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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
Date of Report (Date of earliest event reported) JUNE 24, 1996
Commission file number 0-13218
COMPRESSION LABS, INCORPORATED
(Exact name of registrant as specified in its charter)
DELAWARE 94-2390960
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2860 JUNCTION AVENUE, SAN JOSE, CALIFORNIA 95134
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (408) 435-3000
NOT APPLICABLE
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(Former name or former address, if changed since last report)
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ITEM 2. DISPOSITION OF MAGNITUDE PRODUCT FAMILY ASSETS
On June 10, 1996, Compression Labs Incorporated ("CLI" or the "Company") issued
a press release announcing that it had agreed to sell the assets of its
Magnitude product family to General Instrument Corporation ("GI") (NYSE;GIC).
The Magnitude product family consists of CLI's Magnitude MPEG-2 encoding and
decoding products for all Magnitude customers including DirecTV, USSB, Galaxy
Latin America, TCI and many customers in China, Africa, Australia, Latin
America, and other regions world wide. This sale was completed on June 24,
1996.
The transaction encompasses approximately $8.4 million in book value of
inventory and property, plant and equipment, along with patents, trademarks and
intellectual property in exchange for $12.5 million in cash and the assumption
of $2 million in liabilities. GI will also assume past warranty obligations
associated with the Magnitude product family. The transaction is subject to
post-closing adjustments. The transaction with GI does not include the
SpectrumSaver product family, or any of the accounts receivable related to the
Broadcast Products Division, recorded at $14.9 million on December 31, 1995.
Information contained in the June 10, 1996 press release further describes the
Magnitude product family, and is incorporated herein by reference to Exhibit
20.1 of this Report.
Pro forma financial statements as required under Item 7 will be filed within 60
days of the date of this filing.
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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 thereunto duly authorized.
COMPRESSION LABS, INCORPORATED
BY /s/ Michael E. Seifert
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Michael E. Seifert
Vice President, Finance and Chief
Accounting Officer
July 9, 1996
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INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Number Number
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<S> <C>
10.48 Asset Purchase Agreement between Compression Labs, Incorporated, a
Delaware Corporation and Charger Industries, Inc., a California Corporation
dated as of June 7, 1996 (incorporated by reference from Exhibit 1 to the
registrant's Report on Form 8-K dated June 7, 1996). ______
20.1 CLI Press Release dated June 10, 1996, regarding the agreement to sell
Magnitude product family to General Instrument. _______
</TABLE>
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EXHIBIT 20.1
CLI CONTINUES RESTRUCTURING STRATEGY TO FOCUS
ON VIDEOCONFERENCING BUSINESS
AGREES TO SELL MAGNITUDE PRODUCT FAMILY TO GENERAL INSTRUMENT
SAN JOSE, CALIF., JUNE 10, 1996 -- Compression Labs, Incorporated (CLI)
(NASDAQ:CLIX) announced today that it agreed to sell the assets of the
Magnitude product family to General Instrument Corporation (GI) (NYSE:GIC). The
Magnitude product family consists of CLI's Magnitude(R) MPEG-2 encoding and
decoding products for all Magnitude customers including DirectTV, USSB, Galaxy
Latin America, TCI, and many customers in China, Africa, Australia, Latin
America and other regions world wide.
"We are pleased to enter into an agreement which provides for us to
receive value consistent with our expectations and give the Magnitude product
family, the leading-edge digital broadcast product line, the opportunity to
continue to advance with GI, one of the leading broadcast companies in the
world. Completion of this transaction will represent another important step
toward our re-focusing CLI on high-quality, high-end videoconferencing
solutions and partial fulfillment of the announcement we made in March that we
were pursuing a number of strategic alternatives for our Broadcast Products
Division." said Gary Trimm, CEO and president of CLI. The transaction is
expected to be complete by June 30, 1996.
The transaction encompasses approximately $8.4 million in book value of
inventory and property, plant and equipment, along with patents, trademarks and
intellectual property in exchange for $12.5 million in cash and the assumption
of $2 million in liabilities. GI will also assume past warranty obligations
associated with the Magnitude product family. The transaction is subject to
post-closing adjustments. CLI will retain the SpectrumSaver(TM) product line
for broadcast of business television over satellite, and all the accounts
receivable related to the Broadcast Products Division, valued at $14.9 million
on December 31, 1995.
The Broadcast Products Division product development, research,
marketing, sales and operations team have offers to join GI. Most of the
Research and Development organization under world-renowned scientist, Dr. Wen
Chen, will remain with CLI.
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CLI CONTINUES RESTRUCTURING STRATEGY - PAGE 2
Magnitude is an MPEG-2 product family consisting of modular video and
audio encoders and a choice of decoders for the delivery of entertainment and
information services over telephone, cable and satellite networks. Magnitude
complies with the worldwide MPEG standard, and image-compression scheme for
high quality full motion video Moving Picture Experts' Group (MPEG) under the
direction of the International Standards organization and the Digital Video
Broadcasting (DVB) standards promulgated by the European Broadcasting Union and
administered by the European Telecommunications Standards Institute.
"As the world leader in providing secure broadband networks, we view
this acquisition as a strategic addition to our already strong product
portfolio," said Richard S. Friedland, Chairman and CEO of General Instrument
Corporation. "We are now the only manufacturer offering a complete product line
of digital compression and transmission systems, including ATSC, MPEG-2 and DVB
compliant solutions."
This press release contains forward-looking statements that are subject
to certain risks and uncertainties, including without limitation those
described in CLI's Form 10-K for the year ended December 31, 1995, copies of
which are available from the Securities and Exchange Commission, and actual
results may vary. Among other things, completion of the proposed transaction is
subject to certain closing conditions, and the purchase price is subject to
adjustments.
CLI is a leading provider of television-quality videoconferencing
solutions for business, government, education and healthcare organizations.
Founded in 1976, CLI has sales offices across the United States, with
international offices in Asia and Europe; and distributors serving more than 50
countries worldwide.
General Instrument Corporation is a world leader in developing
technology, systems and product solutions for the secure and interactive
delivery of video, voice and data, as well as in manufacturing and distributing
discrete semiconductors.
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For additional information, contact:
CLI PR GI PR
Joyce Strand Dick Badler
(408) 922-4610 (312) 695-1030
