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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
August 3, 1999
(Date of Report, Date of Earliest Event Reported)
Pacific Research & Engineering Corporation
(Exact name of registrant as specified in its charter)
California
(State or other jurisdiction of incorporation)
001-11773 95-2638420
(Commission File Number) (IRS Employer Identification No.)
2070 Las Palmas Drive, Carlsbad, California 92008
(address of principal executive offices) (Zip Code)
(760) 438-3911
(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS.
The information set forth in the press release dated August 3, 1999
attached hereto as Exhibit 99.1 is incorporated herein by reference in its
entirety.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
The Company's press release dated August 3, 1999 relating to the
Company's second quarter financial results is attached hereto as Exhibit 99.2
and is incorporated herein by reference in its entirety.
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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.
PACIFIC RESEARCH &
ENGINEERING CORPORATION
Date: August 5, 1999 By: /s/ Blake Clark
-----------------------
Blake Clark
Chief Financial Officer
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EXHIBIT INDEX
Exhibit Description
99.1 Press Release, dated August 3, 1999.
99.2 Press Release, dated August 3, 1999.
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EXHIBIT 99.1
HARRIS CORPORATION NEWS RELEASE
HARRIS CORPORATION TO ACQUIRE
PACIFIC RESEARCH & ENGINEERING CORPORATION
MELBOURNE, FL/CARLSBAD, CA, August 3, 1999 - Harris Corporation (NYSE:HRS) and
Pacific Research & Engineering Corporation "PR&E" (ASE:PXE) today jointly
announced the signing of a definitive agreement for Harris to acquire PR&E
through a cash tender offer that values PR&E at approximately $9.5 million,
including the assumption of debt. The board of directors of each company has
unanimously approved the transaction.
Under the terms of the transaction, a subsidiary of Harris will commence a cash
tender offer for all of PR&E's outstanding common shares at a price of $2.35 per
share, all of PR&E's outstanding publicly-traded warrants at a price of $0.15
per warrant, and certain other warrants at a price of $0.15 per each common
share underlying such warrants.
Directors and executive officers of PR&E that hold shares, as well as its
principal shareholder, have agreed to support the transaction and to tender
their shares pursuant to agreements with Harris Corporation. Harris Corporation
and PR&E have also entered into a Stock Option Agreement, pursuant to which PR&E
has granted Harris an irrevocable option to purchase from time to time up to
461,099 authorized and unissued shares (19.9%), at a price of $2.35 per share.
The tender offer is contingent upon customary conditions, including the tender
of at least 90 percent of PR&E's outstanding stock. The tender offer is expected
to commence on or about August 9, 1999 and the acquisition is expected to close
in September, 1999, unless the offer is extended. After the tender is completed,
all non-tendered shares will be converted into the right to receive $2.35 per
share in cash. Harris will consummate the transaction with cash on hand.
"This agreement unites two successful radio businesses and reinforces Harris'
commitment to supply a complete range of solutions including advanced studio
solutions to radio stations worldwide," Jim Woods, vice president, radio systems
business unit of Harris Broadcast Communications Division. "PR&E is a recognized
industry leader in the design, development and integration of analog and digital
radio studio solutions. Their complete range of analog and digital audio
consoles have defined performance and reliability in the studio. Coupled with
Harris' extensive sales and distribution channels as well as our systems design
and integration capabilities, this acquisition brings together two companies
with proven custom engineering, integration and customer service that will
ultimately provide radio broadcasters a comprehensive range of analog and
digital broadcast equipment and systems. PR&E also provides Harris' Broadcast
Communications Division a solid base of operations on the west coast."
"The complementary strengths of the two organizations brings both a wider and
deeper range of services and high-technology products to the rapidly changing
broadcast industry. PR&E's thirty
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years of consulting, custom system design and integration work, along with its
expertise in both analog and digital audio technology, are an excellent fit with
Harris' strategic vision for the domestic and international broadcast
marketplaces. As we merge together with Harris Corporation, we see that our #1
priority of serving our clients will be met on a world-wide basis. The
availability of resources within the two companies will trigger faster paced
solutions in appropriate integration platforms for our client base", says Jack
Williams, PR&E Chairman & CEO. "On a world-wide basis, both companies have been
recognized for their skills. As the two units come together our clients will be
served with a broader base of representatives and a multitude of products and
services will be available to them. We are looking forward to the merger and
enhancing the overall capabilities to support the broadcast marketplace."
Harris is an international communications equipment company focused on providing
product, system and service solutions that take its customers to the next level.
The company provides a wide range of products and services for commercial and
government communications markets such as wireless, broadcast, government and
network support. The company has sales and service facilities in nearly 90
countries.
PR&E manufactures high quality broadcast studio products and provides turnkey
studio design/integration services to the worldwide broadcasting industry.
Products include on-air and production mixing consoles, studio furniture and
systems integration services. For more information, visit PR&E's web site at
www.PRE.com.
This press release contains forward-looking statements made in reliance upon the
safe harbor provisions of the Private Securities Litigation Reform Act of 1995.
Such forward-looking statements reflect management's current assumptions and
estimates of future performance and economic conditions. Harris and PR&E caution
investors that any forward-looking statements are subject to risks and
uncertainties that may cause actual results and future trends and events to
differ materially from those matters expressed in or implied by such
forward-looking statements. Reference is made to Harris' and PR&E's filings with
the Securities and Exchange Commission for a discussion of such facts and risks.
HARRIS MEDIA INQUIRIES: PR&E INQUIRIES:
Jim Burke Don Naab, President/COO
(407) 727-9126 Blake Clark, CFO
(760)438-3911
HARRIS INVESTOR RELATIONS INQUIRIES:
Pamela Padgett
727-9384
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EXHIBIT 99.2
[LOGO] PACIFIC RESEARCH & ENGINEERING CORPORATION
PRESS RELEASE
For Further Information, contact:
Don Naab, President/COO
Blake Clark, CFO
760-438-3911
PACIFIC RESEARCH & ENGINEERING REPORTS SECOND QUARTER RESULTS
CARLSBAD, CA. - AUGUST 3, 1999 - Pacific Research & Engineering Corporation
(AMEX: PXE) today reported a net loss of $654,000, or $0.28 loss per share for
the second quarter ended June 30, 1999 compared to a net loss of $406,000, or
$0.18 loss per share reported for the comparable period of the previous year,
and net income of $90,000, or $0.04 earnings per share for the first quarter of
1999. For the first six months of 1999, the Company reported a net loss of
$564,000, or $0.24 loss per share compared to a net loss of $788,000, or $0.34
loss per share reported for the first six months of 1998.
Net sales for the second quarter of 1999 were $3,154,000, down from net sales of
$4,253,000 for the second quarter of 1998 and net sales of $4,233,000 for the
first quarter of 1999. Net sales for the first six months of 1999 were
$7,387,000, down from net sales of $8,241,000 reported for the first six months
of 1998. Results for the second quarter and first six months of 1999 were
negatively impacted by a decline in overall unit sales of the Company's audio
broadcast equipment and turnkey radio studio solutions. The decline in sales was
primarily attributable to a reduction in the overall number of large studio
system projects compared to prior periods. In addition, the 1998 results
included sales associated with one substantial project for $649,000 in the
second quarter and $1,133,000 in the first six months, respectively. Further,
the Company experienced delays in anticipated customer procurements for
previously planned broadcast equipment and radio studio facilities expenditures.
The Company believes that these procurement delays are the result of broadcast
station ownership consolidation that continues to occur within the Company's
customer base.
The decrease in net loss and loss per share for the first six months of 1999
compared to the same period of 1998 is principally the result of improved gross
profit margins.
The Company also announced today that it has entered into a definitive agreement
with Harris Corporation whereby Harris Corporation will initiate a cash tender
offer to purchase 100% of the outstanding shares of Pacific Research &
Engineering Corporation common stock, all outstanding publicly-traded warrants
and certain other warrants.
PACIFIC RESEARCH & ENGINEERING MANUFACTURERS HIGH QUALITY BROADCAST STUDIO
PRODUCTS AND PROVIDES TURNKEY STUDIO DESIGN AND INTEGRATION SERVICES TO THE
WORLDWIDE BROADCAST INDUSTRY. PRODUCTS INCLUDE ON-AIR AND PRODUCTION MIXING
CONSOLES, STUDIO TECHNICAL CABINETRY AND INTEGRATED SYSTEMS TECHNOLOGIES. PR&E
CLIENTS INCLUDE NBC, ABC, CBS, JACOR COMMUNICATIONS, CHANCELLOR MEDIA, EMMIS
BROADCASTING AND COX COMMUNICATIONS. FOR MORE INFORMATION, VISIT THE COMPANY'S
WEB SITE AT WWW.PRE.COM OR CALL 760-438-3911.
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# # #
PR&E Reports Second Quarter Results - Page 2
Statements used in this press release that relate to future plans, events,
financial results or performance are forward-looking statements as defined under
the Private Securities Litigation Reform Act of 1995. Actual results may differ
materially from those anticipated as a result of certain risks and
uncertainties, including but not limited to delays in product development,
adverse market conditions, market acceptance of current and future products,
competitive pressures, as well as other risks and uncertainties detailed from
time to time in the Company's periodic reports on Forms 10-K, 10-Q and 8-K filed
with the Securities and Exchange Commission. Readers are cautioned not to place
undue reliance on these forward-looking statements, which speak only as of the
date hereof. The Company undertakes no obligation to republish revised
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
(Financial Information Follows on Next Page)
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PR&E Reports Second Quarter Results - Page 3
PACIFIC RESEARCH & ENGINEERING CORPORATION
Unaudited Condensed Statements of Operations
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
For the three months
ended June 30,
1999 1998
---- ----
<S> <C> <C>
Net sales $ 3,154 $ 4,253
Cost of sales 2,103 3,065
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Gross profit 1,051 1,188
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Operating expenses:
General and administrative 541 516
Selling and marketing 666 716
Research and development 316 305
Depreciation and amortization 129 99
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Total operating expenses 1,652 1,636
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Loss from operations (601) (448)
Interest expense, net (51) (42)
Other income (expense), net (1) 84
----------- -----------
Loss before income tax expense (653) (406)
Income tax expense (1) --
----------- -----------
Net loss $ (654) $ (406)
=========== ===========
Net loss per common share:
Basic and diluted $ (0.28) $ (0.18)
Weighted average common shares:
Basic and diluted 2,305,500 2,305,500
</TABLE>
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PR&E Reports Second Quarter Results - Page 4
PACIFIC RESEARCH & ENGINEERING CORPORATION
Unaudited Condensed Statements of Operations
(Dollars in thousands, except share and per share data)
<TABLE>
<CAPTION>
For the six months
ended June 30,
1999 1998
---- ----
<S> <C> <C>
Net sales $ 7,387 $ 8,241
Cost of sales 4,611 5,909
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Gross profit 2,776 2,332
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Operating expenses:
General and administrative 1,115 939
Selling and marketing 1,237 1,366
Research and development 622 603
Depreciation and amortization 236 198
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Total operating expenses 3,210 3,106
----------- -----------
Loss from operations (434) (774)
Interest expense, net (127) (71)
Other income (expense), net (2) 58
----------- -----------
Loss before income tax expense (563) (787)
Income tax expense (1) (1)
----------- -----------
Net loss $ (564) $ (788)
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Net loss per common share:
Basic and diluted $ (0.24) $ (0.34)
Weighted average common shares:
Basic and diluted 2,305,500 2,305,500
</TABLE>
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PR&E Reports Second Quarter Results - Page 5
PACIFIC RESEARCH & ENGINEERING CORPORATION
Condensed Balance Sheet
(Dollars in thousands)
<TABLE>
<CAPTION>
June30, December 31,
1999 1998
(unaudited) (audited)
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 162 $ 321
Accounts receivable, net 982 1,008
Inventories 2,193 2,614
Prepaid expenses 56 34
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Total current assets 3,393 3,977
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Property and equipment, net 1,054 1,164
Capitalized software development costs, net 760 850
Deposits and other assets 133 143
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$ 5,340 $ 6,134
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LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses $ 2,782 $ 2,450
Customer advances 586 1,249
Line of credit 2,175 2,109
Notes payable to shareholder 100 --
Current portion of bank term loan 542 607
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Total current liabilities 6,185 6,415
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Shareholders' deficit (845) (281)
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$ 5,340 $ 6,134
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</TABLE>
