs 154,059 -- (8,947) 145,112
------- ------ ------- -------
Total current assets 207,001 83,376 (16,007) 274,370
Fixed assets, net 39,687 -- (1,667) 38,020
Goodwill, net 84,395 -- (36,540) 47,855
Intangible and other assets, net 17,378 -- (5,332) 12,046
------- ------ ------- -------
Total assets $ 348,461 $ 83,376 $ (59,546) 372,291
========= ========= ========= =======
LIABILITIES AND SHAREHOLDERS (DEFICIT) EQUITY
Current liabilities:
Current maturities of long-term obligations $ 516 $ -- $ (13) $ 503
Accounts payable 49,505 14,982 a (20,353) 44,134
Accrued liabilities 64,634 1,042 c (4,234) 61,442
Due to related parties 2,028 (2,028)a -- --
Deferred membership fees 243,024 -- (18,157) 224,867
------- ------ ------- -------
Total current liabilities 359,707 13,996 (42,757) 330,946
Long-term liabilities 3,057 -- -- 3,057
------- ------ ------- -------
Total liabilities 362,764 13,996 (42,757) 334,003
------- ------ ------- -------
Minority interest 6,505 -- (6,505) --
Mandatorily redeemable convertible preferred
securities of subsidiary 5,157 -- (5,157) --
Shareholders' (deficit) equity:
Preferred stock, $0.01 par value --
1,000 shares authorized; no shares issued -- -- -- --
Common stock, $0.01 par value --
40,000 shares authorized; 17,308 shares issued 173 -- -- 173
Capital in excess of par value 107,835 -- -- 107,835
Accumulated deficit (80,196) 64,253 d -- (15,943)
Accumulated other comprehensive loss (370) -- -- (370)
Treasury stock -- 1,920 shares at cost (53,407) -- -- (53,407)
------- ------ ------- -------
Total shareholders' (deficit) equity (25,965) 64,253 -- 38,288
------- ------ ------- -------
Total liabilities and shareholders' (deficit) equity $ 348,461 $ 78,249 $ (54,419) $ 372,291
========= ========= ========= =======
See notes to pro forma consolidated condensed financial statements (unaudited)
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MEMBERWORKS INCORPORATED
CONSOLIDATED CONDENSED PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED JUNE 30, 2001
(IN THOUSANDS)
MemberWorks iPlace
Historical Historical Pro Forma
June 30, 2001 June 30, 2001 Combined
------------- ------------- ---------
Revenues $ 475,726 $42,116 $433,610
Expenses:
Operating 90,368 13,767 76,601
Marketing 305,032 23,114 281,918
General and administrative 99,732 20,310 79,422
Amortization of goodwill and other intangibles 10,918 6,413 4,505
Non-recurring charge 3,000 -- 3,000
-------- -------- --------
Operating loss (33,324) (21,488) (11,836)
Net loss on sale of investment (2,172) -- (2,172)
Other (expense) income (450) 78 (528)
-------- -------- --------
(Loss) income before equity in affiliate and minority interest (35,946) (21,410) (14,536)
Equity in income of affiliate 83 -- 83
Minority interest 9,106 9,106 --
-------- -------- --------
Net (loss) income from continuing operations $ (26,757) $ (12,304) $(14,453)
======== ======== =======
Basic earnings from continuing operations per share $(1.75) $ (0.95)
======== =======
Diluted earnings from continuing operations per share $(1.75) $ (0.95)
======== =======
Weighted average common shares used in earnings per
share calculations:
Basic 15,248 15,248
======== =======
Diluted 15,248 15,248
======== =======
See notes to pro forma consolidated condensed financial statements (unaudited)
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MEMBERWORKS INCORPORATED
NOTES TO CONSOLIDATED CONDENSED PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The unaudited pro forma consolidated condensed balance sheet is based on the
Company's audited balance sheet as of June 30, 2001, iPlace's unaudited balance
sheet as of June 30, 2001 and upon the adjustments described below. The
unaudited pro forma consolidated condensed balance sheet is based on the
assumption that the sale was completed on June 30, 2001. The unaudited pro forma
consolidated condensed statement of operations for the year ended June 30, 2001
is based on the Company's audited statement of operations for the year ended
June 30, 2001, iPlace's unaudited statement of operations for the year ended
June 30, 2001 and upon the adjustments described below. The unaudited pro forma
consolidated condensed statement of operations is based on the assumption that
the sale was completed on July 1, 2000.
NOTE 2. PRO FORMA ADJUSTMENTS
The following adjustments have been made to the unaudited pro forma consolidated
condensed balance sheet at June 30, 2001 (in thousands):
a. Represents the receipt of funds from Homestore to repay intercompany
balances owed to MemberWorks and a loan from a related party to iPlace.
Debit -- Cash and cash equivalents $12,954
Debit -- Due to related parties 2,028
Credit -- Accounts payable 14,982
b. Represents the receipt of cash, stock and cash in escrow in exchange for
the sale of iPlace to Homestore.
Debit -- Cash and cash equivalents $32,179
Debit -- Cash and cash equivalents 3,703
Debit -- Marketable securities 34,540
Credit -- Gain on sale 70,422
c. Represents the accrual of sale related costs and taxes.
Debit -- Gain on sale $1,042
Credit -- Accrued liabilities 1,042
d. Represents the gain recognized on the sale of iPlace net of sale related
costs.
Proceeds (see b above) $70,422
Sale related costs (see c above) (1,042)
-------
Net proceeds 69,380
Less: net assets of iPlace 5,127
-------
Gain on sale of iPlace $64,253
=======
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