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UNITED STATES
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) DECEMBER 22, 1998
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GALILEO CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 04-2526583
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
0-11309
(Commission File Number)
GALILEO PARK, P.O. BOX 550, STURBRID MASSACHUSETTS 01566
(Address of principal executive offices) (Zip Code)
Registrant's telephone number includ (508) 347-9191
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(Former name or former address, if changed since last report)
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Item 5. OTHER EVENTS
The Registrant reported financial results for its fourth quarter and
for the fiscal year ended September 30, 1998. The Company also
announced the signing of an agreement with an investment entity under
which that entity will, subject to satisfaction of conditions to
closing, purchase for $6.0 million in a private transaction 2,000,000
shares of the Company's common stock, together with warrants for an
additional 2,000,000 shares. The Company also announced that it had
implemented further cost reduction measures, consisting principally of
reductions in staffing at its Sturbridge, Massachusetts facility.
Additionally, the Company terminated operations of its
Telecommunications business and is seeking buyers for this business. A
press release, dated December 22, 1998, describing each of these items
is attached hereto as Exhibit 99.1.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS
a) Exhibits
99.1 Press Release dated December 22, 1998.
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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.
GALILEO CORPORATION
Date: December 30, 1998 By: /s/ Josef W. Rokus
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Josef W. Rokus
Vice President, Corporate Development
and Secretary
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EXHIBIT INDEX
Exhibit No.
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99.1 Press Release dated December 22, 1998.
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EXHIBIT 99.1
Contact: Stephen P. Todd - Interim Chief Financial Officer - 508-347-4222
GALILEO CORP. REPORTS FISCAL YEAR 1998 RESULTS, FOURTH
QUARTER RESULTS AND OTHER DEVELOPMENTS
STURBRIDGE, MA, DECEMBER 22, 1998 - Galileo Corporation (Nasdaq National
Market: GAEO) today reported results for its fourth quarter and for the fiscal
year ended September 30, 1998.
For the fiscal year ended September 30, 1998, sales were $44.3 million
versus $34.1 million for the previous fiscal year, an increase of 29.9%. The
loss for the year amounted to $12.6 million, or $1.65 per share. The results for
the year were impacted by one-time charges of $5.0 million, or $0.66 per share,
for costs to reduce the carrying values of certain equipment and inventories to
fair market value related to the previously announced termination of the Medical
Endoscope Products business and a reduction of certain receivables to net
realizable value. For fiscal year 1997, the Company incurred a loss of $11.2
million, or $1.63 per share. The fiscal year 1997 results included restructuring
charges totaling $9.1 million for the reduction in carrying value of certain
long-lived assets and reorganization costs.
For the fourth quarter, revenues were $11.8 million versus $8.2 million in
the fourth quarter of the previous fiscal year, an increase of 44.0%. The
Company incurred a loss of $7.4 million, or $0.91 per share, which compares to a
loss of $1.1 million, or $0.16 per share for the same period in fiscal year
1997. During the fourth quarter, the Company recorded one-time charges of $4.4
million, or $0.55 per share, for costs to reduce the carrying values of certain
equipment and inventories to fair market value related to the previously
announced termination of its Medical Endoscope Products business, and a benefit
of $0.4 million, or $0.05 per share, from recovery of previously written-off
accounts receivable.
The Company is in violation of covenants under its bank loan agreement,
and the bank has the right to accelerate the loan. The Company is attempting to
negotiate revised financial covenants with the bank. However, there can be no
assurance that a revised agreement can be reached. As a result of the default
under the bank loan agreement and continuing losses, the Company's auditors have
indicated that their report on the Company's fiscal year 1998 will include a
going-concern qualification.
The Company also announced the signing of an agreement with an investment
entity formed by the principals of Andlinger & Company, Inc. under which that
entity will purchase for $6.0 million in a private transaction 2,000,000 shares
of the Company's common stock, together with warrants for an additional
2,000,000 shares. The warrants are exercisable for a period of 7 1/2 years at a
price of $1.50 per share, subject to antidilution adjustment. At December 15,
1998, the Company had 8,071,250 shares of common stock outstanding. Consummation
of the transaction is subject to a number of conditions, including obtaining
waivers and amendments under the Company's bank loan agreements and the issuance
of a waiver by The Nasdaq Stock Market of the requirement for shareholder
approval of the transaction. Following completion of the sale, the Company's
board of directors would be enlarged to seven members, of which three would be
designated by the purchaser including the Chairman. In addition, certain
specified transactions, such as mergers,
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acquisitions, divestitures and financings, would require the consent of five
directors. Prior to entering into this transaction, the Company's board of
directors received an opinion from its financial advisor, Needham & Company,
Inc., as to the fairness from a financial point of view of the consideration to
be received by the Company in the investment. Andlinger & Company is a
twenty-year old private investment company with offices in Tarrytown, New York,
Brussels, Belgium and Vienna, Austria.
As a result of continuing losses in some of its businesses, the Company
announced in the first quarter of fiscal year 1999, ending December 31, 1998,
that it had implemented further cost reduction measures, consisting principally
of reductions in staffing at its Sturbridge, Massachusetts facility.
Additionally, the Company terminated operations of its Telecommunications
business and is seeking buyers for this business. The Company anticipates
continuing operating losses through the first quarter of fiscal year 1999, which
losses include a charge for the reduction of carrying values of certain
long-lived assets of $1.6 million, or $0.20 per share, and severance and other
consolidation costs of $1.4 million, or $0.17 per share.
W. Kip Speyer, President and Chief Executive Officer, commented,
"Management is very enthusiastic about the new investment. This capital infusion
will allow management to focus on strategic growth and profitability. The
Company's aggressive reduction of overhead costs and our renewed focus on our
customers should lead the Company to improved future results." He continued,
"Optical Filter Corporation, the Company's acquisition earlier this year, has
contributed positive cash flow throughout the year, and the Company's women's
health products revenues continue to grow. If all conditions are met so as to
allow this investment to close, we anticipate that Galileo will reemerge as a
profitable company."
Galileo, along with its wholly owned subsidiary, Optical Filter
Corporation, develops, manufactures and markets products based on its core
optical and photonic technologies for applications in medical products and
instruments, analytical instruments and office equipment. Leisegang Medical,
Inc., a wholly-owned subsidiary, develops, manufactures, and markets women's
health-related medical products. Please visit our web sites at
www.galileocorp.com, www.ofccorp.com and www.leisegang.com for additional
information.
This press release contains forward-looking statements which are subject
to the inherent uncertainties in predicting future results and conditions, such
as comments regarding future financial performance and growth opportunities.
Certain factors that could cause actual results to differ materially from those
projected include the following: satisfaction of conditions to the closing of
the new investment, some of which are beyond the control of the Company;
satisfactory restructuring or refinancing of the Company's bank loans; the
Company's ability to remain in compliance with the restructured covenants, if so
received and the ability of the Company to obtain adequate supplies of materials
and services from vendors and to successfully market its products to customers
in light of the Company's impaired liquidity. Other factors affecting the
Company's business are discussed in the Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1997.
(Financial Information Follows)
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GALILEO CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Three Months Ended For the Year Ended
September 30, September 30,
(Dollars in thousands except per share data) 1998 1997 1998 1997
<S> <C> <C> <C> <C>
Net sales $11,766 $ 8,169 $ 44,306 $ 34,117
Cost of sales 11,153 5,630 33,012 22,363
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Gross profit 613 2,539 11,294 11,754
Engineering expenses 1,180 1,438 5,790 5,282
Selling & administrative expenses 5,212 2,362 15,387 9,230
Provision for (recovery of) uncollectible
accounts receivable (415) - 569 -
Reduction in carrying value of certain
long-lived assets 1,525 - 1,525 2,226
Reorganization costs - - - 6,872
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Total operating expense 7,502 3,800 23,271 23,610
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Operating loss (6,889) (1,261) (11,977) (11,856)
Interest expense, net (246) - (524) -
Other income, net 125 144 162 835
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Loss before provision for income (7,010) (1,117) (12,339) (11,021)
Provision for income taxes 352 10 288 163
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Net loss (7,362) (1,127) (12,627) (11,184)
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Net loss per common and common
equivalent shares outstanding $ (0.91) $ (0.16) $ (1.65) $ (1.63)
Weighted average common and common
equivalent share outstanding 8,053 6,864 7,646 6,851
</TABLE>
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GALILEO CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30,
(Dollars in thousands) 1998 1997
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 710 $ 9,546
Accounts receivable, less allowance of $1,265 and $244, respectively 7,952 5,639
Inventories 8,828 6,614
Other current assets 1,092 187
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Total current assets 18,582 21,986
Property, plant and equipment, net 16,128 15,372
Excess of cost over fair value of assets acquired, net 19,396 3,873
Other assets, net 1,548 1,496
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Total assets 55,654 42,727
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 8,683 $ 5,669
Notes payable in default 11,846 -
Current portion of notes payable 1,458 -
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Total current liabilities 21,987 5,669
Long-term notes payable and other liabilities 1,008 956
Shareholders' equity:
Common stock, $0.01 par value, 36,000,000 shares authorized
and 8,052,786 and 6,872,205 outstanding, respectively 81 69
Additional paid-in capital 52,176 42,951
Accumulated comprehensive income (53) -
Accumulated deficit (19,545) (6,918)
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Total shareholders' equity 32,659 36,102
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Total liabilities and shareholders' equity $ 55,654 $42,727
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