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 June 30, 2000
(Date of earliest event reported)
Dynacore Holdings Corporation
(formerly Datapoint Corporation)
(Exact name of registrant as specified in its charter)
Delaware 001-07636 74-1605174
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
7 rue d'Anjou 75008, Paris, France;
8410 Datapoint Drive, San Antonio, TX 78229-8500
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 331-4007-3737; 210-593-7000
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On June 30, 2000, the Registrant issued a press release, a
copy of which is attached as Exhibit 99 to this Form 8-K, indicating that the
Registrant completed the previously reported sale of its European operations
and certain U.S. assets to Datapoint NewCo 1 Limited for $49.5 million in
cash, less certain adjustments, including an adjustment in the event that the
aggregate shareholder deficit of the European operations exceeds $10.0
million. The sale, which represents substantially all of the assets and
revenue of the Registrant, was approved by the Bankruptcy Court for the
District of Delaware.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(b) Pro Forma Financial Information. Set forth below is the pro forma
financial information required with respect to the transactions described above
in Item 2: The following unaudited pro forma financial statements have been
prepared to give effect to the sale of the Company's European operations (the
"Sale"), for $49.5 million in cash, less certain adjustments, which represents
substantially all of the Company's historical operations.
A) The unaudited pro forma financial statements of Dynacore Holdings
Corporation ("Dynacore") (formerly Datapoint Corporation) give effect to
the consummation of the Sale transaction, as if the Sale had been
consummated: (i) on April 29, 2000, in the case of the Unaudited Pro Forma
Balance Sheet, (ii) on August 2, 1998, in the case of the Unaudited Pro
Forma Statements of Operations for the fiscal year ended July 31, 1999,
(iii) and on August 1, 1999, in the case of the Unaudited Pro Forma
Statements of Operations for the nine month period ended April 29, 2000.
B) On June 27, 2000, Dynacore announced that an agreement in principle had
been reached with the Official Unsecured Creditors' Committee appointed in
the corporation's Chapter 11 case pending in the United States Bankruptcy
Court for the District of Delaware. (Case No. 00-1853(PJW)).
The agreement, which is subject to among other things, filing of a Plan of
Reorganization, vote of creditors and equity security holders and approval by
the Bankruptcy Court, provides for the distribution of approximately $34.8
million in cash to Debenture holders and other unsecured creditors from the
proceeds of the Sale. Such cash distribution is expected to result in
debentureholders' receiving a distribution equal to 60% of the face value of the
outstanding 8 7/8% Convertible Subordinated Debentures due 2006 (the
"Debentures"), excluding accrued interest. At the time of confirmation of the
Plan of Reorganization, Dynacore is expected to have remaining working capital
of approximately $4 million after fees, expenses and certain escrow items
required in the Sale.
The agreement provides that when the reorganized Dynacore emerges from
Chapter 11: (i) Debenture holders and other unsecured creditors will receive 25%
of the equity of the reorganized corporation, 3 out of 7 seats on the Board of
Directors, and 40% of a Patent Litigation Trust, to be formed to pursue the
corporation's patent litigations, (ii) current Exchangeable Preferred
Shareholders will receive 23.5% of the equity of the reorganized corporation,
and 3.5% of the Patent Litigation Trust, (iii) current Common Shareholders will
receive 41.5% of the equity of the reorganized corporation; and (iv) current
officer management will receive 10% of the equity of the reorganized corporation
as part of a settlement of certain officer administrative claims that include
contract cancellation and other contractual entitlements. The Plan of
Reorganization of the corporation is expected to be filed during July 2000.
Pursuant to the agreement, with respect to its remaining 56.5% interest in
the Patent Litigation Trust, Dynacore will distribute to its post-bankruptcy
shareholders 75% of the first $100 million of net proceeds received, if any,
after adjustment for corporate tax and payment of all patent litigation
expenses.
<PAGE>
The unaudited pro forma financial statements exclude any impact resulting
from the agreement described above.
C) The unaudited pro forma financial statements are presented for illustrative
purposes only and are not necessarily indicative of what Dynacore's actual
financial position or results of operations would have been had the Sale
been consummated on such dates, nor is it necessarily indicative of future
financial position or results of operations. Additionally, the pro forma
financial statements do not give effect to (i) any transactions other than
the Sale and those described in the accompanying notes to the unaudited pro
forma financial statements, (ii) any one-time charges that may result from
the restructuring of Dynacore's existing business due to the Sale, or (iii)
any cost savings or other synergies anticipated by Dynacore management as a
result of the Sale.
D) The unaudited pro forma financial statements do not purport to be
indicative of Dynacore's financial position or results of operations as of
the date hereof or for any period ended on the date hereof, as of the
closing date of the Sale, or for any period ending at the closing date, or
as of or for any other future date or period. Future results of the Company
could differ materially from the unaudited pro forma financial statements
because of various risks and uncertainties including without limitation,
changes in competition, economic conditions, new product development,
changes in market conditions, changes in tax and other governmental rules,
the outcome of the Engstrom v. Futureshare.com, LLC litigation, and
regulations applicable to the Company.
E) The following unaudited pro forma financial statements are based upon the
historical financial statements of Dynacore and should be read in
conjunction with such historical financial statements and notes thereto
included in the Company's Annual Report on Form 10K for the year ended July
31, 1999 and Form 10Q for the quarterly period ended April 29, 2000.
<PAGE>
DYNACORE HOLDINGS CORPORATION
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED JULY 31, 1999
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
Adjustments Pro
Historical Sale (A) Forma
<S> <C> <C> <C>
Revenue:
Sales $78,687 ($75,155) $3,532
Service and lease 59,598 (58,902) 696
------ ------- ---
Total revenue 138,285 (134,057) 4,228
Operating Cost and expenses
Cost of Sales 60,740 (59,038) 1,702
Cost of Service and lease 41,958 (41,514) 444
Research and development 1,965 (1,373) 592
Selling, general and administrative 35,695 (27,426) 8,269
Restructuring costs 813 (163) 650
--- ---- ---
Total operating expenses 141,171 (129,514) 11,657
Operating income (loss) (2,886) (4,543) (7,429)
Non-operating income (expense)
Interest expense (5,731) 821 (4,910)
Other, net 196 (218) (22)
--- ---- ---
Income (loss) before income taxes
and extraordinary item (8,421) (3,940) (12,361)
Income tax expense (credit) 835 (762) 73
--- ---- --
Income (loss) before extraordinary item (9,256) (3,178) (12,434)
Debt extinguishment 1,707 - 1,707
----- -----
Net income (loss) ($7,549) ($3,178) ($10,727)
======= ======= ========
Net Loss Less Preferred Stock Dividends
Paid or Accumulated plus the Gain on
Exchange & Retirement of Preferred Stock ($7,927) ($11,105)
Net Loss Per Common Share - Basic and Diluted ($0.44) ($0.61)
Average Common Shares Outstanding 18,225,790 18,225,790
</TABLE>
<PAGE>
DYNACORE HOLDINGS CORPORAITON
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED APRIL 29, 2000
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
Pro Forma
Adjustments Pro
Historical Sale (A) Forma
<S> <C> <C> <C>
Sales $54,798 ($54,102) $696
Service and lease 41,124 (40,693) 431
------ ------- ---
Total revenue 95,922 (94,795) 1,127
Operating Cost and expenses
Cost of Sales 41,906 (41,629) 277
Cost of Service and lease 30,348 (30,301) 47
Research and development 830 (830) 0
Selling, general and administrative 24,047 (18,611) 5,436
Restructuring costs 624 0 624
--- - ---
Total operating expenses 97,755 (91,371) 6,384
Operating income (loss) (1,833) (3,424) (5,257)
Interest expense (credit) (4,163) 462 (3,701)
Other, net 822 (870) (48)
--- ---- ---
Income (loss) before income taxes (5,174) (3,832) (9,006)
Income tax expense (credit) 251 (262) (11)
--- ---- ---
Net income (loss) ($5,425) ($3,570) ($8,995)
======= ======= =======
Net Loss Less Preferred Stock Dividends
Paid or Accumulated ($5,874) ($9,160)
Net Loss Per Common Share - Basic and Diluted ($0.32) ($0.50)
Average Common Shares Outstanding 18,359,438 18,359,438
</TABLE>
<PAGE>
DYNACORE HOLDINGS CORPORATION
UNAUDITED PRO FORMA BALANCE SHEET
APRIL 29, 2000
(IN THOUSANDS)
<TABLE>
<CAPTION>
Pro Forma
Adjusments Pro
ASSETS Historical Sale Forma
<S> <C> <C> <C>
Current assets
Cash and cash equivalents $1,500 ($1,247)(A) $253
Restricted cash and cash equivalents 295 (295)(A) 38,800
38,800 (B)
Accounts receivable, net 33,294 (32,872)(A) 422
Inventories 3,534 (3,512)(A) 22
Prepaid expenses 2,249 (2,009)(A) 240
----- ------ ---
Total current assets 40,872 (1,135) 39,737
Fixed assets, net 5,542 (5,248)(A) 294
Other assets, net 1,878 (1,271)(A) 607
----- ------ ---
Total assets $48,292 ($7,654) $40,638
======= ======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities
Payable to banks $5,879 ($5,862)(A) $17
Current maturities of long-term debt 4,960 - 4,960
Accounts payable 20,654 (19,033)(A) 1,621
Accrued expenses 25,891 (18,061)(A) 7,830
Deferred revenue 7,674 (7,318)(A) 356
Income taxes payable 1,289 (1,267)(A) 22
----- ------ --
Total current liabilities 66,347 (51,541) 14,806
Long-term debt, exclusive of current maturities 50,000 - 50,000
Other liabilities 9,379 (4,643)(A) 4,736
Stockholders' equity (deficit) (77,434) (6,217)(C) (28,904)
6,274 (C)
48,473 (C)
------
Total liabilities &
stockholders' equity (deficit) $48,292 ($7,654) $40,638
======= ======= =======
</TABLE>
<PAGE>
NOTES TO UNAUDITED PRO FORMA FINANCIAL STATEMENTS
1. UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
The accompanying unaudited pro forma statements of operations for the year ended
July 31, 1999 and the nine months ended April 29, 2000, have been prepared as if
the Sale was consummated as of August 2, 1998, and August 1, 1999, respectively,
and reflect the pro forma adjustments described below. The estimated
non-recurring gain on the Sale is excluded from the pro forma results of
operations.
(A) to eliminate the historical results of operations associated with the
Company's European operations included in the Sale, including costs
associated with certain corporate employees and other personnel who
were transferred to the purchaser in connection with the Sale.
2. UNAUDITED PRO FORMA BALANCE SHEET
The accompanying unaudited pro forma balance sheet assumes the Sale was
consummated on April 29, 2000 and reflects the following pro forma adjustments:
(A) to record the sale of the historical operating assets and liabilities
of the European operations pursuant to the Sale.
(B) to record net cash proceeds to be received by the Company upon
consummation of the Sale. Net proceeds include the purchase price of $49,500
thousand less anticipated transaction costs and estimated taxes related to the
sale of $4,700 thousand and escrow deposits of $6,000 thousand. Transaction
costs include legal, accounting, other professional fees, and estimated
management bonuses to be paid in connection with the consummation of the Sale.
The escrow deposits will be held by a designated escrow agent pending
adjustment, if any, related to the aggregate of the shareholder deficit of the
European operations and resolution of certain pension fund matters.
(C) to record the estimated net gain on the sale of the European operations
as follows: (in thousands)
Net cash proceeds $38,800
Net liabilities of the European operations 9,673
Accumulated other comprehensive income 57
-----------
Net gain from Sale $48,530
=======
Accumulated other comprehensive income includes ($6,217) thousand for
minimum pension liability adjustments recorded by the Company in
connection with its United Kingdom subsidiary's defined benefit
pension plan, offset by $6,274 thousand for foreign currency
translation adjustments recorded by the Company relating to its
European Subsidiaries.
EXHIBIT NO. DESCRIPTION OF EXHIBIT
99 June 30, 2000 Press Release
<PAGE>
SIGNATURE
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.
Dynacore Holdings Corporation
(formerly Datapoint Corporation)
(Registrant)
Date: July 14, 2000
By: /s/ Phillip P. Krumb
Phillip P. Krumb
Acting Chief Financial Officer
<PAGE>
EXHIBIT INDEX
(99) June 30, 2000 Press Release
<PAGE>
Exhibit 99 - Press Release of Registrant
Contact: Sharon P. Riggs
Investor Relations
San Antonio, Texas
(210) 593-7901
DYNACORE HOLDINGS CORPORATION
(FORMERLY DATAPOINT CORPORATION)
COMPLETES SALE OF EUROPEAN OPERATIONS
AND CERTAIN U.S. ASSETS
SAN ANTONIO, Texas, June 30, 2000.....Dynacore Holdings Corporation
(formerly Datapoint Corporation EBB: DTPTQ) announced that the previously
reported sale of its European operations and certain U.S. assets to Datapoint
NewCo 1 Limited for $49.5 million in cash, less certain adjustments, including
an adjustment in the event that the aggregate shareholder deficit of the
European operations exceeds $10.0 million at closing, was completed today.
Under the agreement in principle reached with the Official Unsecured
Creditors' Committee appointed in Dynacore's Chapter 11 case pending in United
States Bankruptcy Court for the District of Delaware (Case No. 00-1853 (PJW)),
at the time of confirmation of the Plan of Reorganization, Dynacore is expected
to have remaining working capital from the proceeds of the sale of approximately
$4 million after fees, expenses and certain escrow items required in the sale.
Dynacore will have no debt at that time.
The sale of its European Operations is consistent with the direction of
the Corporation to focus its efforts and resources on acquiring, developing and
marketing software with Internet and E-commerce applications. The previously
acquired Corebyte NetworksTM product family (www.corebyte.com), highlights this
effort. The Corebyte subsidiary has developed an intelligent browser-based
communications networking system. With a single interface, users of Corebyte
NetworksTM products directly access every application necessary to manage their
enterprise from basic E-mail to advanced group computing tools. Corebyte
NetworksTM products users seamlessly share and exchange valuable information,
selectively and securely, within their networked community and across
enterprises via the Internet. Companies that standardize their network on
Corebyte NetworksTM products gain all the benefits of the Internet and eliminate
the fear of obsolescence.
This press release contains forward-looking statements that involve
uncertainties, including, but not limited to, risks and uncertainties
related to the competitive environment and other risks. Future trends
and results may differ materially from disclosures contained in this
release.
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