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
DATE OF REPORT (Date of earliest event reported): December 17, 1997
NextLevel Systems, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 001-12925 36-4134221
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(State or other jurisdiction of (Commission File No.) (I.R.S. Employer
incorporation or organization) Identification No.)
8770 West Bryn Mawr Avenue, Chicago, Illinois 60631
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(Address of principal executive offices) (Zip Code)
(773)-695-1000
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(Registrant's telephone number, including area code)
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Item 5 Other Events
The Registrant hereby incorporates the Amendment, dated as of December 16, 1997,
to the Rights Agreement, dated as of June 12, 1997 (such amendment being Exhibit
4.1 attached hereto), and the description of the matters set forth in its press
release dated December 17, 1997 (such press release being Exhibit 99.1 attached
hereto).
Item 7 Financial Statements and Exhibits
(c) Exhibits
4.1 Amendment, dated as of December 16, 1997, to the Rights
Agreement, dated as of June 12, 1997, between NextLevel
Systems, Inc. and ChaseMellon Shareholder Services, L.L.C., as
Rights Agent, filed as Exhibit 1 to the Company's Registration
Statement on Form 8-A filed with the Commission on June 30,
1997 (File No. 001-12925)
99.1 The press release issued on December 17, 1997 by NextLevel
Systems, Inc.
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.
NextLevel Systems, Inc.
By: /s/ Keith A. Zar
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Keith A. Zar
Vice President and General Counsel
December 17, 1997
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Date
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EXHIBIT INDEX
Sequential
Page
No. Exhibits No.
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4.1 Amendment, dated as of December 16, 1997, 4
to the Rights Agreement, dated as of June 12, 1997,
between NextLevel Systems, Inc. and
ChaseMellon Shareholder Services, L.L.C.,
as Rights Agent, filed as Exhibit 1 to the
Company's Registration Statement on Form 8-A
filed with the Commission on June 30, 1997
(File No. 001-12925)
99.1 The press release issued on December 17, 1997 7
by NextLevel Systems, Inc.
Exhibit 4.1
AMENDMENT, dated as of December 16, 1997 (this "Amendment"),
to RIGHTS AGREEMENT, dated as of June 12, 1997 (the "Rights Agreement"), between
NextLevel Systems, Inc., a Delaware corporation (the "Company"), and ChaseMellon
Shareholder Services, L.L.C., a New Jersey limited liability company ("Rights
Agent").
WHEREAS, effective as of the date hereof, the Company and
certain partnerships affiliated with Forstmann Little & Co. are entering into
certain transactions (collectively, the "Transaction") with Tele-Communications,
Inc., a Delaware corporation ("TCI"), pursuant to which TCI would acquire shares
of capital stock, warrants to acquire shares of capital stock, and rights of
first refusal with respect to transfers of common stock of the Company.
WHEREAS, pursuant to Section 27 of the Rights Agreement, prior
to the Distribution Date, the Company and the Rights Agent shall, if the Company
so directs, supplement or amend any provision of the Rights Agreement without
the approval of any holders of certificates representing Common Shares.
WHEREAS, the Board of Directors of the Company deems it
advisable to amend the Rights Agreement to specifically exempt from the
operation thereof the Transaction.
Accordingly, in consideration of the premises and the mutual
agreements herein set forth, the parties hereby agree as follows:
1. All capitalized terms used in this Amendment and not
otherwise defined herein shall have the meanings ascribed to them in the Rights
Agreement.
2. Section 1(a) of the Rights Agreement is hereby amended by
adding the following at the end thereof:
"Notwithstanding the foregoing, the term "Acquiring Person"
shall not include TCI and its Subsidiaries, for so long as (i) TCI and its
Subsidiaries do not acquire Beneficial Ownership of any Common Shares other than
pursuant to the Transaction and instruments and agreements forming part of the
Transaction, or (ii) after giving effect to the acquisition of the Beneficial
Ownership of any Common Shares by TCI or a Subsidiary of TCI other than pursuant
to the Transaction, the Common Shares Beneficially Owned by TCI and its
Subsidiaries in the aggregate do not exceed 35% of the then outstanding Common
Shares. For purposes of the preceding sentence, TCI and its Subsidiaries shall
not be deemed to Beneficially Own any Common Shares Beneficially Owned by their
Affiliates and Associates (other than TCI and its Subsidiaries)."
3. Except as otherwise specifically provided herein, the
Rights Agreement shall remain in full force and effect and be unaffected hereby.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and attested, all as of the date and year first
above written.
NEXTLEVEL SYSTEMS, INC.
By: /s/ Keith A. Zar
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Name: Keith A. Zar
Title: Vice President and General
Counsel
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., the Rights Agent
By: /s/ James E. Hagan
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Name: James E. Hagan
Title: Vice President
By: /s/ Julie Roh
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Name: Julie Roh
Title: Relationship Manager
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Media Contact:
Dick Badler
VP, Corporate Communications
773-695-1030
[email protected]
Investor Contact:
Mark Borman
VP, Investor Relations
773-695-1150
[email protected]
NEXTLEVEL SYSTEMS TO SUPPLY AT LEAST 15 MILLION
ADVANCED DIGITAL SET-TOP DEVICES TO CABLE OPERATORS
MSOs To Become Shareholders In NextLevel,
Which Will Change Name Back To General Instrument
Breen Named Chairman and CEO Of General Instrument; Other Executives Named
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CHICAGO, December 17, 1997 - NextLevel Systems, Inc. (NYSE: NLV) today announced
that it has entered into long-term understandings worth a total of at least $4.5
billion over the next 3-5 years to supply at least 15 million advanced digital
set-top devices to nine leading cable system operators (MSOs) under the
industry's Open Cable specifications.
The understandings reached by NextLevel, which is changing its name back to
General Instrument Corporation, include commitments from MSOs representing about
half of the entire cable industry. As part of these understandings, the MSOs
will receive warrants to purchase approximately 16% of General Instrument equity
at a price of approximately $15.00 per share. These warrants will vest only as
set-top orders are actually shipped in the years 1998-2000.
General Instrument will also acquire from Tele-Communications, Inc., in exchange
for approximately 10% of General Instrument equity, the digital transport and
authorization functions of TCI's Head End In The Sky (HITS) organization,
providing the industry a secure platform to support widespread digital
deployment.
(more)
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These transactions are subject to completion of definitive documentation.
In addition, GI intends to establish strategic partnerships with consumer
electronics companies to pursue future digital technology development and retail
distribution.
Edward D. Breen, who was named the Company's President and Acting Chief
Executive Officer on October 16, has been named Chairman and CEO of the new
General Instrument Corporation and will become a member of the Board's Executive
Committee. The Company also named three new officers: Eric M. Pillmore, Vice
President, Finance and Acting Chief Financial Officer; Scott A. Crum, Vice
President of Administration and Employee Resources; and Robert A. Scott, Vice
President Legal and Secretary.
The Company also announced other elements of its plan to improve financial
performance and achieve the full strategic potential of its world-class
communications technologies and market leadership positions. The plan, which was
announced on October 16, 1997, includes:
Cutting costs at its cable/satellite TV operations, including substantial
job reductions at its San Diego and Puerto Rico satellite TV facilities and
consolidation of its Chicago corporate headquarters into its Horsham, PA, cable
TV facility, which will become the headquarters for General Instrument
Corporation. The cost-cutting initiatives will result in annual earnings
improvement of $0.05 to $0.07 per share beginning in 1998 for the new GI.
Continuing to explore the establishment of the Company's advanced
telephony operations, Next Level Communications, as an independent entity. The
telephony unit will continue to do business as NextLevel Communications (NLC).
The GI Board believes that NLC, which is deploying its NLevel(3) Switched
Digital Access (SDA) system under contracts with Bell Atlantic and U S West, has
created significant value that has not been recognized in the Company's stock
price. The Board believes an eventual spin-off of NLC as a public company may be
the best way to grow this business and increase shareholder value.
The Company now expects 1998 earnings of $0.65 to $0.75 per share if after-tax
losses in the NLC telephony unit can be excluded, compared to its October 16,
1997 announced range of $0.45 to $0.50 before corrective actions. The difference
in expectations is the combination of the $0.05 to $0.07 per share in savings in
the cable/satellite TV operations and exclusion of NLC after-tax losses of
$23-28 million ($0.15 to $0.18 per share) in 1998. This unit is expected to
record an after-tax loss of over $30 million ($0.20 per share) in 1997.
(more)
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General Instrument expects to record after-tax charges of $65-100 million ($0.42
to $0.64 per share). These charges, related principally to the restructuring,
will be incurred and recorded by the Company during the fourth quarter of 1997
and first quarter of 1998.
"We have accomplished a great deal in the past 60 days to increase shareholder
value and put our business on a growth track for the future," said Chairman and
CEO Edward D. Breen. "We expect these transactions with the leading cable MSOs
as both customers and shareholders to provide a strong foundation for our
business, accelerate deployment of new consumer services, make Open Cable a
reality and reinforce our market leadership position in the next generation of
technology. We are deeply honored to become partners with so many fine
companies."
General Instrument's cable/satellite TV business is the world leader in both
analog and digital systems that provide video, audio and high-speed
Internet/data services over cable television and satellite networks. The
cable/satellite TV operations have approximately 7,000 employees and annual
sales of approximately $1.8 billion. The telephony business is a start-up with
300 employees that reported its first $3 million of revenues in the most recent
quarter.
To improve the cost structure of cable/satellite TV operations, GI since October
16, 1997 has announced a 16% reduction in headcount through the elimination of
225 positions in its San Diego-based satellite operations (completed); the
closing of its Puerto Rican satellite receiver manufacturing facility and the
elimination of its 1,100 positions (to be completed by the end of 1997); and the
elimination of 20 positions as a result of moving its corporate headquarters
from Chicago to Horsham, PA (to be completed in the first quarter of 1998).
The General Instrument name was chosen for the cable/satellite TV business based
on its strong brand equity in these businesses. Next Level Communications will
retain its name, which is associated in the market as a leader in
next-generation digital telephone access systems. As a result of the name
change, it is expected that the Company's ticker symbol on the New York Stock
Exchange will be changed from NLV to GIC on or about February 2, 1998.
# # #
The information set forth above includes "forward-looking" information and,
accordingly, the cautionary statements contained in Exhibit 99, under the
caption "Forward-Looking Information" in NextLevel System's quarterly report on
Form 10-Q, for the three months ended September 30, 1997, are incorporated
herein by reference. NextLevel Systems' actual results could differ materially
from the "forward-looking" information in this press release.
