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<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K/A NO. 1
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
Date of Report: November 21, 1997
ESSEX CORPORATION
(Exact name of Registrant as specified in its charter)
Virginia Commission File No. 0-10772 54-0846569
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization)
9150 Guilford Road
Columbia, Maryland 21046-1891
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (301) 939-7000
<PAGE>
ESSEX CORPORATION
Item 2. Acquisition or Disposition of Assets -
On October 16, 1997, Essex Corporation (the "Company") sold certain
of the assets of its Systems Effectiveness Division ("SED") to Star
Mountain, Inc., a privately-held corporation. The price was
$1,475,000, subject to adjustment as described below. The Company
sold the accounts receivable, contracts, fixed assets and certain
other assets. The acquiring company assumed certain liabilities, such
as accounts payable, accrued vacation and certain operating and
capital lease obligations. The effective date of the transaction was
October 1, 1997.
The Company received $525,000 in cash at closing and took a
promissory for $325,000 payable in equal monthly installments over 15
months ending January 1999. The balance of $625,000 is held in escrow
and is expected to be paid through January 1998 as the respective
contracts of SED are novated to the acquiror. Each contract novation
requires the approval of the other party in the contract, principally
agencies of the U.S. Government. The sale price is subject to
adjustment for any change in the net assets and to certain
indemnifications and warranties by the Company which could effect the
ultimate amount of proceeds received.
Item 7. Financial Statements and Exhibits
(b) Pro Forma Financial Information
The following unaudited pro forma statements are filed with this
report:
Unaudited Pro Forma Balance Sheet as of September 28, 1997.......F-1
Unaudited Pro Forma Statements of Operations:
For the year ended December 29, 1996........................F-2
For the thirty-nine weeks ended September 28, 1997..........F-3
Notes and Adjustments to Unaudited Pro Forma Financial
Information....................................................F-4
The unaudited pro forma balance sheet of the Registrant as of
September 28, 1997 reflects the financial position of the Registrant
after giving effect to the disposition of the assets and assumption
of the liabilities discussed in Item 2 and assumes the disposition
took place on September 28, 1997. The Unaudited Pro Forma Statements
of Operations for the year ended December 29, 1996 and for the
thirty-nine week period ended September 28, 1997 assume that the
disposition occurred on December 29, 1996, and are based on the
operations of the Registrant for the year ended December 29, 1996 and
the thirty-nine weeks ended September 28, 1997. Transaction costs
include expenses associated with the transaction.
The unaudited pro forma financial statements have been prepared by
the Registrant based upon assumptions deemed proper by it. The
unaudited pro forma financial statements presented herein are shown
for illustrative purposes only and are not
2
<PAGE>
ESSEX CORPORATION
necessarily indicative of the future financial position or future
results of operations of the Registrant, or of the financial position
or results of operations of the Registrant that would have actually
occurred had the transaction been in effect as of the date and for
the periods presented.
The unaudited pro forma financial statements should be read in
conjunction with the historical financial statements and related
notes of the Registrant.
(c) Exhibits
2.2 Asset Purchase Agreement dated October 16, 1997 between
Essex Corporation and Star Mountain, Inc.
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.
ESSEX CORPORATION
(Registrant)
\Joseph R. Kurry, Jr.\
DATE: November 21, 1997 Joseph R. Kurry, Jr.
Vice President, Treasurer and
Chief Financial Officer
3
<PAGE>
<TABLE>
ESSEX CORPORATION F-1
PRO FORMA FINANCIAL INFORMATION PAGE 1 OF 2
PRO FORMA BALANCE SHEET AS OF SEPTEMBER 28, 1997
<CAPTION>
PRO FORMA ADJUSTMENTS
-----------------------------------------
Subsequent
September 28, SED - Division Payouts/
1997 Divestiture Adjustments Pro Forma
------------- -------------- ----------- ----------
ASSETS (unaudited) (A) (B)
CURRENT ASSETS
<S> <C> <C> <C> <C> <C>
Cash $ 495,728 $ 575,000 $ (750,000) (1) $ 12,175
(60,533) (2)
(170,000) (3)
(18,020) (4)
(60,000) (5)
Accounts receivable, net 480,992 480,992
Inventory 823,813 823,813
Prepayments and other 13,831 13,831
Net current assets of discontinued operations 313,531 (313,531) --
Note receivable 325,000 325,000
Escrow receivable 375,000 375,000
------------- -------------- ----------- ----------
2,127,895 961,469 (1,058,553) 2,030,811
------------- -------------- ----------- ----------
PROPERTY AND EQUIPMENT
Production and special equipment 1,005,031 1,005,031
Furniture, equipment and other 719,968 719,968
------------- -------------- ----------- ----------
1,724,999 1,724,999
Accumulated depreciation and amortization (1,412,613) (1,412,613)
------------- -------------- ----------- ----------
312,386 312,386
------------- -------------- ----------- ----------
OTHER ASSETS
Net noncurrent assets of discontinued operations 1,126,547 (69,291) 1,057,256
Patents, net 180,355 180,355
Goodwill, net 99,626 99,626
Deferred debenture financing 85,301 (10,236) (6) 75,065
Other 34,482 34,482
------------- -------------- ----------- ----------
1,526,311 (69,291) (10,236) 1,446,784
------------- -------------- ----------- ----------
TOTAL ASSETS $ 3,966,592 $ 892,178 $(1,068,789) $3,789,981
- ------------ ============= ============== =========== ==========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ESSEX CORPORATION F-1
PRO FORMA FINANCIAL INFORMATION PAGE 2 OF 2
PRO FORMA BALANCE SHEET AS OF SEPTEMBER 28, 1997
<CAPTION>
PRO FORMA ADJUSTMENTS
--------------------------------
Subsequent
September 28, SED - Division Payouts/
1997 Divestiture Adjustments Pro Forma
------------- -------------- ------------ ---------
LIABILITIES AND STOCKHOLDERS' (unaudited) (A) (B)
EQUITY (DEFICIT)
CURRENT LIABILITIES
<S> <C> <C>
Current portion of capital leases $ 66,550 $ 66,550
Bank line of credit 750,000 (750,000) (1) --
8% Convertible notes payable 245,000 245,000
Accounts payable 299,112 299,112
Accrued wages and vacation 191,917 191,917
Accrued lease settlement 299,551 (18,020) (4) 281,531
Refundable deposit on sale of discontinued operations 200,000 (139,467) (60,533) (2) --
Other accrued expenses 546,199 79,026 625,225
------------- -------------- ------------ -----------
2,598,329 (60,441) (828,553) 1,709,335
LONG-TERM DEBT
10% Collateralized Convertible Debentures Due 2000 1,400,000 (170,000) (3) 1,230,000
Capital leases, net of current portion 31,594 31,594
REDEEMABLE PREFERRED STOCK - SERIES A 120,000 120,000
- ------------------------------------- ------------- -------------- ------------ ----------
Total Liabilities 4,149,923 (60,441) (998,553) 3,090,929
------------- -------------- ------------ ----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.10 par value; 25 million shares
authorized; 3,626,098 shares issued and
outstanding for 1997 362,610 362,610
Contributions in excess of par value 5,316,308 5,316,308
Retained deficit (5,862,249) 952,619 (60,000) (5)
(10,236) (6) (4,979,866)
------------- -------------- ------------ ----------
(183,331) 952,619 (70,236) 699,052
------------- -------------- ------------ ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 3,966,592 $ 892,178 $ (1,068,789) $3,789,981
- ---------------- ============= ============== ============ ==========
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ESSEX CORPORATION F-2
PRO FORMA FINANCIAL INFORMATION PAGE 1 OF 1
STATEMENT OF OPERATIONS
FOR THE THIRTY-NINE WEEK PERIOD ENDED SEPTEMBER 28, 1997
<CAPTION>
PRO FORMA ADJUSTMENTS
-----------------------------------
Systems
Effectiveness Other
Historical Division Divestitures PRO FORMA
-------------- --------------- -------------- -------------
(unaudited)
<S> <C> <C> <C> <C>
Revenues $ 9,112,290 $ 4,200,886 $ 1,912,756 $ 2,998,648
Cost of goods sold and services provided (6,033,763) (2,696,542) (1,862,638) (1,474,583)
Engineering and product development expenses (471,990) -- -- (471,990)
Selling, general and administrative expenses (3,328,995) (1,119,625) (269,112) (1,940,258)
-------------- --------------- -------------- -------------
Operating Income (Loss) (722,458) 384,719 (218,994) (888,183)
Interest expense (192,462) -- -- (192,462)
-------------- --------------- --------------- -------------
Loss from Operations Before Income Taxes (914,920) 384,719 (218,994) (1,080,645)
Provision for income taxes -- -- -- --
-------------- --------------- ---------------- -------------
Net Income (Loss) $ (914,920) $ 384,719 $ (218,994) $ (1,080,645)
============== =============== ================ =============
Weighted Average Number of Shares
Outstanding 3,626,036 3,626,036 3,626,036 3,626,036
============== =============== ================ =============
Primary Earnings (Loss) Per Share $ (0.25) $ 0.11 $ (0.06) $ (0.30)
============== =============== ================ =============
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
ESSEX CORPORATION F-3
PRO FORMA FINANCIAL INFORMATION PAGE 1 OF 1
STATEMENT OF OPERATIONS
FOR THE FISCAL YEAR ENDED DECEMBER 29, 1996
<CAPTION>
PRO FORMA ADJUSTMENTS
-------------------------------------
Systems
Effectiveness Other
Historical Division Divestitures Pro Forma
-------------- ---------------- ---------------- ---------------
(unaudited)
<S> <C> <C> <C> <C>
Revenues $ 12,939,341 $ 5,161,964 $ 4,085,658 $ 3,691,719
Cost of goods sold and services provided (10,324,258) (3,586,827) (3,553,148) (3,184,283)
Engineering and product development expenses (743,662) -- -- (743,662)
Selling, general and administrative expenses (5,052,664) (998,562) (1,351,763) (2,702,339)
-------------- ---------------- ---------------- ---------------
Operating Income (Loss) (3,181,243) 576,575 (819,253) (2,938,565)
Gain on settlement of lawsuit, net of related
expenses of $1,759,450 2,240,550 -- -- 2,240,550
Lease settlement (250,000) -- -- (250,000)
Interest expense (142,991) -- -- (142,991)
-------------- ---------------- ---------------- ---------------
Income (Loss) from Operations Before Income Taxes (1,333,684) 576,575 (819,253) (1,091,006)
Provision for income taxes -- -- -- --
-------------- ---------------- ---------------- ---------------
Net Income (Loss) $ (1,333,684) $ 576,575 $ (819,253) $ (1,091,006)
============== ================ ================ ===============
Weighted Average Number of Shares
Outstanding 3,616,519 3,616,519 3,616,519 3,616,519
============== ================ ================ ===============
Primary Earnings (Loss) Per Share $ (0.37) $ 0.16 $ (0.23) $ (0.30)
============== ================ ================ ===============
<FN>
The accompanying notes are an integral part of these statements.
</FN>
</TABLE>
<PAGE>
NOTES AND ADJUSTMENTS TO F-4
UNAUDITED PRO FORMA FINANCIAL INFORMATION PAGE 1 OF 1
NOTES
A. The line item entries in this column record the divestiture of Systems
Effectiveness Division ("SED").
B. The line item entries in this column represent payouts or adjustments
as a result of the divestiture.
C. No recognition has been given to the gain on the disposition of the
Systems Effectiveness Division.
ADJUSTMENTS
(1) Repayment of bank line of credit.
(2) Refund of difference between estimated and actual net asset value of SED.
(3) Payment to debenture holders due upon sale of underlying collateral
represented by certain assets of divested operations.
(4) Payment to former landlord due upon realization of proceeds of certain
asset sales resulting from divestiture.
(5) Estimate of payment of legal and other expenses incurred by Seller in
connection with divestitures.
(6) Accelerated amortization of deferred debenture financing due to required
early repayment of portion of debentures.
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