8-K/A 1 jan1802_8ka.txt =============================================================================== 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 Date of Report (date of earliest event reported): November 7, 2001 SCIENT, INC. ------------------------------------------------------ (Exact name of registrant as specified in its charter) DELAWARE 333-68402 58-2643480 ---------------------------- ---------------------- ------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of incorporation) Identification No.) 79 FIFTH AVENUE, FOURTH FLOOR NEW YORK, NY 10003 --------------------------------------- -------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (212) 500-4900 NOT APPLICABLE ----------------------------------------------------------- (Former name or former address, if changed since last report) =============================================================================== Item 2. Acquisition or Disposition of Assets. This Form 8-K/A amends the current report on Form 8-K dated November 8, 2001 to include Item 7 (B) - Pro Forma Financial information. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (B) Pro Forma Financial Information (i) The Scient, Inc. unaudited pro forma condensed combined balance sheet as of September 30, 2001. (ii) The Scient, Inc. unaudited pro forma condensed combined statement of operations for the twelve months ended December 31, 2000 for iXL Enterprises and the twelve months ended March 31, 2001 and the twelve months ended March 31, 2002 for Scient Corporation. (iii) The Scient, Inc. unaudited condensed combined statement of operations for the nine months ended September 30, 2001. UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS The following unaudited pro forma condensed combined financial statements are presented to illustrate the effects of the merger on the historical financial position and operating results of iXL Enterprises, Inc. ("iXL") and Scient Corporation. iXL and Scient Corporation have different fiscal years. iXL has a December 31 year-end while Scient Corporation has a March 31 year-end. Scient, Inc. (the "Company") has a December 31 year-end. The twelve-month unaudited pro forma condensed combined statements of operations are presented using iXL's results for the year ended December 31, 2000 and Scient Corporation's results for the twelve months ended March 31, 2001. The interim period unaudited pro form condensed combined statements of operations are presented using both iXL's and Scient Corporation's results for the nine months ended September 30, 2001. Therefore, Scient Corporation's results for the three months ended March 31, 2001 are included in both the twelve-month and interim unaudited pro forma condensed combined statements of operations. Revenues and net loss for Scient Corporation for the three months ended March 31, 2001 were $27.1 million and $90.2 million, respectively. The following unaudited pro forma condensed combined balance sheet at September 30, 2001 and the unaudited pro forma condensed combined statements of operations give effect to the merger as if it occurred as of January 1, 2001. The unaudited pro forma condensed combined financial statements are presented for illustrative purposes only and do not purport to be indicative of the operating results or financial position that would have actually occurred if the merger had been in effect on the dates indicated, nor is it necessarily indicative of future operating results or financial position of the Company. The pro forma adjustments are based on the information and assumptions available at the time of this filing. Although estimates are preliminary, management does not believe the actual results will differ significantly. The Merger The merger was structured as a stock-for-stock exchange. Prior to the merger, iXL and Scient Corporation formed the Company as a new holding company, and the new holding company formed two wholly owned subsidiaries. Upon the closing of the transaction, iXL merged with II-2 and into one such subsidiary and one such subsidiary merged with and into Scient Corporation. As a result, iXL and Scient Corporation each became a wholly owned subsidiary of the Company. As part of the merger, each share of common stock of iXL was converted into 1.00 share of common stock of the Company, and each share of common stock of Scient Corporation was converted into 1.24 shares of common stock of the Company. As a result of the merger, the former shareholders of iXL have an approximate 50% interest in the Company and the former shareholders of Scient Corporation have an approximate 50% interest in the Company. The merger will be accounted for as an acquisition by iXL of Scient Corporation under the purchase method of accounting for business combinations. Management expects that the strategic benefits of the merger will result in cost saving opportunities for the combined company. These opportunities include, but are not limited to, the ability to reduce real estate leases costs and administrative costs. However, such incremental cost savings have not been reflected in the accompanying pro forma condensed combined financial statements. SCIENT, INC. UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET SEPTEMBER 30, 2001 (in thousands) Pro Forma Scient, Inc. iXL Scient Corp. Adjustments Pro Forma ------------------------------------------------------------------------ ASSETS Current assets: Cash and cash equivalents.............. $ 9,102 $ 32,360 $ 41,462 Restricted cash........................ - 37,341 37,341 Marketable securities and short-term investments...................... 128 18,171 18,299 Accounts receivable, net............... 12,757 12,317 25,074 Unbilled revenue....................... 6,473 - 6,473 Prepaid expenses and other current assets........................... 2,533 5,887 8,420 ---------------------------------------------------------------------- Total current assets............... 30,993 106,076 - 137,069 Property and equipment, net................. 21,221 9,032 30,253 Intangible assets, net...................... 13,273 - 14,504 (1)(3) 27,777 Other non-current assets.................... 4,351 - 4,351 ---------------------------------------------------------------------- Total assets....................... $ 69,838 $ 115,108 $ 14,504 $ 199,450 ====================================================================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:........................ Accounts payable....................... $ 8,542 $ 1,213 9,755 Deferred revenue....................... 4,103 - 4,103 Accrued liabilities.................... 6,911 26,094 3,060 (1) 36,065 Restructuring reserve.................. 11,326 34,678 46,004 Current portion of long-term debt...... 309 3,328 3,637 Borrowings under credit facility....... - - - ---------------------------------------------------------------------- Total current liabilities.......... 31,191 65,313 3,060 99,564 II-3 Long-term restructuring reserve............. 3,356 - 3,356 Long-term debt and warrants................. 15,237 1,285 16,522 Other long-term liabilities................. 2,576 - 2,576 ---------------------------------------------------------------------- Total liabilities.................. 52,360 66,598 $ 3,060 122,018 ---------------------------------------------------------------------- Stockholders' equity:....................... Common stock........................... 975 7 (963)(2) 19 Additional paid in capital............. 638,330 311,878 (248,409)(2) 701,799 Stock subscriptions receivable......... (1,500) - (1,500) Note receivable from stockholders...... (1,821) - (1,821) Accumulated other comprehensive income. (1,576) - (1,576) Unearned compensation.................. (641) (2,840) 2,840 (2) (641) Treasury stock......................... (888) - (888) Retained earnings...................... (615,401) (260,535) 257,976 (2) (617,960) ---------------------------------------------------------------------- Total stockholders' equity......... 17,478 48,510 $ 11,444 77,432 ---------------------------------------------------------------------- Total liabilities and stockholders' equity............. $ 69,838 $ 115,108 $ 14,504 $ 199,450 ====================================================================== See accompanying notes to the unaudited pro forma condensed combined financial information

II-4 SCIENT, INC. UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2000 (in thousands) Scient Corp. Pro Forma Scient, Inc. iXL (A) Adjustments Pro Forma --------------------------------------------------------------------- Revenue: $ 359,336 $ 300,177 $ 659,513 Expenses: Professional services expenses......... 213,754 149,334 363,088 Selling, general and administrative expenses......................... 215,109 171,472 386,581 Stock-based compensation and other..... 4,198 9,402 13,600 Depreciation and amortization.......... 64,501 15,819 $ 3,413 (3) 83,733 Impairment charge on intangible assets........................... 97,402 - 97,402 Restructuring charges.................. 76,588 104,799 181,387 --------------------------------------------------------------------- Loss from operations............... (312,216) (150,649) (3,413) (466,278) Other expense............................... (1,754) (440) (2,194) Interest income............................. 5,391 11,679 17,070 Interest expense............................ (2,118) (562) (2,680) Equity in net losses of affiliates.......... (41,168) - (41,168) --------------------------------------------------------------------- Loss before income taxes........... (351,865) (139,972) (3,413) (495,250) Income tax expense.......................... 600 - 600 --------------------------------------------------------------------- Net loss........................... $(352,465) $(139,972) $(3,413) $(495,850) ===================================================================== Net loss per share:......................... Basic and diluted net loss per common share. $ (4.73) $ (2.13) $ (10.54) ===================================================================== Weighted average common shares outstanding.. 74,593 65,583 47,042 ===================================================================== (A) Scient Corp. is for the 12 months ended March 31, 2001 due to Scient Corp.'s pre-acquisition fiscal year end of March 31. See accompanying notes to the unaudited pro forma condensed combined financial information

II-5 SCIENT, INC. UNAUDITED PRO FORMA CONDENSED COMBINED INCOME STATEMENT FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2001 (in thousands) Pro Forma Scient, Inc. iXL Scient Corp. Adjustments Pro Forma --------------------------------------------------------------------- Revenue: $ 94,497 $ 49,976 $ 144,473 Expenses: Professional services expenses......... 83,078 54,551 137,629 Selling, general and administrative expenses......................... 60,483 59,081 119,564 Stock-based compensation and other..... 382 3,956 4,338 Depreciation and amortization.......... 23,602 6,431 $ 2,559 (3) 32,592 Impairment charge on intangible assets. 17,230 - 17,230 Restructuring charge and other......... 42,733 113,030 155,763 --------------------------------------------------------------------- Loss from operations............... (133,011) (187,073) (2,559) (322,643) Other income................................ 8,074 1,184 9,258 Interest income............................. 1,097 4,265 5,362 Interest expense............................ (3,121) (279) (3,400) Equity in net losses of affiliates.......... - - - --------------------------------------------------------------------- Loss before income taxes........... (126,961) (181,903) (2,559) (311,423) Income tax expense.......................... - - - --------------------------------------------------------------------- Net loss........................... $(126,961) $(181,903) $(2,559) $(311,423) ===================================================================== Net loss per share: Basic and diluted net loss per common share. $ (1.40) $ (2.51) $ (6.62) ===================================================================== Weighted average common shares outstanding.. 90,413 70,548 47,042 ===================================================================== See accompanying notes to the unaudited pro forma condensed combined financial information

Notes to the Unaudited Pro Forma Condensed Combined Financial Statements 1) The purchase price of the merger was based on the number of common shares outstanding of Scient Corporation that would be converted into shares of the Company based upon the agreed ratio as of July 31, 2001. The purchase price and allocation used in preparation of these pro forma statements were computed as follows: Purchase Price (in thousands): Cost of acquired entity....................................$ 62,513 Acquisition expenses (estimated) .......................... 3,060(a.) ------------ Total purchase price.......................................$ 65,573 ============ Preliminary Allocation of Purchase Price (in thousands): Fair value of Scient Corporation net assets at September 30, 2001.......................................$ 48,510 Excess of cost of acquired entity over the fair value of net assets............................................ 17,063(b.) ------------ Total purchase price.......................................$ 65,573 ============ a. Total transaction costs to be incurred in connection with the merger are estimated to be approximately $3.1 million. These costs are presented as an adjustment to accrued liabilities in the unaudited pro forma condensed combined balance sheet. These costs are related to legal, printing, accounting, financial advisory services and other expenses. b. The amount $17.1 million represents the excess of the cost of acquired entity over the fair value of the net assets acquired and has been classified as intangible assets in the accompanying balance sheet. 2) Pro forma adjustments to record the merger as of September 30, 2001 represent an increase in common stock resulting from the issuance of Company shares offset by the elimination of Scient Corporation's existing common stock and a corresponding decrease in additional paid in capital and unearned compensation resulting from the elimination of Scient Corporation's existing additional paid in capital and unearned compensation, offset by the cost of the acquired entity in excess of the par value of the common stock. 3) The purchase price allocation for the acquisition is still preliminary, as our appraiser has not completed its work. Through the appraisal process, the total consideration paid will be allocated to the tangible assets acquired and liabilities assumed, as well as identified intangible assets and to goodwill, if any. Such allocation will be compliant with the recently issued Statements of Financial Accounting Standards No. 141 and 142 (see below). For purposes of this pro-forma we have included the excess of the purchase price over book value of net assets acquired as a one line item to be reallocated primarily to identified intangibles and goodwill once the appraisal is completed. However, there can be no assurance that the actual allocation will not differ significantly from the pro forma allocation. For purposes of pro forma amortization expense, we have assumed a weighted average life of 5 years for this item. Should the allocation of cost over historical net assets acquired differ significantly from the pro forma allocation, amortization expense could be impacted since the depreciable lives of assets other than goodwill may be shorter or longer than 5 years. In July 2001, the Financial Accounting Standards Board (FASB) issued SFAS 141, "Business Combinations". This statement requires that all business combinations be accounted for under the Purchase method of accounting for business combinations initiated after June 30, 2001 and prohibits the use of the pooling - of - interest method of accounting. The acquisitions presented in these proforma financial statements has been accounted for using the purchase method. II-7 In July 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible Assets". This statement requires that goodwill no longer be amortized to earnings, but instead be reviewed for impairment. Impairment tests are required to be performed at least annually. The amortization of goodwill ceases upon adoption of the statement. The statement is effective for fiscal years beginning after December 15, 2001 for companies whose annual reporting period ends on December 31, 2001 and applies to goodwill and other intangible assets recognized in the statement of financial position at that date, regardless of when the assets were initially recognized. We will cease to recognize amortization of certain intangibles starting after January 1, 2002. Pro forma amortization of intangibles for the nine months ended September 30, 2001 and the year ended December 31, 2001 was $2,559 and $3,413, respectively. We will be required to test for impairment of intangibles annually starting January 1, 2002 and may be required to test for impairment during an interim period if events occur that would more likely than not negatively affect the fair value of the company. 4) The pro forma combined weighted average common shares outstanding amount for all periods presented is based on the number of shares outstanding after iXL's stockholders and Scient Corporation's stockholders have received their respective 1.0 and 1.24 shares in the Company. 5) Certain financial statement balances of Scient Corporation have been reclassified to conform with iXL's financial statement presentation. II-8 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. DATED: JANUARY 18, 2002 SCIENT, INC. By: /s/ Jacques Tortoroli NAME: Jacques Tortoroli TITLE: Chief Financial Officer, Secretary and Treasurer

SCIENT INC 8-K/A