<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
AMENDMENT NO. 1 TO CURRENT REPORT
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 3, 1996
Wang Laboratories, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware
----------------------------------------------
(State or other jurisdiction of incorporation)
1-5677 04-2192707
------------------------ ---------------------------------
(Commission File Number) (IRS Employer Identification No.)
600 Technology Park Drive, Billerica, Massachusetts 01821
--------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (508) 967-5000
--------------
<PAGE> 2
The undersigned Registrant hereby amends Item 7 of its Current Report
on Form 8-K dated May 3, 1996 to read in its entirety as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a) Financial Statements of Business Acquired
-----------------------------------------
Report of Independent Accountants
Dataserv, Inc. (a wholly owned subsidiary of BBS Holdings, Inc.)
Consolidated Balance Sheets as of December 31, 1995 and 1994
Dataserv, Inc. (a wholly owned subsidiary of BBS Holdings, Inc.)
Consolidated Statements of Operations for the years ended
December 31, 1995 and 1994
Dataserv, Inc. (a wholly owned subsidiary of BBS Holdings, Inc.)
Consolidated Statements of Stockholder's Equity for the years
ended December 31, 1995 and 1994
Dataserv, Inc. (a wholly owned subsidiary of BBS Holdings, Inc.)
Consolidated Statements of Cash Flows for the years ended
December 31, 1995 and 1994
Dataserv, Inc. (a wholly owned subsidiary of BBS Holdings, Inc.)
Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information
-------------------------------
Pro Forma Combined Condensed Balance Sheet as of December 31,
1995
Pro Forma Combined Condensed Statements of Operations for the six
months ended December 31, 1995 and the year ended June 30, 1995
Notes to Combined Condensed Financial Statements
(c) Exhibits
--------
Item No. Description
------- -----------
*2. Asset and Stock Purchase Agreement Among Wang
Laboratories, Inc., Dataserv, Inc. and Dataserv
Computer Maintenance, Inc. dated as of April 9, 1996
23. Consent of Coopers & Lybrand LLP
- -----------------------------
*Previously filed
<PAGE> 3
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.
WANG LABORATORIES, INC.
Dated: July 2, 1996 By: /s/ Gregory C. Thompson
-----------------------
Gregory C. Thompson
Vice President and
Corporate Controller
<PAGE> 4
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
REPORT ON AUDITS OF CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
<PAGE> 5
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Stockholder of
Dataserv, Inc.:
We have audited the accompanying consolidated balance sheets of Dataserv, Inc.,
a wholly owned subsidiary of BBS Holdings, Inc., as of December 31, 1995 and
1994, and the related consolidated statements of operations, stockholder's
equity and cash flows for the years then ended. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Dataserv, Inc. as
of December 31, 1995 and 1994, and the consolidated results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles.
/s/ Coopers & Lybrand L.L.P.
Minneapolis, Minnesota
January 31, 1996
<PAGE> 6
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
CONSOLIDATED BALANCE SHEETS
as of December 31, 1995 and 1994
(dollars in thousands, except par value per share)
<TABLE>
<CAPTION>
ASSETS 1995 1994
<S> <C> <C>
Current assets:
Cash $ 1,116 $ --
Accounts receivable, net 9,113 15,582
Inventories 10,057 12,334
Deferred income taxes 4,788 8,032
Other current assets 1,983 1,042
------- --------
Total current assets 27,057 36,990
------- --------
Property and equipment, net 33,925 32,403
Other noncurrent assets, net 30 122
------- --------
Total assets $61,012 $ 69,515
======= ========
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Accounts payable $ 2,221 $ 4,743
Accrued expenses 7,562 7,704
Amounts due to parent, net 15,512 16,678
Deferred revenue 457 1,013
Net assets and liabilities of discontinued operations -- 8,559
------- --------
Total current liabilities 25,752 38,697
------- --------
Deferred compensation 1,099 1,008
Deferred income taxes 3,159 1,593
Commitments and contingent liabilities (Note 7)
Stockholder's equity:
Common stock, $.05 par value, 42,500,000 shares authorized, 33,325,000
shares issued and outstanding at December 31, 1995 and 1994 1,666 1,666
Additional paid-in capital 26,551 26,551
Retained earnings 2,785 --
------- --------
Total stockholder's equity 31,002 28,217
------- --------
Total liabilities and stockholder's equity $61,012 $ 69,515
======= ========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
2
<PAGE> 7
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
CONSOLIDATED STATEMENTS OF OPERATIONS
for the years ended December 31, 1995 and 1994
(dollars in thousands)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Revenues:
Maintenance $ 124,978 $ 124,229
Parts sales 4,206 11,545
--------- ---------
Total revenues 129,184 135,774
--------- ---------
Cost of sales and service:
Maintenance 89,586 92,732
Parts sales 3,963 9,657
--------- ---------
Total cost of sales and service 93,549 102,389
--------- ---------
Gross margin 35,635 33,385
Selling, general and administrative expenses 28,067 23,468
Interest expense, net 968 591
--------- ---------
Income from continuing operations before income taxes 6,600 9,326
Provision for income taxes 2,838 3,893
--------- ---------
Income from continuing operations 3,762 5,433
Discontinued operations:
Adjustment related to the disposal of Retail Application
Division (net of income tax expense of $3,192) 3,861 --
--------- ---------
Net income $ 7,623 $ 5,433
========= =========
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
3
<PAGE> 8
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
for the years ended December 31, 1995 and 1994
(dollars in thousands)
<TABLE>
<CAPTION>
Additional Retained
Common Paid-In Earnings
Stock Capital (Deficit)
<S> <C> <C> <C>
Balance at December 31, 1993 $ 1,666 $ 28,960 $(3,815)
Net income -- -- 5,433
Dividends to parent -- (2,409) (1,618)
------- -------- -------
Balance at December 31, 1994 1,666 26,551 --
Net income -- -- 7,623
Dividends to parent -- -- (4,838)
------- -------- -------
Balance at December 31, 1995 $ 1,666 $ 26,551 $ 2,785
======= ======== =======
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
4
<PAGE> 9
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the years ended December 31, 1995 and 1994
(dollars in thousands)
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,623 $ 5,433
Income from discontinued operations (3,861) --
-------- --------
Income from continuing operations 3,762 5,433
Adjustments to reconcile net income from continuing operations
to net cash provided by continuing operating activities:
Depreciation and amortization 9,281 8,209
Provision for losses on accounts receivable 26 64
Provision for inventory writedowns 1,930 1,142
Provision for deferred income taxes 714 371
Changes in assets and liabilities:
Accounts receivable 6,443 (5,536)
Inventories 347 (1,312)
Other current assets (441) (228)
Accounts payable (934) 2,057
Accrued expenses (142) (3,303)
Deferred revenue (556) 24
Deferred compensation 91 129
-------- --------
Net cash provided by continuing operating activities 20,521 7,050
Net cash provided (used) by discontinued operations (771) 2,129
-------- --------
Net cash provided by operating activities 19,750 9,179
-------- --------
Cash flows used in investing activities:
Additions to property and equipment (10,711) (13,603)
Additions to other noncurrent assets -- 91
-------- --------
Net cash used in investing activities (10,711) (13,512)
Cash flows provided (used) by financing activities:
Net borrowings of amounts due to parent (1,497) 8,525
Payment of dividends (4,838) (4,027)
Change in cash overdraft (1,588) (165)
-------- --------
Net cash provided (used) by financing activities (7,923) 4,333
Net increase in cash 1,116 --
Cash at beginning of year -- --
-------- --------
Cash at end of year $ 1,116 --
======== ========
Supplemental cash flow information:
Interest paid $ 962 $ 508
Income taxes paid $ 2,219 $ 4,834
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE CONSOLIDATED FINANCIAL
STATEMENTS.
5
<PAGE> 10
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands)
1. BASIS OF PRESENTATION:
Dataserv, Inc. (the Company) is a wholly-owned subsidiary of BBS Holdings,
Inc. (the Parent), which is ultimately a subsidiary of BellSouth
Corporation (BellSouth). The Company's primary business is the maintenance
and repair of computer equipment and systems throughout the United States.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
PRINCIPLES OF CONSOLIDATION:
The consolidated financial statements of Dataserv, Inc. include the
accounts of the Company and its wholly owned subsidiaries. Significant
intercompany accounts and transactions have been eliminated.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Inventories and repairable maintenance parts are subject to technological
life cycle changes which could impact inventory prices and/or the estimated
useful life of repairable maintenance parts. Provisions are applied against
inventories and repairable maintenance parts to reduce the recorded amount
of excess or obsolete items to their net realizable value.
INVENTORIES:
Inventories consist of replacement parts used in the maintenance and repair
of computer equipment or systems and are stated at the lower of cost
(average cost method) or net realizable value.
PROPERTY AND EQUIPMENT:
Property and equipment is recorded at cost. Depreciation and amortization
is computed on a straight-line basis over estimated useful lives as
follows:
<TABLE>
<CAPTION>
<S> <C>
Buildings 30 years
Leasehold improvements 5-10 years
Equipment 5 years
Repairable maintenance parts 5 years
</TABLE>
6
<PAGE> 11
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(dollars in thousands)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED:
PROPERTY AND EQUIPMENT, CONTINUED:
Expenses for refurbishing repairable parts used in the maintenance business
are charged to operations as incurred. Upon the sale or retirement of
property and equipment, the cost and related accumulated depreciation are
eliminated from the respective accounts and the resulting gain or loss is
included in current operations.
DEFERRED SOFTWARE COSTS:
In accordance with accounting policies established by BellSouth, the
Company defers certain costs associated with externally developed or
purchased software. Upon completion and final implementation of such
software, such amounts are expensed immediately. Amounts deferred during
the development and/or implementation phases are as part of other current
assets.
As of December 31, 1995, the Company had approximately $1,200 of such costs
included in other current assets which will be expensed in 1996.
INCOME TAXES:
For Federal income tax purposes, the results of the Company's operations
are included in BellSouth Corporation's consolidated tax return. In
accordance with the BellSouth Consolidated Federal Income Tax Allocation
Policy, the Company is generally allocated Federal income tax or benefit to
the extent it contributes taxable income or loss to the consolidated group.
Alternative Minimum Tax (AMT) is computed and recognized on a separate
company basis and may consequently reduce the amount of tax benefit or
increase income taxes payable. The Company files separate state tax returns
in the jurisdictions in which it conducts business. Income taxes paid as
disclosed on the statement of cash flows reflects amounts that were paid in
accordance with the Company's tax-sharing agreement.
3. DISCONTINUED OPERATIONS:
In December 1993, the Company's parent adopted a plan to dispose of its
Retail Application Division (RAD). In July 1995, the Company reached final
agreements to sell this division in two separate pieces to two different
parties. Terms of these agreements called for the Company to receive in
1995 and 1996, $3,700 in cash. In addition, during 1995, the Company
incurred and paid approximately $2,100 of transaction related costs.
7
<PAGE> 12
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(dollars in thousands)
3. DISCONTINUED OPERATIONS, CONTINUED:
At December 31, 1995, the Company has recorded as part of other current
assets a receivable of $500 related to a payment received in January 1996.
Remaining payments of $1,061 due in 1996 will be recognized by the Company
upon receipt. In addition, under the terms of one of the agreements the
Company has the right to receive royalty payments in connection with the
purchaser attaining certain revenue levels over a period of three years
from the agreement date. No such royalties were recognized in 1995. All
other amounts related to discontinued operations have been reflected in the
adjustment related to the disposal of RAD as presented on the Company's
consolidated statement of operations.
<TABLE>
Revenues and operating losses related to discontinued operations in 1995
and 1994 were as follows:
<CAPTION>
1995 1994
<S> <C> <C>
Revenues $ 1,361 $11,535
======= =======
Operating losses $ 2,849 $ 692
======= =======
</TABLE>
<TABLE>
The following summarizes the net assets and liabilities of discontinued
operations at December 31, 1994, as reflected in the consolidated balance
sheets:
<CAPTION>
<S> <C>
Accounts receivable, net $ 1,329
Inventories, net 271
Property and equipment, net 422
Other assets and (liabilities), net (1,209)
Provision for loss on disposal (9,372)
-------
Net assets and liabilities of discontinued operations $(8,559)
=======
</TABLE>
4. RELATED PARTY TRANSACTIONS:
The Company has a revolving credit line agreement with its Parent in the
form of unsecured notes, due upon demand, bearing interest at a rate
approximating the Parent's commercial paper rate. The line does not have an
established limit. The interest rate at December 31, 1995 and 1994 was
5.03% and 5.75%, respectively. Interest expense relating to the line
amounted to $970 and $570, for the years ended December 31, 1995 and 1994,
respectively. Outstanding borrowings under the line were $16,850 and
$17,000 at December 31, 1995 and 1994, respectively.
8
<PAGE> 13
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(dollars in thousands)
4. RELATED PARTY TRANSACTIONS, CONTINUED:
Refundable income taxes of $1,338 and $395 as of December 31, 1995 and
1994, respectively, are included in amounts due to parent in accordance
with the Company's tax-sharing agreement.
Selling, general and administrative expenses of $1,526 and $1,493 in 1995
and 1994, respectively, have been recognized by the Company in connection
with services performed by various BellSouth Subsidiaries.
5. INCOME TAXES:
The Company accounts for income taxes in accordance with the provisions of
Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting
for Income Taxes." The Statement requires that deferred income taxes
reflect the tax consequences on future years of differences between the tax
bases of assets and liabilities and their financial reporting amounts. In
addition, this accounting standard requires the recognition of future tax
benefits, such as net operating loss carryforwards, to the extent that
realization of such benefits is more likely than not.
The components of income tax expense from continuing operations are as
follows:
<TABLE>
<CAPTION>
Current Deferred Total
<S> <C> <C> <C>
Year ended December 31, 1995:
Federal $ 1,979 $ 308 $ 2,287
State 476 75 551
------- -------- -------
Total $ 2,455 $ 383 $ 2,838
======= ======== =======
Year ended December 31, 1994:
Federal $ 2,860 $ 301 $ 3,161
State 662 70 732
------- -------- -------
Total $ 3,522 $ 371 $ 3,893
======= ======== =======
</TABLE>
9
<PAGE> 14
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(dollars in thousands)
5. INCOME TAXES, CONTINUED:
The differences between the Company's effective tax rate and the Federal
statutory tax rate on continuing operations are explained below:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Federal statutory tax rate 35.0% 35.0%
State income taxes, net of Federal income tax benefit 5.4 4.6
Other (primarily nondeductible expenses) 2.6 2.1
---- ----
Effective tax rate 43.0% 41.7%
==== ====
</TABLE>
The components of deferred tax assets and liabilities are as follows:
<TABLE>
<CAPTION>
1995 1994
------------------------ ---------------------
ASSETS LIABILITIES ASSETS LIABILITIES
<S> <C> <C> <C> <C>
Inventory capitalization $ 903 $ -- $ 970 $ --
Nondeductible reserves 3,315 -- 2,320 --
Depreciation and amortization -- 2,514 -- 1,593
Vacation costs 570 -- 505 --
Discontinued operations, net -- 242 4,185 --
Other, net -- 403 52 --
------ ------- ------ -------
$4,788 $ 3,159 $8,032 $ 1,593
====== ======= ====== =======
</TABLE>
6. BENEFIT PLAN:
The Company has a defined contribution savings plan for its employees who
have completed a qualified period of employment. The plan provides for
participant and employer matching contributions. The plan was amended
October 1, 1995 and the plan assets were transferred to a new plan trustee.
Under the amended plan, the Company will match 50% of participant
contributions up to a maximum amount of $1. The Company may also make
discretionary contributions as determined by senior management. The cost of
the plan to the Company related to matching and discretionary contributions
approximated $733 and $311 for the years ended December 31, 1995 and 1994,
respectively.
10
<PAGE> 15
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(dollars in thousands)
7. COMMITMENTS AND CONTINGENT LIABILITIES:
The Company is party to various claims, legal actions and complaints
arising in the ordinary course of business. In the opinion of management,
all such matters are without merit or are adequately covered by insurance,
or if not so covered, are of such kind or involve such amounts that
unfavorable disposition would not have a material effect on the results of
operations or financial position of the Company.
The Company's headquarters, certain warehouse and ancillary office space,
and certain equipment, are currently rented under lease agreements which
are classified as operating leases for financial statement purposes. These
leases expire at various times through the year 2000. The following is a
schedule of future minimum rental payments required under leases that have
an initial or remaining noncancellable term of over one year at December
31, 1995:
<TABLE>
<CAPTION>
Year Ending December 31
<S> <C>
1996 $ 1,611
1997 597
1998 590
1999 590
2000 538
Thereafter 63
-------
$ 3,989
=======
</TABLE>
Rent expense related to continuing operations was $1,606 and $1,498 for the
years ended December 31, 1995 and 1994, respectively.
As further discussed in Note 10, the Company, in 1996, intends to enter
into a sale/leaseback transaction on its existing facility in Chanhassen,
MN. In connection with this transaction the Company will not renew its
existing operating lease on its corporate headquarters when such lease
expires in July 1996.
8. MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK:
Gross sales to customers exceeding 10% of total sales for the years ended
December 31, 1995 and 1994 were as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1995 DECEMBER 31, 1994
<S> <C> <C>
Customer A 28% 31%
Customer B 14% 11%
Customer C 14% 11%
Customer D 11%
</TABLE>
11
<PAGE> 16
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(dollars in thousands)
8. MAJOR CUSTOMERS AND CONCENTRATIONS OF CREDIT RISK, CONTINUED:
Financial instruments which subject the Company to concentrations of credit
risk consist principally of trade accounts receivable. Accounts receivable
are primarily from retail and insurance industry customers located
throughout the United States. Payment of these receivables is in part
dependent upon the economic conditions affecting the retail and insurance
industries. The Company evaluates each customer's credit worthiness on a
case-by-case basis. The Company requires no collateral from its customers.
Certain maintenance contracts, however, are maintained on a prepaid basis.
9. ADDITIONAL FINANCIAL INFORMATION:
The following sets forth the components of certain balance sheet amounts at
December 31:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Accounts receivable, net:
Trade accounts $ 9,676 $ 16,055
Other -- 67
Less allowance for uncollectibles (563) (540)
-------- ---------
$ 9,113 $ 15,582
======== =========
Property and equipment, net:
Land and building $ 7,209 $ 7,134
Leasehold improvements 1,703 4,152
Equipment 13,513 21,756
Recyclable maintenance parts and machines 36,970 36,134
-------- ---------
59,395 69,176
Less accumulated depreciation and amortization (25,470) (36,773)
-------- ---------
$ 33,925 $ 32,403
======== =========
</TABLE>
Cash overdrafts of $1,588 at December 31, 1994 have been included in accounts
payable in the accompanying consolidated balance sheet.
12
<PAGE> 17
DATASERV, INC.
(A WHOLLY OWNED SUBSIDIARY OF BBS HOLDINGS, INC.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
(dollars in thousands)
10. SUBSEQUENT EVENTS:
In December 1995, BellSouth signed a letter of intent with an unrelated
party to sell all of the assets of the Company. Terms of the agreement have
not yet been finalized.
As part of the above transaction, the Company also intends to enter into a
sale/leaseback arrangement with another unrelated party. The Company will
sell its land and building located in Chanhassen, MN and subsequently lease
these premises back from that party under a long-term lease agreement. This
transaction is anticipated to be finalized concurrently with the
transaction discussed above.
13
<PAGE> 18
PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS
The following Pro Forma Combined Condensed Balance Sheet as of December 31, 1995
and the Pro Forma Combined Condensed Statements of Operations for the six months
ended December 31, 1995 and the year ended June 30, 1995 give effect to the
acquisition by Wang Laboratories, Inc. (the "Company") of all of the outstanding
shares of Dataserv Computer Maintenance, Inc. ("Dataserv") as if the acquisition
had occurred on December 31, 1995 for purposes of the balance sheet and at July
1, 1994 for purposes of the statements of operations. The pro forma information
is based on the historical financial statements of the Company and Dataserv,
giving effect to the transaction under the purchase method of accounting and the
assumptions and adjustments in the accompanying notes to the pro forma financial
information.
The pro forma information does not purport to be indicative of the financial
position or results of operations that would have been attained had the
combination been in effect on the dates indicated nor of future results of
operations of the Company. The pro forma combined condensed financial statements
should be read in conjunction with the separate audited financial statements and
notes thereto of Wang Laboratories, Inc. included in its Form 10-K for the year
ended June 30, 1995 and the audited financial statements and notes thereto of
Dataserv, Inc. contained elsewhere herein. Dataserv, Inc. is a wholly owned
subsidiary of BBS Holdings, Inc., which is ultimately a subsidiary of BellSouth
Corporation. Dataserv is a wholly owned subsidiary of Dataserv, Inc.
<PAGE> 19
<TABLE>
PRO FORMA COMBINED CONDENSED BALANCE SHEET (1)
DECEMBER 31, 1995
(Unaudited)
(Dollars in millions)
<CAPTION>
Historical Historical Pro Forma Pro Forma
Wang Dataserv Adjustments(2) Combined
---------- ---------- -------------- --------
<S> <C> <C> <C> <C>
Assets
Current assets
Cash and equivalents $130.0 $ 1.1 $(28.5) $102.6
Accounts receivable, net 230.4 9.1 -- 239.5
Inventories 26.0 10.1 (10.1) 26.0
Other current assets 38.0 6.8 (6.5) 38.3
------ ----- ------ ------
Total current assets 424.4 27.1 (45.1) 406.4
Depreciable assets, net 122.2 33.9 (2.2) 153.9
Other 26.8 -- -- 26.8
Intangible assets, net 268.4 -- -- 268.4
------ ----- ------ ------
Total assets $841.8 $61.0 $(47.3) $855.5
====== ===== ====== ======
Liabilities and stockholders' equity
Current liabilities
Borrowings due within one year $ 2.9 $15.5 $(15.5) $ 2.9
Accounts payable, accrued
expenses and other 289.6 9.8 3.4 302.8
Deferred service revenue 82.2 0.5 -- 82.7
------ ----- ------ ------
Total current liabilities 374.7 25.8 (12.1) 388.4
Long-term liabilities 118.2 4.2 (4.2) 118.2
Redeemable preferred stock 148.3 -- -- 148.3
Stockholders' equity 200.6 31.0 (31.0) 200.6
------ ----- ------ ------
Total liabilities and stockholders'
equity $841.8 $61.0 $(47.3) $855.5
====== ===== ====== ======
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Statements
<PAGE> 20
<TABLE>
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (1)
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
(Unaudited)
(Dollars in millions, except per share data)
<CAPTION>
Historical Historical Pro Forma Pro Forma
Wang Dataserv Adjustments Combined
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net Revenue $556.7 $60.2 (3) $(1.1)(4) $615.8
Costs and Expenses
Cost of revenues 373.6 44.3 (1.0)(4) 416.9
Research and development 18.3 -- -- 18.3
Selling, general and administrative 126.5 14.8 (0.7)(4)(5)(6)(7) 140.6
Acquisition-related charges 27.2 -- -- 27.2
Amortization of intangibles 21.4 -- -- 21.4
------ ----- ----- ------
Total costs and expenses 567.0 59.1 (1.7) 624.4
------ ----- ----- ------
Operating income (loss) (10.3) 1.1 0.6 (8.6)
Other (income) expense (3.7) 0.5 0.3 (8)(9) (2.9)
------ ----- ----- ------
Income (loss) from continuing
operations before income taxes (6.6) 0.6 0.3 (5.7)
Provision (benefit) for income taxes 7.2 0.3 (0.3)(10) 7.2
------ ----- ----- ------
Income (loss) from continuing
operations (13.8) 0.3 0.6 (12.9)
Discontinued operations -- 3.9 (3.9)(11) --
------ ----- ----- ------
Net income (loss) (13.8) 4.2 (3.3) (12.9)
Accretion and dividends on preferred
stock (6.8) -- -- (6.8)
------ ----- ----- ------
Net income (loss) applicable to
common stockholders $(20.6) $ 4.2 $(3.3) $(19.7)
====== ===== ===== ======
Weighted average shares outstanding 35.8 35.8
Net loss per share $(0.58) $(0.55)
====== ======
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Statements
<PAGE> 21
<TABLE>
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS (1)
FOR THE YEAR ENDED JUNE 30, 1995
(Unaudited)
(Dollars in millions, except per share data)
<CAPTION>
Historical Historical Pro Forma Pro Forma
Wang Dataserv Adjustments Combined
---------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Net Revenue $ 947.2 $131.3 (3) $(6.9)(4) $1,071.6
Costs and expenses
Cost of revenues 656.2 94.6 (6.4)(4) 744.4
Research and development 31.5 -- -- 31.5
Selling, general and administrative 230.0 24.5 (2.0)(4)(5)(6)(7) 252.5
Acquisition-related charges 64.2 -- -- 64.2
Amortization of intangibles 32.0 -- -- 32.0
-------- ------ ----- --------
Total costs and expenses 1,013.9 119.1 (8.4) 1,124.6
-------- ------ ----- --------
Operating income (loss) (66.7) 12.2 1.5 (53.0)
Other (income) expense (9.0) 0.8 0.7 (8)(9) (7.5)
-------- ------ ----- --------
Income (loss) from continuing
operations before income taxes (57.7) 11.4 0.8 (45.5)
Provision (benefit) for income taxes 3.6 4.8 (4.8)(10) 3.6
-------- ------ ----- --------
Income (loss) from continuing
operations (61.3) 6.6 5.6 (49.1)
Discontinued operations -- -- -- --
-------- ------ ----- --------
Net income (loss) (61.3) 6.6 5.6 (49.1)
Accretion and dividends on preferred
stock (8.7) -- -- (8.7)
-------- ------- ----- --------
Net income (loss) applicable to
common stockholders $ (70.0) $ 6.6 $ 5.6 $ (57.8)
======== ======= ===== ========
Weighted average shares outstanding 34.2 34.2
Net loss per share $ (2.04) $ (1.69)
======== ========
</TABLE>
See Notes to Pro Forma Combined Condensed Financial Statements
<PAGE> 22
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) On May 3, 1996 ("Closing Date") Wang Laboratories, Inc. (the "Company")
completed the acquisition pursuant to the Stock Purchase Agreement among the
Company, Dataserv Inc. and Dataserv Computer Maintenance, Inc. ("Dataserv")
dated as of April 9, 1996 of all the outstanding shares of Dataserv. In
consideration for the shares of Dataserv the Company paid $28.5 million in
cash, subject to completion of an audit of the initial closing statement, as
defined in the Stock Purchase Agreement. Dataserv provides customers with
computer maintenance and support services for industry-standard servers,
desktop products, point-of-sale retail scanners and registers, as well as
application helpdesk and network integration services. The Pro Forma Combined
Condensed Balance Sheet has been prepared based on the Company's and Dataserv's
respective December 31, 1995 audited consolidated balance sheets. The Company
has a fiscal year end of June 30 while Dataserv has a fiscal year end of
December 31. Therefore, the pro forma statement of operations for the six
months ended December 31, 1995, includes the Company's historical results for
the six months ended December 31, 1995, and the Dataserv results for the fiscal
year ended December 31, 1995 less the results for the six months ended June 30,
1995. The pro forma statement of operations for the year ended June 30, 1995
includes the Company's historical results for the year ended June 30, 1995 and
the Dataserv results for the six months ended December 31, 1994 and for the six
months ended June 30, 1995.
(2) To adjust the historical balance sheet of Dataserv to equal the assets
acquired and the liabilities assumed. The following purchase price and
purchase accounting adjustments were made to the historical balance sheet:
- Pro forma consideration of $28.5 million in cash paid for Dataserv.
The determination of the final purchase price is dependent on the net
working capital of Dataserv at the Closing Date, which may be affected
by post-closing adjustments.
- Reclassification of inventories to depreciable assets of $10.1 million
to conform with the Company's financial statement classifications.
- Elimination of certain other current assets, principally deferred
income taxes of $4.8 million.
- Reduction to depreciable assets of $8.1 million for land and buildings
not acquired, the reclassification of depreciable assets from
inventories of $10.1 million and the allocation of negative goodwill
of $4.2 million.
- Elimination of amounts due to Dataserv's parent not assumed by the
Company of $15.5 million.
- Accrual of transaction and integration costs totalling $3.4 million.
- Eliminate certain long-term liabilities not assumed by the Company of
$4.2 million, principally deferred income taxes.
- Preliminary allocation of the purchase price and the elimination of
$31.0 million representing the historical stockholder's equity of
Dataserv. The allocation of the purchase price to assets acquired and
liabilities assumed is subject to appraisals and evaluations
of the fair value of Dataserv's assets and liabilities as well as
post-closing adjustments.
(3) Revenues of $7.8 million and $15.1 million included in the Dataserv
historical Statement of Operations for the six months ended December 31,
1995 and the year ended June 30, 1995, respectively, represent sales to a
customer that terminated its relationship with Dataserv in early 1996. The
pro forma Statements of Operations have not been adjusted for the impact
of this terminated customer.
(4) To eliminate the impact of the parts sales portion of the Dataserv business
which the Company has elected not to continue.
(5) To eliminate compensation expense of $0.1 million for both the six months
ended December 31, 1995 and the year ended June 30, 1995, recognized by
Dataserv for liabilities that were not assumed by the Company.
<PAGE> 23
Notes to Pro Forma Combined Condensed Financial Statements (Unaudited) -
Continued
(6) To eliminate depreciation expense recognized by Dataserv for the building
not acquired by the Company and to reflect the impact of rent expense.
(7) To reflect the reduction in depreciation expense of $0.4 million and $0.8
million for the six months ended December 31, 1995 and the year ended June
30, 1995, resulting from the allocation of the purchase price to Dataserv's
historical balance sheet.
(8) To reflect the reduction of interest income on $28.5 million of cash used
to finance the acquisition at an assumed rate of interest of 5.7% and 5.3%
for the six months ended December 31, 1995 and the year ended June 30,
1995, respectively.
(9) To eliminate interest expense of $0.5 million and $0.8 million for the six
months ended December 31, 1995 and the year ended June 30, 1995,
respectively, recognized by Dataserv for debt that was not assumed by the
Company.
(10) To eliminate the Dataserv tax provision due to the availability of the
Company's current year loss to offset income of Dataserv as if Dataserv
were included in the Company's U.S. consolidated tax return for the
respective periods.
(11) To eliminate the adjustment related to the disposal of the discontinued
operations not acquired by the Company.
<PAGE> 1
Exhibit 23
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration statements of
Wang Laboratories, Inc. on Form S-3 (File Nos. 33-58717, 333-03879, 333-06611)
and Form S-8 (File Nos. 333-01333, 333-01335) of our report dated January 31,
1996 on our audits of the consolidated financial statements of Dataserv, Inc.,
a wholly owned subsidiary of BBS Holdings, Inc. as of December 31, 1995 and
1994, and for the years then ended, which report is included in Amendment No. 1
to Current Report of Wang Laboratories, Inc. on Form 8-K/A dated May 3, 1996.
/s/ Coopers & Lybrand LLP
Minneapolis, Minnesota
July 1, 1996
