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Microcap & Penny Stocks : AppNet Systems, Inc. (APNT) -- Ignore unavailable to you. Want to Upgrade?

To: Pareto who wrote (228)	7/21/2000 11:39:57 AM
From: Sarkie	Read Replies (1) \| Respond to of 232

Commerce One To Account For AppNet Deal As A Purchase ================================================================ WASHINGTON -(Dow Jones)- Because it plans to account for its pending acquisition of AppNet Inc. (APNT) under the purchase method of accounting, Commerce One Inc. (CMRC) warned in a filing Thursday with the Securities and Exchange Commission that its net losses could increase in the "foreseeable future." For its second quarter ended June 30, Commerce One reported a net loss of $43.1 million, or 28 cents a share. Excluding non-operating losses, second quarter losses totaled $16.2 million, or 10 cents a share. For the first half of 2000, the Pleasanton, Calif. company posted a net loss of $86.8 million, or 57 cents a share. Commerce One, which provides software and services to connect global buyers with suppliers of business goods and services via the Internet, said that intangible assets, including goodwill, will be amortized over a three-year period. Goodwill and other intangible assets are expected to total $1.5 billion, according to the filing. Goodwill is traditionally understood as the difference between the price paid for an acquired company and the fair value of its underlying assets and liabilities. As reported, Commerce One agreed June 20 to issue 0.8 of a common share for each AppNet common share outstanding. AppNet, an interactive marketing company, has about 34 million shares outstanding. In its SEC filing, Commerce One estimated that goodwill charges to operating costs and expenses would total roughly $124 million a quarter and $497 million a fiscal year, assuming amortization in equal quarterly amounts over a three-year period after the merger's close. The company said an additional amount of about $90.9 million of deferred compensation will be amortized to operating costs and expenses over the remaining vesting periods of the related unvested options - ranging from one to four years. Of the intangible assets, Commerce One estimated $28 million would be for assembled workforce, $11.9 million for customer contracts and backlog, $3.5 million for internal proprietary software and $2.3 million noncompete covenants. Goodwill will comprise $1.4 billion. Consequently, "purchase accounting treatment of the merger will increase the net loss for Commerce One in the foreseeable future, which could cause the market value of Commerce One common stock to decline," according to the filing. Separately, AppNet granted Commerce One an option to buy roughly 19.9% of its common shares outstanding as of the first date the option becomes exercisable, Commerce One disclosed in its SEC filing. The option has a strike price of $41.15 a share. "The option is intended to increase the likelihood that the merger will be completed," Commerce One said in the filing. "It may discourage third parties who are interested in acquiring a significant stake in AppNet." The option isn't currently exercisable. Commerce One may only exercise the option if the merger agreement is terminated in certain circumstances similar to those in which the $38.5 million termination fee is payable. -Kevin Guerrero; Dow Jones Newswires/Federal Filings Business News; 202-628-7667 (This story was originally published by Dow Jones Newswires) Copyright (c) 2000 Dow Jones & Company, Inc. All Rights Reserved