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) April 15, 1999
FRANKLIN ELECTRONIC PUBLISHERS, INCORPORATED
--------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania
------------
(State or other jurisdiction of incorporation)
0-14841 22-2476703
---------------------------------------
(Commission File Number) (IRS Employer Identification Number)
One Franklin Plaza, Burlington, New Jersey 08016-4907
-------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (609) 386-2500
<PAGE>
ITEM 5 OTHER EVENTS
(i) Franklin Electronic Publishers, Incorporated (the "Registrant")
announced on April 19, 1999 that its Chief Executive Officer and President, H.
Andrew Cross, left the Registrant by mutual agreement. The Registrant's
Executive Vice President, Barry J. Lipsky, a director of the Registrant, was
promoted to the post of Chief Operating Officer and was named Acting President
as well.
(ii) The Registrant announced on April 15, 1999 that it has
restructured the Note Purchase Agreement for its $40,000,000 7.71% Senior Notes
due March 31, 2007. As a part of the restructuring, the Registrant has paid down
$6,000,000 in principal and agreed to interest rate increases on the balance of
the principal.
In February 1999, the Registrant announced that it had revalued its
inventory at the end of the December quarter, resulting in a writedown of
$11,200,000 before income taxes. As a result of the large loss for the quarter,
the Registrant did not meet EBITDA covenants under the Note Purchase Agreement
and the credit agreements with its banks. At that time, the Registrant received
waivers from the Senior Noteholders and its banks in order to allow the
Registrant to restructure its financing arrangements. The restructuring of the
Note Purchase Agreement provides the Registrant with acceptable modifications to
the EBITDA covenants, a reduction in prepayment penalties for the $6,000,000
prepayment, and reductions in future payment penalties for certain additional
optional prepayments of principal. The Registrant agreed to an interest rate
increase of 1.25% on the Senior Notes and agreed to further interest rate
increases of 25 basis points per quarter for four consecutive quarters ending
March 31, 2000.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits:
1. Franklin Electronic Publishers, Incorporated Press Release,
dated April 19, 1999.
2. Franklin Electronic Publishers, Incorporated Press Release,
dated April 15, 1999.
3
<PAGE>
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.
FRANKLIN ELECTRONIC PUBLISHERS, INC.
By /s/ Gregory J. Winsky
---------------------------------
Name: Gregory J. Winsky
Title: Senior Vice President
Date: April 27, 1999
4
Exhibit 1
Franklin(R)
Electronic Publishers ONE FRANKLIN PLAZA, BURLINGTON, NJ 08016-4907,
TEL: 609-386-2500 FAX: 609-387-0533
- --------------------------------------------------------------------------------
NEWS
Contact: Gregory J. Winsky
Senior Vice President
Franklin Electronic Publishers, Inc.
(609) 386-2600
FOR IMMEDIATE RELEASE
FRANKLIN ANNOUNCES CEO H. ANDREW CROSS TO DEPART
EXECUTIVE VICE PRESIDENT BARRY J. LIPSKY
NAMED CHIEF OPERATING OFFICER AND ACTING PRESIDENT
Burlington, N.J., April 19, 1999 - Franklin Electronic Publishers, Inc. ("NYSE:
FEP") today announced that its Chief Executive Officer and President H. Andrew
Cross is leaving the Company by mutual agreement. Franklin's Executive Vice
President, Barry J. Lipsky, a director of the Company, was promoted to the post
of Chief Operating Officer and was named Acting President as well.
James H. Simons, Chairman of the Board of the Company, stated "We are grateful
for the leadership Mr. Cross has provided. During the period of his presidency,
Franklin established record annual revenues, substantially increased the sales
of its REX line of organizers, revamped its reference and ROLODEX(R) Electronics
lines, and inaugurated its strategy of Internet publishing through the
introduction of the Rocket eBook(TM)."
Barry Lipsky, newly appointed C.O.O. and Acting President, has been with
Franklin for fourteen years and is a member of its Board of Directors. Mr.
Lipsky has served as Vice President for Manufacturing, has been responsible for
much of the Company's R&D, and has architected a number of the Company's key
outside partnerships, including that with Starfish Software for the REX
organizer line.
Mr. Simons went on to say, "Barry Lipsky's background at Franklin together with
his broad understanding of our fast moving industry and his proven management
skills make him especially well suited for his new role."
Mr. Lipsky, 48 years old, lives in Princeton, New Jersey and is married with two
children.
Franklin Electronic Publishers, Inc. (NYSE:FEP), the exclusive source for REX(R)
PC- Card organizer products, is the worldwide market leader in handheld
electronic books, including the popular BOOKMAN(R) series. The Company is also
the exclusive producer
[LOGO]
-more-
<PAGE>
and distributor of ROLODEX(R) Electronics brand personal information management
products. Franklin has sold more than 20,000,000 electronic books and currently
publishes more than 200 titles, including dictionaries and bilingual
dictionaries; encyclopedias; Bibles; entertainment titles; education and
tutorial publications; and medical reference works. Franklin products, available
in sixteen languages, are sold in 45,000 retail outlets worldwide and through
catalogs and the Internet. More information about Franklin can be found at
http://www.franklin.com. The Company has sales and distribution subsidiaries in
the United Kingdom, France, Germany, the Benelux countries, Canada, Australia,
Mexico, Singapore, and South Africa, and production management offices in Tokyo
and Hong Kong.
###
ROLODEX(R) is a registered trademark of Sterling Resources Co., a subsidiary of
Nextell Co. Rocket eBook(TM) is a trademark of NuvoMedia, Inc. Other product and
company names herein may be trademarks of their respective owners.
- --------------------------------------------------------------------------------
Except for the historical information contained herein, the matters discussed
throughout this release, including, but not limited to, those that are stated as
Franklin's belief or expectation or preceded by the word "should" are forward
looking statements that involve risks to and uncertainities in Franklin's
business, including, among other things, the timely availablility and acceptance
of new electronic reference products, oraganizers, and computer companion
products, changes in technology, the impact of competitive electronic products,
the management of inventories, Franklin's dependence on third party component
suppliers and manufacturers, including those that provide Franklin-specific
parts, and other risks and uncertainities that may be detailed from time to time
in Franklin's reports filed with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
Exhibit 2
Franklin (R)
Electronic Publishers ONE FRANKLIN PLAZA, BURLINGTON, NJ 08016-4907,
TEL: 609-386-2500 FAX: 609-387-0533
- --------------------------------------------------------------------------------
NEWS
Contact: John G. Day, Senior Vice President & Chief Financial Officer
Gregory Winsky, Senior Vice President
Franklin Electronic Publishers, Inc.
(609) 386-2500
FOR IMMEDIATE RELEASE
Investor Relations
Cheryl Schneider/John Blackwell
Press: Michael McMullan
Morgen-Walke Associates
(212) 850-5600
FRANKLIN ELECTRONIC PUBLISHERS, INC. COMPLETES
RESTRUCTURING OF SENIOR NOTES
Burlington, NJ, April 15, 1999 -- Franklin Electronic Publishers, Inc.
(NYSE: FEP) today announced that it has restructured the Note Purchase Agreement
for its $40,000,000 7.71% Senior Notes due March 31, 2007. As a part of the
restructuring, the Company has paid down $6,000,000 in principal and agreed to
interest rate increases on the balance of the principal.
In February 1999, the Company announced that it had revalued its inventory
at the end of the December quarter, resulting in a writedown of $11,200,000
before income taxes. As a result of the large loss for the quarter, the Company
did not meet EBITDA covenants under the Note Purchase Agreement and the credit
agreements with its banks. At that time, the Company received waivers from the
Senior Noteholders and its banks in order to allow the Company to restructure
its financing arrangements. The restructuring of the Note Purchase Agreement
provides the Company with acceptable modifications to the EBITDA covenants, a
reduction in prepayment penalties for the $6,000,000 prepayment, and the
reductions in future prepayment penalties for certain additional optional
-more-
[LOGO] FEP
NYSE
<PAGE>
FEP: COMPLETES RESTRUCTURING OF SENIOR NOTES Page: 2
prepayments of principal. The Company agreed to an interest rate increase of
1.25% on the Senior Notes and agreed to further interest rate increases of 25
basis points per quarter for four consecutive quarters ending March 31, 2000.
Franklin Electronic Publishers, Inc. (NYSE:FEP), the exclusive source for
REX(R) PC-Card organizer products, is the worldwide market leader in handheld
electronic books, including the popular BOOKMAN(R) series. The Company is also
the exclusive producer and distributor of ROLODEX(R) Electronics brand personal
information management products. Franklin has sold more than 20,000,000
electronic books and currently publishes more than 200 titles, including
dictionaries and bilingual dictionaries; encyclopedias; Bibles; entertainment
titles; education and tutorial publications; and medical reference works.
Franklin products, available in sixteen languages, are sold in 45,000 retail
outlets worldwide and through catalogs and the Internet. More information about
Franklin can be found at http://www. franklin.com. The Company has sales and
distribution subsidiaries in the United Kingdom, France, Germany, the Benelux
countries, Canada, Australia, Mexico, Singapore, and South Africa, and
production management offices in Tokyo and Hong Kong.
###
ROLODEX(R) is a registered trademark of Sterling Plastics Co. a subsidiary of
Nowell Co. Other product and company names herein may be trademarks of their
respective owners.
- --------------------------------------------------------------------------------
Except for the historical information contained herein, the matters discussed
throughout this release, including, but not limited to, those that are stated as
Franklin's belief or expectation or preceded by the word "should" are forward
looking statements that involve risks to and uncertainties in Franklin's
business, including, among other things, the timely availability and acceptance
of new electronic reference products, organizers, and computer companion
products, changes in technology, the impact of competitive electronic products,
the management of inventories. Franklin's dependence on third party component
suppliers and manufacturers, including those that provide Franklin-specific
parts, and other risks and uncertainties that may be detailed from time to time
in Franklin's reports filed with the Securities and Exchange Commission.
- --------------------------------------------------------------------------------
