UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K/A

Amendment No. 1

 

 

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 17, 2011

 

 

SPS COMMERCE, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware		001-34702		41-2015127
(State of Incorporation)		(Commission File Number)		(IRS Employer Identification No.)
333 South Seventh Street, Suite 1000 Minneapolis, MN				55402
(Address of Principal Executive Offices)				(Zip Code)

Registrant’s Telephone Number, Including Area Code (612) 435-9400

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Explanatory Note

This Amendment No. 1 is being filed to amend and supplement the Current Report on Form 8-K of SPS Commerce, Inc., originally filed with the Securities and Exchange Commission on May 23, 2011, reporting the acquisition of Direct EDI LLC and indicating under Item 9.01(b) that the required pro forma financial information would be filed by amendment. This Amendment No. 1 is being filed to include such financial information.

 

Item 9.01

Financial Statements and Exhibits

 

(b)	Pro Forma Financial Information

The following pro forma financial information is filed herewith as Exhibit 99.4:

 

•

Unaudited pro forma condensed combined balance sheet as of March 31, 2011;

 

•

Unaudited pro forma condensed combined statement of operations for the year ended December 31, 2010;

 

•

Unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2011; and,

 

•

Notes to unaudited pro forma condensed combined financial statements.

 

(d)

Exhibits

 

No.		Description
2.1*		Asset Purchase Agreement, dated as of May 17, 2011, by and between Direct EDI LLC and SPS Commerce, Inc.
23.1**		Consent of Sonnenberg & Company, CPAs, A Professional Corporation
99.1*		Press Release, dated May 18, 2011, announcing the completion of the acquisition
99.2*		Audited financial statements of Direct EDI as of December 31, 2010 and December 31, 2009 and for the year ended December 31, 2010
99.3*		Unaudited financial statements of Direct EDI as of and for the three months ended March 31, 2011 and March 31, 2010
99.4**		Unaudited pro forma condensed combined financial statements and notes

 

*	Previously filed.

**	Filed herewith.

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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.

 

		SPS COMMERCE, INC.
Date: June 22, 2011		By:		/s/ KIMBERLY K. NELSON
				Kimberly K. Nelson
				Executive Vice President and
				Chief Financial Officer

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EXHIBIT INDEX

 

No.		Description
2.1*		Asset Purchase Agreement, dated as of May 17, 2011, by and between Direct EDI LLC and SPS Commerce, Inc.
23.1**		Consent of Sonnenberg & Company, CPAs, A Professional Corporation
99.1*		Press Release, dated May 18, 2011, announcing the completion of the acquisition
99.2*		Audited financial statements of Direct EDI as of December 31, 2010 and December 31, 2009 and for the year ended December 31, 2010
99.3*		Unaudited financial statements of Direct EDI as of and for the three months ended March 31, 2011 and March 31, 2010
99.4**		Unaudited pro forma condensed combined financial statements and notes

 

*	Previously filed.

**	Filed herewith.

Exhibit 23.1

CONSENT OF INDEPENDENT AUDITORS

We have issued our report dated April 20, 2011 accompanying the consolidated financial statements of Direct EDI LLC as of December 31, 2010 and December 31, 2009 and for the year ended December 31, 2010 included in this Current Report on Form 8-K. We hereby consent to the incorporation by reference of said report in the Registration Statements of SPS Commerce, Inc. and subsidiaries on Forms S-8 (File Nos. 333-167314, 333-167315 and 333-172073).

/s/ Sonnenberg & Company, CPAs, A Professional Corporation

San Diego, California

June 16, 2011

Exhibit 99.4

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On May 18, 2011, SPS Commerce, Inc. acquired the assets of Direct EDI LLC, a privately-held provider of cloud-based integration solutions for electronic data interchange. The unaudited pro forma condensed combined financial statements and accompanying notes of the combined business set forth below give effect to the acquisition of Direct EDI as a business combination using the acquisition method of accounting as defined in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 805, Business Combinations.

The unaudited pro forma condensed combined balance sheet as of March 31, 2011 is presented as if the acquisition had occurred on that date. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2010 and for the three months ended March 31, 2011 are presented as if the acquisition had occurred on January 1, 2010.

The unaudited pro forma financial information presented, including the allocation of the purchase price, is based on the historical financial information of SPS Commerce and Direct EDI, our preliminary estimates of the fair values of assets acquired and liabilities assumed, and assumptions that we believe are reasonable under the circumstances. These preliminary estimates and assumptions are subject to change during the measurement period as we finalize the valuation of the net tangible and intangible assets acquired. Assumptions underlying the pro forma adjustments are described in the accompanying notes, which should be read in conjunction with the unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements are provided for illustrative purposes only and are not necessarily indicative of the financial position or results of operations that would have actually been reported had the acquisition occurred on the dates presented, nor is it necessarily indicative of our future financial position or results of operations as of or for any future date or periods. In addition, the unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and/or cost savings that we may achieve with respect to the combined companies and do not include the effects of future restructuring activities, if any, as a result of the acquisition. Actual amounts recorded as of the completion of the acquisition and thereafter may differ materially from the information presented in these unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements should also be read in conjunction with the historical financial statements and accompanying notes of:

 

•

SPS Commerce, Inc. for the year ended December 31, 2010, included in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 3, 2011;

 

•

SPS Commerce, Inc. for the period ended March 31, 2011, included in our Quarterly Report on Form 10-Q as filed with the Securities and Exchange Commission on May 5, 2011; and,

 

•

Direct EDI LLC as of and for the fiscal years ended December 31, 2010 and 2009 and the three months ended March 31, 2011, included as Exhibits 99.2 and 99.3 to our Current Report on Form 8-K as filed with the Securities and Exchange Commission on May 23, 2011.

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SPS COMMERCE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

(In thousands)

 

		As of March 31, 2011
		Historical								Pro Forma
		SPS Commerce				Direct EDI				Adjustments				Combined
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	40,447			$	1,043			$	(12,154	) (a)(b)(c)		$	29,336
Accounts receivable, net			6,356				173				—				6,529
Deferred costs, current			4,887				—				—				4,887
Prepaid expenses and other current assets			1,234				15				—				1,249
Total current assets			52,924				1,231				(12,154	)			42,001
PROPERTY AND EQUIPMENT, net			2,826				41				—				2,867
GOODWILL			1,166				—				4,694	(d)			5,860
INTANGIBLE ASSETS, net			290				—				6,120	(e)			6,410
OTHER ASSETS
Deferred costs, net of current portion			2,031				—				—				2,031
Other non-current assets			80				—				—				80
		$	59,317			$	1,272			$	(1,340	)		$	59,249
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES
Accounts payable		$	1,579			$	90			$	—			$	1,669
Accrued compensation and benefits			3,362				—				—				3,362
Accrued expenses and other current liabilities			944				88				—				1,032
Deferred revenue, current			3,549				498				(498	) (f)			3,549
Total current liabilities			9,434				676				(498	)			9,612
OTHER LIABILITIES
Deferred revenue, less current portion			5,302				176				(176	) (f)			5,302
Other non-current liabilities			244				—				—				244
Total liabilities			14,980				852				(674	)			15,158
STOCKHOLDERS’ EQUITY
Common stock			12				3				(3	) (g)			12
Additional paid-in capital			106,601				—				—				106,601
(Accumulated deficit ) retained earnings			(62,276	)			417				(663	) (c)(g)			(62,522	)
Total stockholders’ equity			44,337				420				(666	)			44,091
		$	59,317			$	1,272			$	(1,340	)		$	59,249

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

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SPS COMMERCE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

 

		For the Year Ended December 31, 2010
		Historical								Pro Forma
		SPS Commerce				Direct EDI				Adjustments				Combined
Revenues		$	44,597			$	4,149			$	—			$	48,746
Cost of revenues			12,626				1,034				—				13,660
Gross profit			31,971				3,115				—				35,086
Operating expenses
Sales and marketing			16,601				901				—				17,502
Research and development			4,349				763				—				5,112
General and administrative			7,985				702				284	(h)			8,971
Amortization of intangible assets			—				—				1,040	(e)			1,040
Total operating expenses			28,935				2,366				1,324				32,625
Income from operations			3,036				749				(1,324	)			2,461
Other income (expense)
Interest expense			(74	)			—				—				(74	)
Interest income			158				—				—				158
Other expense			(144	)			—				—				(144	)
Total other income (expense), net			(60	)			—				—				(60	)
Income before income taxes			2,976				749				(1,324	)			2,401
Income tax expense			(92	)			(10	)			—	(i)			(102	)
Net income		$	2,884			$	739			$	(1,324	)		$	2,299
Net income per share
Basic		$	0.36											$	0.29
Diluted		$	0.25											$	0.20
Weighted average common shares used to compute net income per share
Basic			8,036												8,036
Diluted			11,596												11,596

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

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SPS COMMERCE, INC.

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

 

		For the Three Months Ended March 31, 2011
		Historical								Pro Forma
		SPS Commerce				Direct EDI				Adjustments				Combined
Revenues		$	12,649			$	1,255			$	—			$	13,904
Cost of revenues			3,321				334				—				3,655
Gross profit			9,328				921				—				10,249
Operating expenses
Sales and marketing			5,126				288				—				5,414
Research and development			1,240				191				—				1,431
General and administrative			2,455				224				71	(h)			2,750
Amortization of intangible assets			—				—				261	(e)			261
Total operating expenses			8,821				703				332				9,856
Income from operations			507				218				(332	)			393
Other income (expense)
Interest expense			—				—				—				—
Interest income			32				—				—				32
Other expense			(18	)			—				—				(18	)
Total other income (expense), net			14				—				—				14
Income before income taxes			521				218				(332	)			407
Income tax expense			(29	)			(3	)			—	(i)			(32	)
Net income		$	492			$	215			$	(332	)		$	375
Net income per share
Basic		$	0.04											$	0.03
Diluted		$	0.04											$	0.03
Weighted average common shares used to compute net income per share
Basic			11,864												11,864
Diluted			12,698												12,698

The accompanying notes are an integral part of the unaudited pro forma condensed combined financial statements.

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SPS Commerce, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Note 1. Basis of Presentation

On May 17, 2011, we entered into an asset purchase agreement with Direct EDI LLC, a privately-held provider of cloud-based integration solutions for electronic data interchange, and the parties completed the asset purchase on May 18, 2011. Under the asset purchase agreement, we purchased and acquired substantially all of the assets of Direct EDI for $10.9 million in cash and assumed certain liabilities of Direct EDI.

The acquisition of Direct EDI was accounted for pursuant to FASB ASC 805, Business Combinations. In accordance with ASC 805, we recognized separately from goodwill the fair value of the identifiable assets acquired and the liabilities assumed at the acquisition date as defined by FASB ASC 820, Fair Value Measurements and Disclosures. Goodwill as of the acquisition date was measured as the excess of consideration transferred and the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed.

The unaudited pro forma condensed combined balance sheet as of March 31, 2011 is presented as if the acquisition had occurred on that date. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2010 and for the three months ended March 31, 2011 are presented as if the acquisition had occurred on January 1, 2010.

The unaudited pro forma financial information presented, including the allocation of the purchase price, is based on the historical financial information of SPS Commerce and Direct EDI, our preliminary estimates of the fair values of assets acquired and liabilities assumed, and assumptions that we believe are reasonable under the circumstances. These preliminary estimates and assumptions are subject to change during the measurement period as we finalize the valuation of the net tangible and intangible assets acquired.

In addition, the unaudited pro forma condensed combined financial statements do not reflect any operating efficiencies and/or cost savings that we may achieve with respect to the combined companies and do not include the effects of future restructuring activities, if any, as a result of the acquisition. Actual amounts recorded as of the completion of the acquisition and thereafter may differ materially from the information presented in these unaudited pro forma condensed combined financial statements.

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Note 2. Purchase Price Allocation

The following table summarizes the preliminary allocation of the fair value of assets acquired and liabilities assumed in the acquisition (in thousands):

 

Current assets		$	188
Fixed assets			41
Intangible assets (see Note 3)			6,120
Goodwill			4,694
Current liabilities			(178	)
Total purchase price		$	10,865

Note 3. Pro Forma Adjustments (dollars in thousands)

 

(a)

Cash paid of $10,865 upon closing of the acquisition.

 

(b)

The cash of Direct EDI was not an acquired asset.

 

(c)

Estimated transaction costs of $246 not included in the historical balance sheet.

 

(d)

Goodwill based on the preliminary purchase price allocation (see Note 2).

 

(e)

Preliminary fair values of intangible assets acquired and the related amortization expense for the periods presented. Intangible assets will be amortized on a straight-line basis over their estimated useful lives.

The following table presents information related to the intangible assets acquired:

 

Acquired Intangible Assets		Estimated Fair Value				Estimated Life (Years)		Amortization Expense (Annual)				Amortization Expense (3 months)
Customer relationships		$	5,250			7		$	750			$	188
Non-competition agreements			870			3			290				73
Total		$	6,120					$	1,040			$	261

 

(f)

Difference between the preliminary fair value and the historical amount of Direct EDI’s deferred revenue upon acquisition.

 

(g)

Eliminate the historical common stock and retained earnings of Direct EDI upon acquisition.

 

(h)

Increased compensation related to employment arrangements, entered into as part of the acquisition, of certain Direct EDI executives who were earning below market salaries prior to the acquisition.

 

(i)

No tax adjustments are reflected because the incremental tax expense of Direct EDI would be offset by a corresponding amount of tax benefit resulting from the reversal of the valuation allowance on our net operating loss carryforwards.