<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
__________
FORM 8-K/A
AMENDMENT NO. 1 TO 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) March 29, 1996
--------------
WMS INDUSTRIES INC.
(Exact Name of Registrant as Specified in Its Charter)
Commission file number 1-8300
------
Delaware 3 6 - 2 8 1 4 5 2 2
-------- -------------------
(State or Other Jurisdiction of Incorporation (I.R.S. Employer
or Organization) Identification No.)
3401 North California Ave., Chicago, IL 6 0 6 1 8
- --------------------------------------- ---------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (312) 961-1111
--------------
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ITEM 7.(b) PRO FORMA FINANCIAL INFORMATION
-- Introduction to Unaudited Pro Forma Condensed Consolidated
Financial Statements
-- Unaudited Pro Forma Condensed Consolidated Balance Sheet of WMS
Industries Inc. and Atari Games Corporation as of December
31, 1995
-- Unaudited Pro Forma Condensed Consolidated Statement of Income of
WMS Industries Inc. and Atari Games Corporation for the Six
Months Ended December 31, 1995
-- Unaudited Pro Forma Condensed Consolidated Statement of Income of
WMS Industries Inc. and Atari Games Corporation for the Twelve
Months Ended June 30, 1995
-- Notes to Unaudited Pro Forma Condensed Consolidated Financial
Statements
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WMS INDUSTRIES INC. AND ATARI GAMES CORPORATION
_____________
INTRODUCTION TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On March 29, 1996, a wholly-owned subsidiary of WMS Industries Inc. (the
"Company") acquired all the capital stock of Atari Games Corporation ("Atari
Games") from Warner Communications Inc.("Warner"), a subsidiary of Time Warner
Inc. The acquisition is being accounted for by the purchase method of
accounting. Headquartered in Milpitas, California, Atari Games is engaged in
the business of developing, manufacturing, licensing, publishing and
distributing coin operated video arcade games and home video games.
The Company intends to assimilate parts of the Atari Games business into the
Company's similar activities and exit certain activities that include closing
the leased manufacturing plant in California and transferring the production of
future video arcade games to the Company's existing Chicago plants; combining
the sales, marketing and distribution of home video games with the Company's
home video operations; the sale of an Irish subsidiary that produces video
arcade games; the sale of a subsidiary in Japan that develops and markets home
video games; and downsizing certain elements of the video arcade product
development activities that are duplicative of similar activities in Chicago. A
$4,500,000 liability for exit activities was established and includes provisions
for employee severance and relocation, contractual liabilities, direct exit
costs and estimated losses of the two foreign subsidiaries until disposition.
Any change in the exit liability would result in an adjustment to negative
goodwill.
The preliminary purchase price for Atari Games is a minimum of $10,487,000 and a
maximum of $25,763,000. The preliminary purchase price was computed based upon
the book net asset value of Atari Games as of March 29, 1996 with a portion of
the purchase price contingent upon future gross profits, as defined, of Atari
Games. The preliminary purchase price is subject to adjustment based upon the
Atari Games' March 29, 1996 final balance sheet to be delivered by June 27, 1996
and then audited.
The preliminary minimum purchase price included cash of $2,000,000 and a two
year non-recourse promissory note (the "Two Year Note") payable on March 29,
1998 for $8,487,000, or 10/28th of the balance of the final maximum purchase
price. Additional purchase price in the form of a four year non-recourse
promissory note (the "Four Year Note") payable in semi-annual installments is
contingent on the gross profits, as defined, of Atari Games over the next four
years and will be recorded incrementally as future cash gross profits are
realized. The preliminary maximum amount of the Four Year Note is $15,276,000,
or 18/28th of the balance of the maximum final purchase price. Semi-annual
installments are to be made on the Four Year Note equal to 50% of the cash gross
profit from the sale or distribution of certain products and intellectual
property with respect thereto owned by Atari Games (the "Products").
The Two Year Note is collateralized by the capital stock of Atari Games. The
Company's obligations under the Two Year Note may be satisfied by relinquishing
the capital stock of Atari Games to Warner. The Four Year Note is secured by
the Products. Atari Game's unpaid obligations under the Four Year Note may be
satisfied by transferring the Products to Warner.
The unaudited pro forma condensed consolidated balance sheet as of December 31,
1995 was prepared as if Atari Games was acquired as of December 31, 1995 and
using the audited balance sheet of Atari Games filed as part of this Form 8-K
and the unaudited balance sheet of WMS Industries Inc. included in the WMS
Industries Inc. Form 10Q for the quarterly period ended December 31, 1995.
2
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The unaudited pro forma condensed consolidated statement of income for the six
months ended December 31, 1995 was prepared as if Atari Games was acquired as of
July 1, 1995 and assimilation and exit activities occurred on that date and
using the unaudited statement of income of Atari Games and WMS Industries Inc.
for that period.
The unaudited pro forma condensed consolidated statement of income for the
twelve months ended June 30, 1995 was prepared as if Atari Games was acquired as
of July 1, 1994 and assimilation and exit activities occurred on that date and
using the unaudited statement of income of Atari Games for that period and the
audited statement of income of WMS Industries Inc. for the year ended June 30,
1995.
The unaudited pro forma financial information does not purport to present the
consolidated financial position and consolidated results of operations of the
Company had the acquisition of Atari Games actually occurred on the dates
indicated; nor does it purport to be indicative of results that will be attained
in the future.
The pro forma financial information should be read in conjunction with the WMS
Industries Inc. historical consolidated financial statements and notes thereto
contained in the WMS Industries Inc. Form 10-K for the fiscal year ended June
30, 1995 and in the WMS Industries Inc. Form 10-Q for the six months ended
December 31, 1995, as well as, the Atari Games historical consolidated financial
statements and notes filed herewith.
COMMENTS ON ATARI GAMES RESULTS OF OPERATIONS
Atari Games charges all costs of developing new games to operations as they are
incurred. During the twelve months ended June 30, 1995 and six months ended
December 31, 1995 Atari Games incurred research and product development costs,
included in costs and expenses in the pro forma column in the respective
unaudited pro forma condensed consolidated statements of income, of
approximately $19,000,000 and $12,000,000. Approximately $17,500,000 of these
costs relate to new video arcade games and home video games that are in process
of development that are expected to be released for sale after December 31,
1995.
During the eighteen months ending December 31, 1995 the primary home video games
being sold to consumers were for 16 bit platforms. Available home video game
industry statistics for this period generally show that at least 50% of the
installed home units for 16-bit platforms were Nintendo. Until the settlement
of litigation, described in Note 11 to Atari Games Corporation audited financial
statements included herein, Atari Games was unable to sell home video games for
the Nintendo 16-bit video game platform. Sales commenced during the six month
period ended December 31, 1995.
The Company is undertaking other changes in the operation of Atari Games that
should result in other cost reductions that are not reflected in the pro forma
financial information because a reasonable estimate of the savings cannot be
made at this time.
3
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<TABLE>
<CAPTION>
WMS INDUSTRIES INC. AND ATARI GAMES CORPORATION
--------------------
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1995
(THOUSANDS OF DOLLARS)
WMS ATARI GAMES PRO FORMA
INDUSTRIES INC. CORPORATION ADJUSTMENTS PRO FORMA
--------------- -------------- ---------------- ----------
<S> <C> <C> <C> <C>
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents......................... $ 75,052 $ 5,973 $ 7,024 (a) $ 85,299
(2,750)(b)
Receivables, net.................................. 93,675 25,646 - 119,321
Inventories....................................... 45,837 7,601 - 53,438
Other current assets.............................. 6,045 1,458 - 7,503
--------- --------- --------- ---------
Total current assets.......................... 220,609 40,678 4,274 265,561
Investments in, receivables and advances to
nonconsolidated affiliates........................ 23,750 - - 23,750
Investment in marketable equity securities.......... 23,687 - - 23,687
Property, plant and equipment....................... 140,010 18,740 (18,740)(b) 140,010
Less: accumulated depreciation...................... (57,283) (13,581) 13,581 (b) (57,283)
--------- ---------- --------- ---------
82,727 5,159 (5,159)(b) 82,727
Excess of purchase cost over amount
assigned to net assets acquired, net.............. 19,561 - - 19,561
Other assets........................................ 32,984 300 - 33,284
--------- ---------- --------- ---------
$ 403,318 $ 46,137 $ (885) $ 448,570
========= ========== ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Accounts and notes payable........................ $ 30,242 $ 10,855 $ - $ 41,097
Current and deferred income taxes................. 9,043 - (1,773)(b) 7,270
Other current liabilities......................... 31,196 16,543 4,500 (b) 52,239
Payable to parent................................. - 67,166 8,690 (a) -
(75,856)(b)
--------- ---------- --------- ---------
Total current liabilities...................... 70,481 94,564 (64,439) 100,606
Long-term debt, less current maturities............. 82,914 - 8,487 (b) 91,401
Deferred income taxes............................... 4,705 - 3,986 (b) 8,691
Other noncurrent liabilities........................ 9,232 - 2,654 (b) 11,886
Minority interests.................................. 17,556 - - 17,556
STOCKHOLDERS' EQUITY:
Common stock...................................... 12,090 6,855 (6,855)(b) 12,090
Additional paid-in capital........................ 82,036 - - 82,036
Retained earnings................................. 128,528 (55,282) (1,666)(a) 128,528
56,948 (b)
--------- ---------- --------- ---------
222,654 (48,427) 48,427 222,654
Treasury stock, at cost........................... (153) - - (153)
Unrealized loss on noncurrent marketable
equity securities.............................. (4,071) - - (4,071)
--------- ---------- --------- ---------
Total stockholders' equity..................... 218,430 (48,427) 48,427 218,430
--------- ---------- --------- ---------
$ 403,318 $ 46,137 $ (885) $ 448,570
========= ========== ========= =========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
4
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WMS INDUSTRIES INC. AND ATARI GAMES CORPORATION
--------------------
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WMS Atari Games Pro Forma
Industries Inc. Corporation Adjustments Pro Forma
--------------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Net sales - amusement games............................ $197,456 $76,957 $(7,259)(a) $267,154
Management fees - Williams Hospitality................. 5,280 - - 5,280
Condado Plaza hotel/casino............................. 25,576 - - 25,576
-------- ------- ------- --------
Total revenues........................................... 228,312 76,957 (7,259) 298,010
COSTS AND EXPENSES:
Cost of sales (excluding depreciation) -
amusement games...................................... 146,109 60,473 (7,944)(b) 198,638
Williams Hospitality operating expenses
(excluding depreciation)............................. 1,954 - - 1,954
Condado Plaza operating expenses
(excluding depreciation)............................. 17,549 - - 17,549
Selling and administrative............................. 35,864 16,588 (3,109)(c) 49,343
Depreciation and amortization.......................... 5,949 1,038 (1,038)(d) 5,949
Equity in loss of nonconsolidated affiliate............ 3,597 - - 3,597
-------- ------- ------- --------
Total costs and expenses................................. 211,022 78,099 (12,091) 277,030
-------- ------- ------- --------
Income (loss) from operations............................ 17,290 (1,142) 4,832 20,980
Interest and other income................................ 2,699 478 (699)(e) 2,478
Interest expense......................................... (3,546) (273) (523)(f) (4,342)
-------- ------- ------- --------
Income (loss) before tax provision and
minority interests..................................... 16,443 (937) 3,610 19,116
Provision for income taxes............................... (6,088) (151) (918)(g) (7,157)
Minority interests in income............................. (1,194) - - (1,194)
-------- ------- ------- --------
Net income (loss)........................................ $ 9,161 $(1,088) $ 2,692 $ 10,765
======== ======= ======= ========
Net income per share of common stock..................... $ 0.38 $ 0.45
======== ========
Shares used in calculating per share amount.............. $ 24,115 24,115
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
5
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WMS INDUSTRIES INC. AND ATARI GAMES CORPORATION
--------------------
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED DECEMBER 31, 1995
(THOUSANDS OF DOLLARS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
WMS Atari Games Pro Forma
Industries Inc. Corporation Adjustments Pro Forma
--------------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
REVENUES:
Net sales - amusement games............................ $314,494 $ 60,347 $ (5,457)(a) $369,384
Management fees - Williams Hospitality................. 13,348 - - 13,348
Condado Plaza hotel/casino............................. 57,530 - - 57,530
-------- -------- -------- --------
Total revenues........................................... 385,372 60,347 (5,457) 440,262
COSTS AND EXPENSES:
Cost of sales (excluding depreciation) -
amusement games...................................... 241,961 68,712 (11,072)(b) 299,601
Williams Hospitality operating expenses
(excluding depreciation)............................. 5,175 - - 5,175
Condado Plaza operating expenses
(excluding depreciation)............................. 39,784 - - 39,784
Selling and administrative............................. 45,891 23,122 (6,715)(c) 62,298
Depreciation and amortization.......................... 11,685 1,983 (1,983)(d) 11,685
Equity in loss of nonconsolidated affiliate............ 7,003 - - 7,003
-------- -------- -------- --------
Total costs and expenses................................. 351,499 93,817 (19,770) 425,546
-------- -------- -------- --------
Income (loss) from operations............................ 33,873 (33,470) 14,313 14,716
Interest and other income................................ 7,239 (175) (3)(e) 7,061
Interest expense......................................... (7,154) (1,989) 410 (f) (8,733)
-------- -------- -------- --------
Income (loss) before tax provision and
minority interests..................................... 33,958 (35,634) 14,720 13,044
(Provision) credit for income taxes...................... (11,841) 1,842 6,524 (g) (3,475)
Minority interests in income............................. (2,910) - - (2,910)
-------- -------- -------- --------
Net income (loss)........................................ $ 19,207 $(33,792) $ 21,244 $ 6,659
======== ======== ======== ========
Net income per share of common stock..................... $ 0.80 $ 0.28
======== ========
Shares used in calculating per share amount.............. 24,102 24,102
======== ========
</TABLE>
See Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
6
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WMS INDUSTRIES INC. AND ATARI GAMES CORPORATION
_____________
NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following pro forma adjustments are based on estimates which are subject to
change.
1. Unaudited Pro Forma Condensed Consolidated Balance Sheet as of December 31,
1995
a) To increase the payable to parent to the $75,856,000 balance on March
29, 1996 which was required under the Stock Purchase Agreement to
establish a minimum level of working capital at the purchase date.
Payable to parent was increased by $8,690,000 with the offset increasing
cash and cash equivalents by $7,024,000 and accumulated deficit by
$1,666,000 to recognize the net loss for the three months to March 29,
1996.
b) To reflect the purchase of the Atari Games capital stock for the
minimum purchase price of $11,237,000 consisting of $2,750,000
(including acquisition costs of $750,000) in cash and a noncurrent note
for $8,487,000, and the preliminary allocation of the minimum purchase
price to the assets and liabilities of Atari Games including $4,500,000
of estimated liabilities to exit certain acquired activities.
<TABLE>
<CAPTION>
<S> <C>
Cash and cash equivalents ($2,750,000)
Property, plant and equipment (18,740,000)
Accumulated depreciation 13,581,000
Current and deferred income taxes 1,773,000
Other accrued liabilities (4,500,000)
Payable to parent 75,856,000
Long term debt (8,487,000)
Noncurrent deferred income taxes (3,986,000)
Other noncurrent liabilities (negative goodwill) (2,654,000)
Common stock (6,855,000)
Accumulated deficit (56,948,000)
-----------
$ 0
===========
</TABLE>
2. Unaudited Pro Forma Condensed Consolidated Statement of Income for the Six
Months Ended December 31, 1995
The pro forma adjustments to the unaudited pro forma condensed consolidated
statement of income for the six months ended December 31, 1995 includes
adjustments to reflect the exit activities and assimilation activities to
eliminate redundancies as well as adjustments resulting from the allocation
of the purchase price and the pro forma combination of the two companies.
The principal exit and assimilation activities include (1) the sale of the
Irish subsidiary that manufactures video arcade products which in the
future will be manufactured in the Company's Chicago plants (2) the sale of
the subsidiary in Japan that develops and markets home video games which
sales activity has been licensed to a distributor (3) elimination of
Simulation division that was not acquired by WMS Industries Inc. (4)
elimination of video platform development activity that was discontinued
(5) closing the leased manufacturing plant in California and transferring
production of video arcade games to the Company's existing Chicago plants
eliminating plant costs and (6) combining the sales, marketing and
distribution of home video games with the Company's home video operations
eliminating duplicative sales and administration costs.
7
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a) Net sales - amusement games
Japan subsidiary sales net of royalty income ($2,813,000)
Ireland subsidiary contract manufacturing sales (2,105,000)
Simulation division sales (530,000)
California contract manufacturing sales (1,811,000)
-----------
($7,259,000)
===========
b) Cost of sales (excluding depreciation) - amusement games
Japan subsidiary net of intercompany royalty ($1,114,000)
Ireland subsidiary (2,699,000)
Simulation division (612,000)
Video platform development (733,000)
California contract manufacturing (1,661,000)
California manufacturing plant closing net of
incremental Chicago plant costs (1,125,000)
-----------
($7,944,000)
===========
c) Selling and administrative
Japan subsidiary ($498,000)
Ireland subsidiary (424,000)
Simulation division (536,000)
Home video games combination net of incremental
Company home video operations costs (1,651,000)
-----------
($3,109,000)
===========
d) Elimination of Atari Games depreciation and amortization because their
property, plant and equipment is eliminated in the allocation of the
preliminary minimum purchase price.
e) Interest and other income
Japan subsidiary ($298,000)
Ireland subsidiary (401,000)
---------
($699,000)
=========
f) Elimination of $273,000 of interest expense of Atari Games and
include interest expense of $796,000 on the two notes issued by the
Company as part of the purchase price. The interest rate on the Two
Year Note was 6% and on the Four Year Note was 7%.
g) To reflect the accrual of additional income tax at statutory rates on
the loss before tax of Atari Games offset by the total of the pro forma
adjustments.
3. Unaudited Pro Forma Condensed Consolidated Statement of Income for the
Twelve Months Ended June 30, 1995
The pro forma adjustments to the unaudited pro forma condensed consolidated
statement of income for the twelve
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months ended June 30, 1995 includes adjustments to reflect the exit
activities and assimilation activities to eliminate redundancies as well as
adjustments resulting from the allocation of the purchase price and the pro
forma combination of the two companies. The principal exit and assimilation
activities include (1) the sale of the Irish subsidiary that manufactures
video arcade products which in the future will be manufactured in the
Company's Chicago plants (2) the sale of the subsidiary in Japan that
develops and markets home video games which sales activity has been licensed
to a distributor (3) elimination of Simulation division that was not
acquired by WMS Industries Inc. (4) elimination of video platform
development activity that was discontinued (5) closing the leased
manufacturing plant in California and transferring production of video
arcade games to the Company's existing Chicago plants eliminating plant
costs and (6) combining the sales, marketing and distribution of home video
games with the Company's home video operations eliminating duplicative sales
and administration costs.
a) Net sales - amusement games
Japan subsidiary sales net of royalty income ($568,000)
Ireland subsidiary contract manufacturing sales (915,000)
Simulation division sales (1,051,000)
California contract manufacturing sales (2,923,000)
------------
($5,457,000)
============
b) Cost of sales (excluding depreciation) - amusement games
Japan subsidiary ($860,000)
Ireland subsidiary (3,691,000)
Simulation division (1,058,000)
Video platform development (929,000)
California contract manufacturing (2,560,000)
California manufacturing plant closing net of
incremental Chicago plant costs (1,974,000)
------------
($11,072,000)
============
c) Selling and administrative
Japan subsidiary ($550,000)
Ireland subsidiary (575,000)
Simulation division (1,307,000)
Home video games combination net of incremental
Company home video operations costs (4,283,000)
------------
($6,715,000)
===========
d) Elimination of Atari Games depreciation and amortization because their
property, plant and equipment is eliminated in the allocation of the
preliminary minimum purchase price.
e) Interest and other income
Japan subsidiary $ 271,000
Ireland subsidiary (274,000)
------------
($3,000)
============
f) Elimination of $1,989,000 of interest expense of Atari Games and include
interest expense of $1,579,000 on
9
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the two notes issued by the Company as part of the purchase price. The
interest rate on the Two Year Note was 6% and on the Four Year Note was 7%.
g) To reflect the additional tax benefit at statutory rates on the loss
before tax of Atari Games offset by the total of the pro forma adjustments.
10
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WMS INDUSTRIES INC.
_______________
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 duly authorized.
WMS INDUSTRIES INC.
-------------------
(Registrant)
Dated: June 7, 1996 By: /s/ Harold H. Bach, Jr.
----------------------------
Harold H. Bach, Jr.
Vice President-Finance
Principal Financial and
Chief Accounting Officer
11
